Millers are paying cane farmers higher prices than recommended by a committee to boost scarce supplies.
The Sugarcane Pricing Committee (SCPC), under the Agriculture and Food Authority (AFA), reduced cane prices from Sh4,320 per tonne to Sh4,050 effective August, after the price of the sweetener dropped by Sh400 per 50kg bag last month.
Solomon Odera, head of the Sugar Directorate, said millers were still paying farmers the earlier price.
“The committee, whose mandate is to determine the price of cane every month, set the minimum at Sh4,050 but millers are still paying a premium to get raw material from farmers,” said Mr Odera.
The SCPC, formed last August, is tasked with recommending the minimum monthly sugarcane price.
This is a departure from the past where millers were at liberty to set prices.
Major growing zones are facing a cane shortage following a severe drought, with the Sugar Directorate estimating a shortage of 1.9 million tonnes at the end of June.
AFA expects the situation to normalise in the next 12 months and has allowed millers to import 150,000 tonnes of sugar to cover for the deficit.
Sugar production in the first six months of the year dropped 40 per cent compared with the same period in 2016, according to the directorate.
Data from the directory indicates that production between January and June stood at 202,023 tonnes down from 337,826 realised in the same period last year.
The low production forced the directorate to increase imports to contain soaring sugar prices which hit a record Sh400 per two kilogramme packet. The price has since stabilised to Sh250 per two kilo packet.