PRICES of sugar in Zambia are high because 60 percent of inputs are imported, says Zambia Sugar managing director Rebecca Katowa.
Ms Katowa said imported inputs for sugar production included fertilisers, chemicals, spares and packaging.
She was speaking at a public hearing on ‘Keeping sugar prices down and creating more jobs’ o rganised by the Consumer Unit for Trust Society (CUTS) Zambia.
She explained even though some inputs were locally sourced, they had components that were dollar indexed.
“I have heard a comment that 90 percent of inputs are locally sourced; I would like to correct that. In fact, about 60 percent of inputs are imported and these are fertilisers, chemicals, spares, packaging and even those inputs we believe are locally sourced have got components that are dollar indexed,’’ she said.
Responding to concerns that Zambia Sugar was exploiting farmers and consumers due to its dominance in the market, Ms Katowa said Government had not stopped anyone from investing in the sugar industry.
Ms Katowa said many people had done feasibility studies to try and invest but evidence showed that anyone wanting to invest in the green field had to think twice.
She also said the company operated one of the most successful outgrower schemes on the continent.
According to a study undertaken by CUTS Zambia, over 95 percent of the costs of production for sugar producers were locally sourced.
The study showed that pricing of sugar varied and there was some level of price competition among players.
Kasama sugar company priced its sugar around K 5.50 per 1 kg while Zambia Sugar pegged it at K 6.80.
It also showed that prices of sugar were high in Zambia although not excessive despite producing its own sugar.
The study indicated that the margin made by cane farmers did not seem to be excessive and therefore there was no reason to suppose that high shelf prices were caused by farmers.
According to the study, the cost of fortification appeared to be extremely low, with one sugar company saying the cost of fortification to them was currently 5 ngwee per Kg.
Therefore, the cost of fortifying sugar in Zambia was not responsible for the apparent high prices charged.