Zambia Sugar hikes prices

Zambia Sugar hikes prices
By Chiwoyu Sinyangwe
Sat 03 Apr. 2010, 04:01 CAT

Zambia Sugar Plc head of corporate affairs Lovemore Sievu presenting a donation of sugar to first lady Thandiwe Banda at State House recently - Picture by Collins Phiri

ZAMBIA Sugar Plc has upped local sugar prices by 13 per cent owing to the recent increase in fuel prices and inflation rate which accelerated to 10.2 per cent in March from 9.8 per cent in February.

The hike is exclusive to domestic customers as industrial clients benefit from economies of scale and their price structure is via negotiations with concessions embedded in them.

Zambia Sugar head of corporate affairs Lovemore Sievu told The Post that the country’s largest sugar producer had seen its cost of production surge, forcing it to revise upwards the consumer prices for sugar.

Sievu stressed that the price hike, which triggered on April 1, 2010 was meant to preserve the value of the company’s earnings, which had been eroded by the recent movements in the economic fundamentals.

“I can confirm that there has been an increase of 13 per cent for the year,” Sievu said. “This is due to the increase in the packaging cost and to take into account the consumer price index (CPI) which has increased and other costs such as other materials…and of course the fuel costs. But, in real terms, there is no price increase if you factor in the increase in inflation and other costs, we just want to preserve the value of our earnings. We don’t profiteer and our financial statements are available so that people can see…this price is a shelf price.”

Sievu said Zambia Sugar Plc annually revises its prices in line with inflationary trends and other related costs.

He said most sugar cane growers who get more than 50 per cent of the revenues from total sugar sales had also been hurt by inflationary pressures as their costs of doing business such as inputs and husbandry services had surged.

“Our price increase is within the inflationary range and also considering the wage increase for the workers this year,” he said.

Zambia Sugar Plc this year awarded all its unionised employees between 12 to 13 per cent salary increments.

Sievu, however, said the 13 per cent price hike was unique to the local market as sugar exports were subjected to international market dynamics both within the region and the European market.

The local market consumes about 30 per cent of Zambia Sugar’s total output, which currently is estimated to be in excess of 300,000 metric tonnes.

The remainder is exported.

“In Zambia, we apply a national delivered price, meaning as Zambia Sugar, we pay for the actual cost of transportation of sugar to all parts of the country, be it in Kasama or Livingstone,” said Sievu. “But for exports, we do the (FOB) free on board, meaning the buyers have to take care of logistics for the sugar they buy from Mazabuka.”

Last week, Central Statistical Office (CSO) director Efreda Chulu explained that inflation has increased by 0.4 of a percentage point due to the increase in fuel in January.

The Energy Regulation Board (ERB) last January announced a 15 per cent increase in fuel prices, citing the rise in international crude oil prices which doubled since the last increment in December 2008 and the Treasury’s three per cent increment in excise duty on diesel this year.