Mumias MP Ben Washiali was recently calling for the removal of Mumias Sugar Company MD Evans Kidero.
Many ills plague sugarcane farming in Mumias District and other cane growing regions, and it is common for politicians to pick on these for various reasons.
Calls for increase in cane prices have always guaranteed them instant popularity but the real problems rarely get looked into. Cane farmers have never been told exactly what makes them poor, and without this knowledge there can never be change.
There are a number of issues that have contributed to poverty. First, sugar is the most heavily taxed cash crop at 20 per cent. That represents 16 per cent VAT and 4 per cent SDL (sugar development levy).
Secondly, the cost of producing sugar in Kenya is higher when compared to other countries. Local production costs are double those of a country like Brazil.
Farm inputs are unusually expensive and while other countries provide subsidies to farmers, nothing of the kind is practised here.
Dilapidated roads
Thirdly, roads in sugar cane growing regions are dilapidated meaning an increase in the cost of transportation which impacts negatively on profit margins.
According to Dr Kidero, his firm has to spend about Sh400 million on roads a year. This is money the company would have shared with farmers had the Roads and Local Government ministries been able to maintain proper roads.
Fourth, we now live in a liberalised market. Sugar prices are determined by market forces, which mean that when prices fall, a farmer earns less money.
Illegal importation of sugar has drastically affected sugar prices. Unscrupulous businesses people smuggle sugar without paying duty or falsify tonnage and gain unfair advantage.
Fifth, sugar cane is grown in small farms, which cannot compete with large plantations found elsewhere. About 80 per cent of local cane is grown on holdings of two hectares or less, meaning farmers cannot benefit from economies of scale.
There is the question of the Common Market for Eastern and Southern Africa (Comesa). Kenya is required under the treaty arrangement to open its market to the free flow of goods and services, including sugar.
Comesa
The problem is that some Comesa countries like Egypt, Swaziland and Malawi can produce cheaper sugar and could easily flood our market and kill the sugar industry.
This could be the scenario in 2012 when the safeguards granted to Kenya will expire and the sugar market is completely liberalised.
But all is not lost. MPs should lobby the Government to remove or reduce taxes levied on sugar and farm inputs that go into sugar farming. They could also hold talks with the Kenya Revenue Authority to ensure no sugar enters the country illegally.
MPs should also ensure the sugar belt has good infrastructure, and the laws of the country are changed to allow sugar companies to diversify into other profitable ventures such as co-generation, which will allow for the production of electricity and ethanol.
{Justus Wabuyabo, via e-mail}
