NIGERIA – Worried by the relatively high prices of sugar in the domestic market in spite of the continuous drop in the international market prices, the National Sugar Development Council (NSDC) has urged the local refineries and producers in the country’s sugar sector to carry out a downward review of current sugar prices in line with emerging trends in global sugar market.
According to the NSDC, the move became necessary in view of emerging worrisome trend in the domestic sugar market, adding that: “Council had believed that with time, the trend would reverse, but indeed it has not, hence the need to reach out to all our major sector players and find workable solutions.”
In a statement signed by the Executive Secretary of the NSDC, Dr. Latif Busari, the council said: “With most of the major producers projecting good crops and many large consuming countries still holding substantial stocks, global sugar prices are more likely to witness further downward pressure and no one knows when it will bottom out.”
Stressing on why a downward review of current prices of sugar in the local market has become imperative, the statement quoted the NSDC Executive Secretary as saying: “Between January and June this year, while world sugar prices have dropped by around 18 per cent, wholesale prices in Nigeria have gone up by 15 per cent.
Wholesale prices today are hovering around the high prices of 2000 and council keeps receiving complaints from both industrial and domestic consumers, who wonder why the declining international prices are not reflected in the local market, given the fact that Nigeria still imports over 98 per cent of its raw sugar needs:”
The statement further said: “Council had done a conservative estimate of the cost profile and while it agrees that the recent depreciation in our local currency relative to the dollar has eroded some of the gains, our estimates reveal that ex-factory price of refined sugar in Nigeria should cost around N6,000/50kg bag or N120,000/ton even when a realistic, reasonable margin is factored into the equation.”
It said a downward review of prices is a “strategy that would help rein in the activities of smugglers which are already threatening to erode the modest gains of the National Sugar Master Plan and whatever profits the refineries hope to make from the current regime of high prices.”
While soliciting for understanding and cooperation of major key players in the sugar sector with regards to this development, the council said though this is not the first time such voluntary downward review of sugar prices in response to the market dynamics will be happening, also called “all refineries/producers to downwardly review their ex-factory prices of sugar in order to make it more cost-reflective and in line with current global trends.”