Politics and policy
By GERALD ANDAE
Sugar firms are bracing themselves for a cane shortage on the back of dwindling production.
A census by the Kenya Sugar Board (KSB) indicates that
yields have dropped by 2.5 per cent despite increased investments in
cane development by millers.
“The cane available for crushing in the next
financial year will be 7,574,850 tonnes against a requirement of
8,302,000 tonnes. The industry is thus projected to have a deficit cane
supply,” says the regulator in a report.
This news comes hot on the heels of another report
indicating that most processors have cleared their stocks to begin
normal operations. The overall stock held in factories has dropped to
just 13,000 tonnes in July compared to 42,000 tonnes in February.
The KSB has linked the looming shortage to delayed
payments from millers and poor returns that have forced some farmers to
abandon the business altogether.
Millers in the country owe farmers more than Sh1 billion in unsettled deliveries. Mumias leads the pack with more than Sh400 million.
The KSB report adds that farmers’ earnings from
cane has also reduced from an average of Sh3,900 per tonne last year, to
Sh3,200 this year in tandem with drop in ex-factory price.
Mr Richard Ogendo, chairperson of the Sugar Growers
Association says the figure issued by the regulator is conservative as
growers have recorded more than 20 per cent drop in their incomes.
“There was poor maintenance of sugar cane for a
whole year as a result of delayed payment by millers, farmers were
forced to abandon good husbandry as they did not have funds for the
exercise,” said Mr Ogendo.
The amount of cane milled rose by 7.6 per cent from
5,690,128.73 tonnes in the 2012/13 financial year to a total of
6,122,427.25 tonnes in the last season.
The growth pushed up sugar production by 38 per
cent to 654,209 tonnes, the first time millers ever crossed the
600,000-tonne mark.
The sugar sector has over the past years had a number of challenges that include illegal cheap imports.
The sugar sector has over the past years had a number of challenges that include illegal cheap imports.
Mumias, the country’s largest miller, has been
making losses from 2012 with its management blaming the dismal
performance on scarcity due to cane poaching.
In the six months to December 2013, it reported a
loss of Sh73.4 million, an improvement from the Sh1.67 billion loss it
had in the full-year to June 2013.
In March, Kenya was given another year extension by
the Comesa secretariat to raise competitiveness of its sugar industry
before it is exposed to competition from other member states.
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