SUGAR prices in Zambia are still high despite the cost of production being low, says the Consumer Unity and Trust Society (CUTS) International.
Zambia’s cost of production for sugar stands at US$169 per tonne as compared to a world average of US$263 per tonne,
Presenting findings of a scoping study for the assessment of the structural and political economy issues in the Zambian sugar market, CUTS Zambia board chairperson Michael Muleba said the price of sugar is too high for Zambian households.
“However, the findings are not clear on what is driving prices in Zambia high. Previous studies which have suggested that prices are excessively high are not robust enough to substantiate the claim, hence the research project CUTS is undertaking to better understand what accounts for high sugar prices in Zambia,” Mr Muleba said.
“The scoping study identifies three possible factors which could affect prices, all of which will be explored in more detail through further research, and these include; costs of production, market structure and protection.”
He said the market structure and protection could be another factor that might explain high prices because the country’s sugar sub-sector is dominated by one player, Zambia Sugar Plc, which has a market share of about 94 percent for industrial sugar production and 92 percent for household sugar.
And CUTS Zambia co-ordinator Simon Ng’ona said there is need for further research to understand the underlying factors of high sugar prices.
“The study also discusses the impact of vitamin A fortification on the sugar sector. Existing evidence suggests that the vitamin A fortification policy acts as a non-tariff barrier, protecting local sugar from imported ones but we believe this fortification requirement could be a significant cost driver and a possible barrier to prospective market entrants,” Mr Ng’ona said.
Zambia Daily Mail