Hope as recovery roadmap laid for ailing sugar industry

 

Kisumu Governor Anyang’ Nyong’o (Left), his Migori Counterpart Okoth Obado (Center) and Kericho Deputy Governor Susan Kikwai (Right) during the Sugar consultative meeting that was held at the Royal Swiss in Kisumu [Phillip Orwa, Standard]

The Government and key players have unveiled a road-map to help resuscitate the sugar industry whose financial mess has left thousands jobless and farmers impoverished.

A delegation of government officials led by Agriculture, Livestock and Fisheries Cabinet Secretary Willy Bett met governors, policy stakeholders, millers and farmers in Kisumu at a two-day conference meant to find solutions to the ailing sector.

Drawbacks that have seen Kenya fail to meet conditions laid by the Common Market for Eastern and Southern Africa (Comesa) before safeguards protecting its market from quota imports from the bloc were identified as the main challenges facing the industry.

A presentation by the head of Sugar Directorate Solomon Odera revealed high debt portfolios, high cost of production, lack of revenue stream diversification and high cost of farm inputs were among the main issues bedeviling the industry which supports nearly 10 million Kenyans.

Mr Bett termed the summit a timely and necessary mitigation to the sector which he described “facing the biggest and most complicated problems” and one whose future was bleak unless solutions arose from the summit.

Cheap imports

“We have previously pumped into the sector more money than any other sector and employed strategies that never worked. This consultative forum offers us the only hope to re-look our approach models,” said the CS.

Suspicion between the two levels of government, farmers and millers as well as with other stakeholders, he said was another impediment in arriving at practical solutions.

Migori Governor Okoth Obado, who chairs the Council of Governors Agriculture Committee, said collaboration was the key to saving the once thriving industry.

“Demand for sugar continues to outstrip the supply, necessitating the need for cheap imports. This in turn has very negative effects on the grassroots stakeholder – the farmer – who is depressed when prices go down,” he said

He said little has been done on the recommended reforms before privatising five State owned sugar millers – Sony, Chemelil, Muhoroni, Miwani and Trans Nzoia.

“The Council of Governors is advocating privatisation that is done within the realms of the Constitution and in the spirit of devolution which makes land and agriculture functions of the county government,” said the governor who also represented CoG Chairman Josephat Nanok, Turkana Governor.

Mr Obado, also the former director of the defunct Kenya Sugar Board, said the cane pricing formula should be implemented strictly to ensure farmers also benefit when market prices are good. The pricing formula compels millers to adjust farm-gate prices for farmers in relation to the prevailing market prices.

He said Kenya was importing sugar from countries that have heavily subsidised their farmers and should follow in their steps in supporting local farmers in order to lock out cheap imports.

His sentiments were shared by sugar Directorate boss Odera who said that if the companies milled at between 80 to 90 per cent of their installed capacities, the current demand of 500,000 metric tonnes would be met and an equal quantity of surplus left for export.

State owned millers across the country are crushing at an average 46 per cent their capacities due to worn out equipment, lack of cane and poor cane varieties. Mumias, the largest single such miller with capacity of nearly 8,000 tonnes a day has only been operating at 12 per cent its capacity.

The solution, he said lay in restructuring of the millers through privatisation and modernisation. He also proposed the establishment of a Cane Development fund (to replace the scrapped Sugar Development Levy).

“If we are going to adopt the farm-gate pricing based sucrose content, then there is need for the new better varieties introduced to be taken up by farmers,” he said.