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Local sugar industry sees bitter times ahead

By BY WINSLEY MASESE | November 11th 2013 at 00:00:00 GMT +0300


KENYA: Kenyan sugar cane farmers and millers face a tough period ahead with the expiry of the Common Market for Eastern and Southern Africa (Comesa) safeguards, slated for early next year.

By April 2014, sugar millers from the Comesa will have access to sell their duty-free sugar in Kenya. Intriguingly, though, Kenyan consumers will continue to pay dearly for the same product.

The cost of production of one metric tonne of sugar in Kenya stands at about $950 against the global standard of about $400 for sugar producers, where the price bracket for the Comesa bloc in countries such as Mauritius, Egypt, Malawi and Zambia fall. This will further pile pressure on the already limping manufacturing sector, which is facing stiff competition from cheap imports and a high cost of production.

Sony Sugar Company acting managing director Pamela Odhiambo said that their plans to improve efficiency to compete with other prospective incoming players have been handicapped by the unfavourable climate the industry goes through.

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“The poaching of cane has severely affected the operations of the company and it would not be fair to open the market to other outside players,” she said.

Odhiambo said that though the company invests massively towards cane development, new entrants licensed without due consideration of the law has jeorpadised any prospects of Kenyans accessing the product at a lower price.

Farm inputs

The cost of cane production, she said, is about 50 per cent of the total farm inputs, saying this is high compared to the global standard of 30 per cent. “Millers that poach the cane, we have assisted farmers develop, have not incurred any cost and can offer better prices compared to what we offer. What they do is tantamount to theft,” she said.

Last week, the Parliamentary Committee on Agriculture called upon the Kenya Sugar Board to stop licensing new millers until the crises afflicting the industry have been resolved.

The committee observed that the increasing number of millers, in the local sugar industry has compounded the challenges currently experienced by millers, cane farmers and consumers.

Common Market for Eastern and Southern Africa (Comesa) Mauritius Egypt Malawi
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