Muhoroni sells sugar directly to retailers to offset debt

Muhoroni Sugar Company has put in place drastic measures to ease its Sh500 million debt burden, while keeping the institution afloat. The measures include selling sugar in smaller quantities to retailers and wholesalers. The current plan enables the factory to dispose the commodity to small-scale businesses.

This is contrary to previous strategies where the company relied on distributors and wholesalers to dispose stocks. With the measures in place, the company has managed to sell between 50 and 100 50kg bags of the commodity daily.

“Though the quantity is small, we are managing to ease our stores to create more room for further production,’’ said the company’s General Manager Anderson Oloo.  “A team from the marketing department has been dispatched to similar companies in the region for learning purposes.”

Pricing policy

Farmers have welcomed the new measures, saying it augurs well for the industry since they will ensure all debts owed to them are paid on time. Through their representatives, the farmers challenged the Kenya Sugar Board (KSB) – a regulating body to amend its policy on pricing and allow the commodity to sell at market price. Currently, KSB requires the State-owned mills sell a 50kg bag of sugar at Sh3,600 while imported sugar is sold as low as Sh2, 600.

This makes it hard for the commodity to effectively compete with imported product.  ‘‘We want our sales to be dictated by the law of demand and supply. The Government should let the market forces prevail, otherwise we will continue to suffer,” said Kenya Sugarcane Growers’ Association Secretary General Richard Ogendo.

 The Government approved writing off of the loans through the 10th Parliament, but to date, there is no official communication to factories forcing them to continue charging farmers such levies. “The Government should also write off loans owed to outgrowers’ companies,’’ said Ogendo. “Industry-wise, they are owed Sh2 billion. The amount is so huge and needs to be written off. “Currently, Muhoroni has 30, 000 tonnes of sugar worth Sh325 million in stocks while it owes farmers Sh270 million since February.

The company also owes transporters Sh28 million while it owes suppliers of spare parts Sh370 million.  Last week, Oloo raised an alarm saying the company is in dire need of a Sh500 million bail-out package to pay its debtors.