The National Sugar Development Council (NSDC) wants local refineries and producers in the nation’s sugar sector to carryout a downward review of current 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. It said it had thought 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 press statement signed by Latif Busari, its executive secretary, NSDC 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”.
Emphasising on the need to cut current sugar prices, the statement quoted the NSDC executive secretary as saying that “between January and June this year while world sugar prices have dropped by around 18 percent, wholesale prices in Nigeria have gone up by 15 percent”.
“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 percent of its raw sugar needs,” NSDC said.
“The 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 identified downward review of prices as a “strategy would help rein in the activities of smugglers, which are already threatening the 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 the understanding and cooperation of major key players in the sugar sector with regards to this development, the council said: “Although this is not the first time such voluntary downward review of sugar prices in response to the market dynamics will be happening, NSDC calls on 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”.