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Sugar Sales to Traders Prohibited inside Merkato |
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  Addisfortune-
Alemayehu Dendenna, shopkeeper at the ‘EtFruit container’ near the Teklehaimanot Church, concentrates as he measures out the now scarce commodity, sugar.
Sugar sold to traders in the latest round of auction is to be traded outside of Merkato, by the order of Habtamu Reggasa, a top official at the Ethiopian Sugar Development Agency (ESDA).
At an auction held on Monday, February 15, 2010, at the agency’s head office near Mexico Square on Chad Street, 100,000ql of sugar were sold to 40 bidders out of a total of 100 that had been present. Traditionally this sugar would have gone to the traders’ stores, most of which are located in the Bomb Terra area of Merkato.
“We have no another option than to take this measure,” said Habtamu, who is the director general of the Enterprise Support and Supervision Directorate as well as controlling foreign and local trade at the ESDA.
Despite the agency’s efforts to limit the market retail price of sugar to 13.50 Br per kilogramme, it was escalating to as much as 18 Br.
“This is intolerable,” Habtamu said.
There are 25 wholesalers in the Bomb Terra area. Two of them, Casabel Plc and Hafiz Trading, sell only to other wholesalers from the Oromia Special Zone. The other 23 are obliged to follow the order from ESDA, according to Habtamu. These companies have already started selling their sugar to retailers around town by carrying it around on trucks. Mudin Yassin, one of the 23, was selling sugar to traders in Lideta Street, from his Isuzu truck on February 24, 2010, around Lideta District.
“This is a good way for me [to operate]” said Thigusa Bekele, a store owner in Kebele 08 of the Lideta District. “I was not able to find sugar from Merkato because of this inconvenience that started a couple of weeks ago.”
The inconvenience was that buyers had to pay brokers 150 Br to get sugar from the brokers. A group of organised brokers had been in control of the Bomb Terra area until midnight hours, according to a businessman in the Bomb Terra, Zergaw Ayenew. Such market manipulation and not supply shortage has been the cause of the shortage, Habtamu says.
While the shortage is visible in many stores at any price, EtFruit sells sugar at 13.50 Br whenever it is available.
The agency floats a tender every two weeks to supply 100,000ql of sugar, attracting an average of 90 bidders. Only about half of them win the auction. Those who miss could lose as much 70,000 Br profit every two weeks, according to an official at ESDA.
The Ministry of Trade and Industry (MoTI) also uses EtFruit and the Ethiopian Merchandise Wholesale Trade and Import Enterprise to stabilise the market by selling at 13.50 Br. Both get 20,000ql of sugar from the agency every two weeks, However, these two, unlike the Merkato traders, will continue selling from their stores, because they sell only to the end users.
The agency auctions sugar which it gets from the three state owned sugar factories, Metahara, Wenji Shoa, and Fincha, which together produce three million quintals, whereas current consumption stands at more than 4.6 million quintals per year. Since 2002 the government has been importing sugar from Brazil, India, Kenya and South Africa.
Ethiopia imported 20.54ql in 2002, 32,786ql in 2004, 67,093ql in 2007 and 136,557ql in 2008, according to the National Sugar Organisation Yearbook of 2009.
“We plan to import a total of 800,000ql for this fiscal year,” Habtamu said.
The agency has already awarded the supply of 50,400ql to UK based ED&F Man Sugar Limited and the Swedish based Louis Dryfus at 831 dollars per tonne, a huge increase from last year’s 380 dollars.
“The price is very expensive but, the market needs more sugar,” Habtamu said.
The price increment was caused by Brazil’s increased emphasis on the production of ethanol from sugar cane and India’s increased consumption of sugar, according to an industry expert.
“The Indian market has shifted in the last couple of months from export to import” this expert said.
Habtamu agrees with this expert, but the market had responded by shedding 50 dollars to the news, last week that the Brazilian sugar industry was ready to produce sugarcane for sugar production, he said. He expects a significant decrease in price by April 2010.
“This is very good news for us,” he added.
The agency gets the money for the purchase of sugar from the Sugar Development Fund. The fund was established with the three state owned sugar factories for their development activity. The agency accesses the money through loans for the duty free import of sugar. This sugar is to be sold at 1,260Br per quintal, from which the wholesalers make 35 to 45 Br.
MoTI believes the shortage is for a short period of time. The expansion projects at the three sugar factories and the construction of a new one in the Afar Regional State are expected to boost production to more than six million quintals.
The government has plans to inject 16 million Birr to all these projects.
By WUDINEH ZENEBE
SPECIAL TO FORTUNE
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#1 |
on March 05 2010 02:03:25
#2 |
on March 05 2010 23:07:40
#3 |
on March 14 2010 19:50:04
#4 |
on June 09 2010 04:49:37
#5 |
on June 16 2010 18:54:32
#6 |
on July 27 2010 21:07:44
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