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Competition in sugar production-the only recipe for lower prices-Observes CUTS-International
August 16, 2010, Lusaka

The announcement by the Ministry of Foreign Affairs that Indian commercial Farmers mostly specialised in sugar production, are expected in the country in December to explore prospects of investing in the Nansanga farm blocks, is a welcome move.

More investment in the sugar production in Zambia is needed in order to bring about competition in the industry. The industry needs such investment so as to create competitive prices that will enable consumers afford this basic commodity. It is believed that any healthy competition is good for both market competitors as well as buyers hence this news being welcomed.

With Oversees Development Institute (ODI) 2009 report released early this year showing that Zambia has the lowest sugar production costs in the world standing at US$169 a tonne compared to the world average for sugar producing nations which is currently at US$263 a tonne, it remains baffling why prices are high for sugar. This is a clear indication that more firms are needed in the sugar production sector so as to enhance competition.

We wish to commend Zambia sugar for their aggressiveness within the market hence being a dominant player. We do not expect Zambia sugar to be apologetic as there are other players in the market who are still trying to be as innovative as Zambia sugar.

Zambia sugar is on record to have indicated in the media that they were not scared of any competition as they were too firmly entrenched to fear any possible competition. Zambia sugar on the other hand also indicated that the domestic market was to very small and that extra market players in the sector were likely to grow the product for export market rather than domestic consumption.

However, CUTS feels the prices of sugar are quite high as compared to other producing nations in the region and other least developing countries. This has ultimately made it impossible for some house hold to afford this basic good. With only a couple of market players in the sugar production consumers have remained at the mercy of these few players in the especially that consumers have got no close substitute for sugar.

More competition in this sector will help firms to set competitive prices in that if they charge above the market price, they would lose their customers. A competitive sugar market will also mean more choices for the consumers. Consumers will have a broad and huge product range to choose from, hence benefiting from the value of their money.

CUTS-International would like to also challenge local producers to try exploiting the available opportunities in this sector and be able to bring meaningful competition to existing companies that have subjected consumers to such exorbitant prices of the commodity.

And CUTS welcomes the coming in of the Competition and Consumer Protection law as it will help in insuring that markets are, and remain competitive. This will bring benefits to consumers eventually in all of the ways as stated earlier. This however, will be effectively achieved if all the stake holders, Judiciary, business associations, media, Civil Society, consider defining their role in the implementation of this law. Each one of these has got a specific role to play in the ensuring fair competition and consumer protection is adhered to.

For more information, please contact
294892 or Patrick Chengo at pc@cuts.org or Simon Ng’ona at sn2@cuts.org write to lusaka@cuts.org