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Sugar farmers furious at removal of support fund

BUSINESS
By Dalton Nyabundi | June 26th 2016

Uproar has greeted removal of Sugar Development Levy (SDL) in this year’s budget by Treasury CS Henry Rotich.

Cane farmers are protesting, saying the move will affect the smooth financial operations of the troubled sugar sector, which is struggling to overcome heavy production costs.

They have urged the Government to provide funding alternatives to debt-ridden millers and cane development. The levy was scrapped in the 2016/17 budget estimates.

Kenya National Sugarcane Farmers Union (KENSFU) Deputy Secretary Atiang’ Atyang’ said the sector has perennially suffered lack of political goodwill and the recent budget speech by Rotich did not add value to it.

He said the proposal by Agriculture CS Willy Bett to reduce the VAT charged on sugarcane delivered to factories was not enough.

Mr Atyang' said State-owned millers, which need a Sh59 billion bailout, stood to lose in the removal of the levy, which has for long been used to save millers from collapse.

Mr Atyang’, who also represents farmers in the Nyando Sugar Belt, said Miwani had collapsed, Muhoroni was in receivership and Chemelil, with a Sh3 billion debt, was headed for a downfall.

He urged the Government to show goodwill by bailing out the factories to avert the looming poverty farmers will suffer if plants are left to die.

Although details remain unclear on exemptions, manufacturers welcomed the move.

Kenya Association of Manufactures Western Kenya chairperson Joyce Opondo said SDL hitherto charged at four percent of the value of sugar was being misused and its removal will level the field for public and private millers.

"SDL was introduced to support the millers - both private and public. But it always has been used to bailout public millers when in debt, which was never its purpose," she said.

Kenya Union of Sugar Plantation and Allied Workers (KUSPAW) Secretary General Francis Wangara said, however, it would be challenging for farmers and the millers to survive on their own.

He said the rotating funds introduced to support the sector boosted cane development and research.

The development levy, a rotating fund used majorly to support the public millers, was also extended to farmers as loans.

The Sugar Directorate, whose mum on the matter has raised eyebrows, has in the recent years come under pressure for failing to rein in the escalating crisis in the sugar sector.

The pressure led to the dismissal of CEO Rosemary Mkok. Her replacement, Andrew Osodo, said they will issue a statement through the Agriculture, Fisheries and Food Authority when they have details.

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