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Trade minister explains price hikes

Oct 5, 2010, 12:17 PM | Article By: Alieu O. Jabang

Deputies on Friday asked the minister of Trade to shed light as to the cause of what they called the "unfortunate situation" in the price hike of basic commodities like rice, sugar and onion.

Hon. Pa Jallow, member for Jarra Central constituency, who posed the question to the minister of Trade, noted that "it is common knowledge that the price for some commodities like sugar, rice and onion have risen to an unprecedented level".

Responding to questions posed during the question and answer session, Trade minister Yusupha Kah said that, since late 2007, the price of major commodities imported into the Gambia was highly affected by the world food crisis and, subsequently, recent climate change. The ministry of Trade, he added, monitors the stock and prices of basic commodities, and reports to cabinet on a weekly basis.

"In the case of sugar, after the food crisis, the subsequent price hikes in sugar are mainly due to external factors in the international market," he said, noting that last year, major sugar exporting countries such as India and Brazil experienced drought during the monsoon season, and this resulted in a reduction in the supply of sugar world wide leading to further international price hikes thereafter.

Trade Minister Kah further stated that there were also delays in shipment due to less availability and higher charges for vessels. "This is the reason why the stock of sugar has been low," he said.

According to him, importers in the Gambia faced many challenges in obtaining vessels to ship large quantities of sugar to the Gambia because of the long waiting periods associated with high demurrage costs at the port of Brazil.

He further stated that this compelled most Gambian importers of sugar to import by containers rather than the usual vessel, which he said, only brought less quantities at a go. "The long wait at the Brazilian port and the limited importation in containers caused shortages in many importing countries, including the Gambia," he explained.

He further explained that price changes in sugar are very sensitive compared to other commodities because, according to him, there is a lot of speculation in its trade.

He added that his ministry is constantly monitoring the international price and that there are expectations that the price will fall in the last quarter of this year, as the exporting countries will be starting their harvest.

He said his Ministry held discussions with importers and retailers last August which resulted in the reduction of the price of sugar to D1,250 per 50kg bag wholesale price.

Minister Kah noted that since the aftermath of the world food crisis, the stock of rice has been adequate throughout, while the price has been relatively stable between early 2009 to mid 2010.

The average wholesale price of rice, he added, increased from D640 at the beginning of July 2010 to D690 by the end of August for a 50kg bag. However, he went on, the current depreciations of the dalasi also adds to the cost of imports as importers pay their suppliers in foreign currency.

Commenting on onion and potatoes, Trade Minister Kah revealed that there is a different treatment compared to rice and sugar. He said an extra tax of D5.00 per kilo is levied on all imports of onions and potatoes, during the harvest periods of Kharafi Farms to enable the company to sell their produce against cheaper imports.

"Once the measure was in force, importers stopped importing onions as they cannot compete with Kharafi?s product," he stated.

In July, he said, the measure was temporally lifted for normal importation of the two commodities during the non-harvest period of June-February. He said the imports were late to arrive and Kharafi's stocks were not enough to cover the demand, and resulted into a shortage and price hike in the market.

"The Ministry is now working with Kharafi Farms and other importers of onions for them to develop a strategy for smooth transitions in order to avoid shortages," he concluded.