Prices of sugar in retail bags have soared above 100 percent, as refiners make investments to close the more than 1.4 million metric tonnes gap in the industry.
Nigeria consumes at least 1.5 million metric tonnes of sugar, according to the National Sugar Development Council (NSDC), but produces a little above 30,000 MT of raw sugar, according to Samuel Kwabe, immediate past acting executive secretary of the council. This leaves a deficit of more than 1.4 million MT, even as the country’s production could hit 50,000 MT this year, according to Latif Busari, the second-time executive secretary of the council.
Much of Nigeria’s sugar needs are met by importation of raw sugar from Brazil, which is refined locally.
“Our implementation strategy has changed and the full focus is now on the expansion of the Savannah Sugar Estate to its full potential, and development of the new site at Tunga in Nasarawa State,” said Abdullahi Sule, acting group managing director of Dangote Sugar Refinery(DSR), whose firm has pumped $2 billion in plantations in six to seven states in Nigeria.
“Concerted efforts are being made towards the actualisation of our backward integration programmes (BIPs) plan,” Sule said.
BusinessDay’s market monitor in Lagos shows that sugar prices have jumped between 109 to 115 percent in the last one year. At Mushin Market on Tuesday, a 50 kg bag of sugar sold for N20, 000 as against N9, 300 in February 2016.
Iya Mueez, a sugar trader at Oshodi, expressed concern that the price of sugar would lead to further fall in sales.
At Mushin in Lagos, a 50kg bag of sugar sold for N22, 000 on Wednesday, April 5, as against N10, 500 exactly one year ago.
Similarly, the price of a bag of sugar has gone up to between N19, 500 and N20, 000 at Daleko Market in Lagos, from N9,000 in the same market between February and March 2016.
BusinessDay gathered that the price of sugar in Port Harcourt, Rivers State, hovers between N22, 000 and N24, 000 as against between N11, 000 and N11, 500 offered a year ago.
Jude Okafor, national publicity secretary of the Association of Master Bakers and Caterers of Nigeria, attributed the initial hike in sugar prices to high dollar cost (up to N500/$), but wondered why manufacturers and distributors have failed to bring down prices at a point the dollar-naira exchange rate is N360/$.
“This could bring back the era of the use of alternatives such as sacharine, which is dangerous to the health of those above 40 years. When the price of flour was N5,800, the price of sugar was N6,500. But when the price of flour rose to N11,000, that of sugar soared to N19,000 and has remained there until last week, when the price fell to N18,000,” Okafor said.
He urged for a price drop to enable bakers assimilate workers that have been sacked on the basis of jumping production costs.
Ikechukwu Ibeabuchi, a manufacturer and managing director of MD Services Limited, said sugar price rose four-year-high in September 2016 to almost $22 per pound but has crashed to about $16 a pound since then.
Ibeabuchi said with the lower international price and dollar cost in the country, sugar price could begin to fall next month.
An official of one of the sugar refiners, who spoke on the condition of anonymity, assured BusinessDay that the price would fall soon, as soon as old stocks bought at high dollar rate were exhausted.
Meanwhile, sugar makers have continued to expand operations to meet the huge demand-supply gap in the country. Apart from Dangote’s over $2 billion investment in the industry, Flour Mills Mills of Nigeria’s Golden Sugar, is pumping $300 million in sugar production at Sunti, Niger State, where a large portion of local sugar production goes on.
HoneyGold Group, on the other hand, is investing $300 million on two sites in Adamawa State, while Crystal Sugar Mills is throwing in $30 million to expand its operations at Hadejia, Jigawa State. Confluence Sugar Company is investing $240 million in Kogi State.
BUA has about 15,000 hectares of land for nursery, plantation and final sugar production.
Sugar demand in Nigeria is driven by a young demography and rapid growth of the food and beverage industry, which use sugar as an input.
“There is also a strong adult consumer base, thanks to medicated confectionery, with these products being used to soothe coughs and freshen breath,” says Euromonitor International, in its June 2016 report on ‘Nigeria Sugar Confectionery’.
