“Which loan portfolio is being referred to here? Is it for the farmer, the miller or for both?”
Owiti adds: “The minister’s Budget speech implies the money is to be divided across the three sub-sectors of sugar, rice and coffee, which amounts almost to nothing. Even if it is for farmers – in the sugar sector alone, this is hardly enough because farmers across all the sugar belts collectively owe in excess of Sh11 billion in loans.”
The policy expert says other than writing the industry’s debts, the Government should institute far-reaching reforms in the sector to spur growth.
“The Government needs to move quickly and privatise the industry to allow for private sector investment and introduce competitiveness,” he says.
He says there are significant challenges in the sugar sector, which need to be address. For instance, he says, price collusion between millers is hurting farmers.
“The factories keep fixing the price of the cane at Sh3,500 per metric tonne, which is the gross pay because they would have to deduct cost of transport and harvesting the farmer remains with nothing despite the high cost of production,” he explains.
“Moreover, the farmer is alienated from other by-products of sugarcane like ethanol and baggasse, which fetch more returns than even the sugar itself.”
He says the Sugar Act should be amended to give the farmer more say in the industry process with the miller’s only mandate being the milling itself.
“The power the sugar millers wield in the industry is immense. We should devise a regime where the farmer is more in charge of the processes,” he adds.
KSB, which regulates, develops and promotes the sector, is actively encouraging private investment in the sugar industry, and has made recommendations to restructure or privatise Government-owned mills.
Mkok says the board is currently pushing for the review of the Sugar Act to align to it the new Constitution and specifically on devolution.
“The Act was written before the new Constitution but now the supreme law has strict provision on stakeholder expectation which we must adhere to,” she says.
