Sugar workers warn on State millers sale

Sugarcane harvesting. Workers in the sugar industry have raised concerns that the planned privatisation of millers may not be enough for the sector to sharpen its competitive edge in light of planned market liberalisation next year. Photo/FILE  Nation Media Group

By RAMENYA GIBENDI

In Summary

• Kenya’s cost of producing sugar, at about $600 per tonne of cane is far above the world average of between $300 and $400

Workers in the sugar industry have raised concerns that the planned privatisation of millers may not be enough for the sector to sharpen its competitive edge in light of planned market liberalisation next year.

Safeguards protecting Kenya’s sugar industry from cheap imports from the Common Market for East and South Africa (Comesa) are expected to expire in March 2014.

The Kenya Union of Sugar Plantation and Allied Workers secretary general, Mr Francis Wangara, warns that the newly privatised companies will not have enough time to develop the capacity to compete at the same level as other sugar millers in the Comesa region.

“It has taken too long to privatise state-owned millers in the industry and the time left is not enough for them to adapt,” said Mr Wangara.

Last year, the Cabinet approved the privatisation of the six millers in readiness for the expiry of the safeguards.

Last week, in a newspaper notice, the government stated that the sale of shares in the companies was on track.

When the safeguards were first granted ten years ago, it was stipulated that Kenya would increase the competitiveness of sugar industry through privatisation and product diversification.

However, the country has repeatedly extended the safeguards while putting-off the privatisation process.

Mr Wangara, who represents about 350,000 members, says the government should now find alternative ways of improving the sugar industry’s competitiveness through tax waivers and subsidised farm inputs.

Kenya’s cost of producing sugar, at about $600 per tonne of cane is far above the world average of between $300 and $400.

This high cost of producing cane is turn reflected in the retail-pricing of the product while millers working with smaller margins opt to pay farmers poorly.

However, the industry regulator, Kenya Sugar Board (KSB),  maintains that the privatisation process is on course and that the sugar industry should be ready for the expiry of the safeguards