Sugar prices in Nigeria have surged due to increased demand, adverse weather conditions, and currency scarcity.
The National Sugar Development Council reported that the average sugar price for the week ending July 29, 2022, was N579,400 per ton.
This marked a significant increase compared to N835,400 per ton for the week ending July 28, 2023, representing a 44.2% rise compared to the 2022 price.
Nigeria’s heavy reliance on sugar imports and global price increase
Nigeria heavily relies on sugar imports, accounting for about 98% of its sugar needs, with the remaining produced domestically.
Globally, sugar prices have been on the rise, partly driven by India’s drought-related reduction in sugar production, affecting the global supply.
Sugar prices have increased by 44% since the beginning of the year on the world commodity exchange, making it the best-performing commodity.
Major Nigerian companies like Dangote, BUA, and Flour Mills have been importing raw sugar for refining and sale.
To address the situation, the National Sugar Development Council is pushing sugar companies to invest in domestic sugar production and employ more local extracts for refining, a process called reverse integration.
However, companies are allowed to import extracts based on their plantation investment.
Foreign exchange scarcity and the devaluation of the Nigerian naira have also impacted sugar imports.
The naira has lost nearly half of its value since the introduction of the managed float FX system in June.
The Nigerian Manufacturers Association (MAN) has previously raised concerns about the lack of foreign exchange hindering the import of raw materials and machinery.