Millers, farmers locked in sugarcane prices standoff

Consumers face higher sugar prices as farmers and millers wait to see who will blink first in a dispute over the price of sugarcane.

Millers are threatening to shut their plants from today after a court thwarted a government's decision to cut cane prices to Sh5,100 per tonne.

Farmers, who went to court and obtained orders retaining cane prices at Sh5,900, accuse millers of engaging in economic sabotage and blackmailing the government with their threat to shut down operations.

The price cut by the Sugar Pricing Committee was to be effected from April 8 before the court halted the price change.

The Kenya Sugar Manufacturers Association (Kesma) on Thursday faulted the decision to keep the higher farmers pay, saying it was unsustainable.

Kesma chairman Jayantilal Patel added that the court directive infringes on the contractual arrangements between the millers and farmers.

“The new (higher) sugarcane prices are causing high disruption and interference of our business operations,” he said.

“As millers, our options are very clear, we will either operate at the price of Sh5,100 per tonne until the matter in court is determined or close the sugar plants until the case comes to an end,” added Mr Patel.

Shutting operations

He claimed that shutting operations will lead to a loss of 30,000 jobs of workers and Sh2 billion per month in loss of revenue to the National Treasury.

Kenya Sugarcane Growers Association (Kesga) secretary- general Richard Ogendo faulted the Sugar Pricing Committee for deriving the sugarcane pricing formula from gross sugar prices at the factory level.

“It is unfair. Some of the companies also extract products like ethanol, biogas, electricity, briskets and fertiliser,” he said.

Kenya Association of Sugar and Allied Products chairman Charles Atyang’ challenged the formula, saying it failed to protect the interests of cane farmers and jeopardised the stability of the local sugar industry.

“The Committee also failed to take into account that the farmers’ production costs have been on the rise,” he stated in his affidavit.

 Mr Ogendo accused the millers of manipulating the gross prices of sugar to underpay farmers for their deliveries.

“The millers should provide their cost of production in order for the Agriculture and Food Authority to come up with a fair pricing for the benefit of all the players,” he said.

He also called on the government to operationalise cane testing units to pay farmers based on sucrose content as opposed to weight.

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