Against a backdrop of a protected industry, the Competition and Fair Trading Commission (CFTC) has said sugar prices are justifiable while Malawi’s main sugar producer has said it needs the strict import measures for a long term of viability.
Consumers have been complaining about the relatively high sugar prices which some analysts have said it is due to the fact that the producer takes advantage of consumers because it is a monopoly.
A consumer writing in a letter published in the press said sugar prices in the country are raised every quarter.
But Illovo Sugar Malawi, the country’s main sugar producer, has said there are justifiable factors that drive sugar prices and not just because they are a monopoly.
Responding to an e-mailed questionnaire last week, Illovo Sugar Malawi public relations officer Irene Phalula said key drivers to price adjustments are normally currency movements, inflation, increase in cost of fuel and other major commodity input costs like electricity.
She also said throughout the world, sugar is one of the most highly-protected agricultural commodities.
“Almost without exception, all producing countries protect their domestic sugar market through tariffs and specific duties as well as import licensing. This practice continues to be of strategic importance to the ongoing viability of these industries,” said Phalula.
Local consumer protection and anti-trust agency CFTC has also said from the look of things sugar is priced like any other commercial commodity, which takes into consideration costs of production and distribution.
Responding to an e-mailed questionnaire on Wednesday, CFTC executive director Charlotte Malonda, however, said any form of regulation to protect any industry should consider the welfare of the consumer and the public.
“Some tradeoffs have to be made and under normal circumstances, any given industry cannot have both. The industry is already protected by government policy which prohibits importation of sugar. So, domestic consumption of sugar is limited to the produce from Illovo,” said Malonda.
Phalula pointed out that price adjustments that were made since January this year were triggered by a combination of factors, including the kwacha, high inflation which remained around 22 percent while in April the company negotiated a 28 percent increase for unionised staff.
Phalula argued that despite the marginal strengthening of the kwacha, fuel prices were not reduced after the February 2014 adjustment resulting in fuel price increase being 24 percent higher year on year.
Further Phalula said while the upward price adjustments of some other industrial products are usually higher than those of Illovo, the company strives to keep the increases at the lowest levels possible because sugar is recognised as an essential product.