Ailing sugar firms face flood of cheap imports

Sugarcane transporter driving to Chemelil Milling Factory. [Denish Ochieng, Standard]

Kenya is yet to put a request to the Common Market for Eastern and Southern Africa (Comesa) for an extension of a sugar import moratorium ahead of expiry of the safeguards.

The country got a 12-month extension last year and that will end in February 2021, sounding the death knell for many local sugar millers that are already in crisis.

While giving the extension, the eighth since Kenya sought protection for its industry, Comesa directed the government to accelerate the sale of its sugar factories so as to have them run competitively.

Failure by Kenya to seek an extension is likely to see cheap sugar from the region flood the local market.

Last year, Kenya’s sugar production stood at about 440,000 tonnes against a consumption of about 1.1 million tonnes, meaning that the country has a deficit.

Using the safeguards, Kenya – simply because it cannot compete with other Comesa states on duty-free terms – has limited imports from the countries to a maximum of 350,000 tonnes every year.

If the moratorium is not sought, Comesa members will be free to export to Kenya sugar that could cost 40 per cent less than what is on the shelves.

While seeking the extension, Kenya said it was already in the process of privatising State-owned millers, adopting a cane-pricing formula and implementing an energy policy to facilitate co-generation of electricity and ethanol production.

Agriculture Principal Secretary Hamadi Boga told Weekend Business that there was progress in the process, but blamed court cases for halting the leasing of the public factories.

“We have made progress in some areas in the sector but the challenge in the leasing of the five State-owned sugar mills are court cases that have frustrated it. We have six cases now and we can’t move,” he said.

Last week, the High Court in Eldoret suspended the government’s plan to lease out three of the mills pending a determination of a case filed by 50 farmers.

“Pending hearing and determination of the application inter-parties, the respondent should not lease the three State-owned sugar mills, namely Chemelil Sugar company, Muhoroni Sugar and Miwani Sugar as alluded to in the Gazette Notice no 5473 of 2020 and 6437 of 2020,” read the ruling by Justice S M Githinji.

The farmers alleged contravention of the Constitution in the appointment of members of the interim management committee on the leasing of the mills. Twenty-nine companies expressed interest in leasing the mills after bids closed on August 3, 2020.