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Production cost and global tariffs main challenges facing sugar sector

By Biketi Kikechi | June 16th 2019

Corruption has over the years been the biggest challenge facing sugarcane farmers in Kenya, with the high cost of production being the other big issue never tackled.

In countries like Mauritius, South Africa and Ethiopia, the answer to cutting costs was found in development of early maturing varieties through Research and Development strategies.

Here, farmers were not sure what roles and programmes sugar research stations like Kenya Sugar Research Foundation, now part of Kenya Agricultural and Livestock Research Organisation, play.

They told the Kenya National Alliance of Sugarcane Organisation Task Force that they have had the same varieties like CO 425900 and others for decades and wondered when they will get new and improved seed.

“Some work seems to have been done and appropriate varieties developed for the emerging highland zones in Western and North Rift Valley but they still need more information about the growth patterns,” said KNAFSO Chairman Saulo Busolo.

Information on new varieties needs to be shared with factories, some accused by farmers of bringing lowland operation rules about the age and growth of cane to this new environment.

Age of harvest is one of the most important factors affecting sugarcane productivity because of varietal differences in growth and maturity rates that must be considered when harvesting decisions are made.

Research is important because environmental conditions, management practices and pest pressure influence the optimal harvest age of sugar due to changing climatic conditions.

Climate elements include temperature, solar radiation, relative humidity and total rainfall variables that account for a major variation in harvest age among sugarcane growing countries. Some sugarcane varieties developed by the South African Sugarcane Research Institute (SASRI) exhibit pronounced differences in their suitability to different harvest ages, with faster maturing varieties being more popular.

Cane breeding and biochemistry have yielded early maturing seeds in Mauritius where advances in sugar science technology has been going on since 1953 when Mauritius Sugar Industry Research Institute was opened.

Some 52 varieties produced there locally and 12 foreign ones have been evaluated for adoption to local conditions for early, middle and late season harvest. Farmers interviewed by this writer in the South West of the Island in 2016 said the seven-month maturing M703/89, for example, is a popular early ripening high yielding variety released in 2004 for early and midseason harvest.

The global market is oversupplied with sugar, a situation that will continue for the foreseeable future because global production is now 185 million tonnes for 2019. India and Brazil are the largest producers, with 35 and 30 million tonnes, respectively, while the global demand stands at 176 tonnes.

Brazil is the largest exporter and has up to 30 million tonnes to export each year, which is 30 years’ worth of Kenya’s demand.

It is estimated by global sugar export monitoring firms that about 50 million tonnes is sitting in ships and warehouses just waiting to land in ports such as Mombasa or Kismayu to get a share of the market.

The KNAFSO report says global prices are at record low, a 10-year record slump recorded in August 2018 when sugar sold at an equivalent of Sh25,000 per ton or Sh25 per kilo when delivered in Nairobi. Domestic ex-factory prices in Kenya are currently selling at Sh80 per kilo. Government policy decisions regarding taxes and duties, import tariffs, excise duty, and VAT has a huge impact on the domestic market.

The KAFSO Task Force report also said 700,000 tonnes imported duty free in 2017 is still in the market, which is oversupplied.

“Enforcement of tax is lax and imported sugar reaches the market at well below domestic market prices leaving huge sums of money to be divided between importers and government officials – police and KRA officials among others,” says the report.

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