Regional bloc sets roadmap for sugar sector revival

Sugarcane transporter drives a tractor to Chemelil milling factory on August 27,2018. Farmers in the sugar belt region of Kisumu dialogue over zoning as factories that went under receivership plan to start milling. [Photo: Denish Ochieng/ Standard]

The struggling sugar industry could be headed out of the woods after stakeholders endorsed a revival roadmap yesterday.

Sugarcane farmers and millers, private and public, unanimously adopted a nine-point plan to be presented to President Uhuru Kenyatta in a month’s time.

Management and forensic audit of the public mills, financial resuscitation, debt write-off amounting to nearly Sh86 billion and limitations on sugar importation are among the steps adopted at the meeting convened by the Lake Region Economic Bloc (LREB) in Kisumu.

The meeting chaired by LREB Chairman Wycliffe Oparanya reinforced resolutions made in June during a meeting between governors and Agriculture Cabinet Secretary Mwangi Kiunjuri.

To help the struggling public millers back on their feet, the stakeholders resolved that the planned privatisation should be revisited to rope in strategic partners who can modernise the obsolete firms to make them competitive ahead of regional market liberalisation.

The Sugar Development Levy scrapped in last year’s budget will be reintroduced to fund cane research and development, as well as infrastructural improvement at the factories.

Restricted imports

To streamline the industry battling influx of cheap imports, the summit resolved that sugar importation be restricted to the Common Market for Eastern and Southern Africa (Comesa) Free Trade Agreement.

The stakeholders further want the importation done by the Kenya National Trade Corporation and millers on an equal share for three years.

“After the three years, millers should move out of the importation business and concentrate on their core mandate of sugar production,” read the resolutions.

To tame the growing cut-throat competition for sugarcane, the summit resolved that proposed regional zoning of the milling zones be reinstated and contractual models adopted to bind millers to the farmers they contract.

Further, an executive board comprised of farmers’ representatives, millers, representatives from the Agriculture and Food Authority and the Agriculture ministry be established to steer the restoration of the industry.

This, they said, should be supported by regional committees in which farmers get the majority seats.

To widen their margins, farmers are rooting for payment for all sugar byproducts such as molasses and bagasse on top of delivered cane.

They further want millers to set aside part of proceeds from sugar to pay for delivered cane to avert accumulation of arrears.