Economy

Sugar factories roar to life again on December 1


cane

Drivers deliver sugarcane to a factory in western Kenya. FILE photo | nmg

Sugar millers are set to be re-opened on December 1 more than four months after they were ordered shut after most were accused of harvesting immature cane.

It is good news for sugar cane farmers who have been hit by the August suspension by the Agriculture and Food Authority (Afa, the body that regulates and promotes food crops in the country.

“Yes. This is the plan (to lift the suspension on December 1),” said Willis Audi, director general of Afa when contacted by the Business Daily on its plans to lift the suspension.

Re-opening of the factories was initially set for November 1 but this was delayed to next month.

Kenya has 16 sugar factories out of which five – Miwani, Chemelil, Muhoroni (under receivership), Nzoia, and South Nyanza — are owned by the government, which also has a stake in Mumias Sugar which is now under receivership. Private milling factories include tycoon Jaswant Rai’s West Kenya Sugar Company, West Kenya – Olepito Sugar Unit, Sukari Sugar Industries.

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Other private millers include Butali Sugar, Kwale International Sugar, Busia Sugar Industry, Soin Sugar Company, and Miwani Sugar.

The millers have been facing a severe shortage of cane this year having largely depleted stocks of mature crop that even forced some millers to crush immature cane.

Consequently, cane deliveries to the 15 sugar millers in the first eight months dropped by 26.6 percent to 4,112.31 tonnes from 5,600.97 tonnes in August last year, figures from the national statistician shows. The shortage of cane has also resulted in high retail prices of sugar due to a reduced supply of the sweetener as most of the millers remain closed.

Output of sugar from local millers has dropped by over a third in eight months due to a shortage of cane, with the scarcity sharply pushing prices to a record high.

A total of 357,308 tonnes of sugar were produced in the first eight months compared to 527,309 tonnes in the same period last year. This has forced the administration of President William Ruto to resort to increased importation of sugar to plug the deficit.

Speaking at State House in August, President Ruto said the government had issued licenses for traders to import sugar from outside the Common Market for Eastern and Southern Africa (Comesa) after stocks of the product ran out in the region.

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“Now that we have ascertained that there isn’t sufficient supply of sugar in the Comesa area, we are looking elsewhere around the world and we expect fresh stocks of sugar to come into the country within the next one or two weeks,” said the head of state.

The Cabinet approved a plan to lease the five struggling public sugar companies to private investors even as it okayed the write-off of a Sh117 billion debt they owe.

They owe the money in bank loans, tax arrears, and penalties, farmers’ and employees’ dues. They owe banks Sh65 billion, Sh50 billion in taxes, and nearly Sh2 billion in farmers’ dues.

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