It’s the poor cane farmer who will bear the brunt of imports
A farmer sorts out his dry sugarcane at a farm in Yiro Village in Siaya County on February 10, 2016. PHOTO | TONNY OMONDI | NATION MEDIA GROUP
What you need to know:
- What is being imported from Brazil is bulk raw sugar which is unfit for human consumption until it is processed.
- Greedy sugar barons have taken full advantage of a duty-free window granted to them by the government in May to bring in huge volumes of sugar on an unprecedented scale.
- MV Goergios, carrying 39,600 tonnes, sailed from Paranagua last week headed for Mombasa.
- The intention of the greedy merchants is to sell the raw sugar to the open market for brown sugar.
Between now and the end of the month, the country is going to be flooded with cheap sugar from Brazil as never happened before in the history of this country.
How and where will the sugarcane farmer sell his produce?
Greedy sugar barons have taken full advantage of a duty-free window granted to them by the government in May to bring in huge volumes of sugar on an unprecedented scale.
To make matters worse, what is being imported from Brazil is bulk raw sugar, which -- as we all know -- is unfit for human consumption until it is processed.
Which begs the question: Where is this sugar being taken? Since when did we acquire the capacity to process and refine the 100,000 tons of raw sugar the greedy merchants are importing.
RAW SUGAR
Consider the following facts from publicly available shipping information: Right now, a ship by the name, MV IVS Tembe, loaded with 34, 100 tonnes of raw sugar is sailing towards Mombasa.
The estimated time of arrival of this ship is August 3.
Secondly, MV Goergios, carrying 39,600 tonnes, sailed from Paranagua last week headed for Mombasa.
At an estimated voyage time of 22 days, this vessel’s estimated arrival time in Mombasa is August 16.
Thirdly, a vessel by the name MV King Coffee, carrying 30 tonnes, is expected to arrive in Mombasa by August 20.
A fourth ship, MV Western Baltic, carrying 34,500 tonnes of raw bulk sugar is expected arrive in Mombasa by August 18.
A fifth vessel, MV Iliana, carrying 40,000 tonnes, is expected to arrive in Mombasa, on August 19.
Clearly, in terms of volume and time frame, the scale is unprecedented. Mombasa Island could sink under the weight of raw bulk sugar.
HUGE IMPORTS
And, the logistics and handling the huge imports between now and the end of the month will itself be major nightmare because raw bulk sugar has to be put into bags.
What are the policy implications? First, let us wait and see how and whether these greedy merchants will manage to circumvent the rules and procedures governing the issue of health certification.
Mind you, raw bulk sugar is handled in a very unhygienic way.
The commodity comes in bulk, very much like sand being transported by tippers to a construction site.
This is because the assumption is that the stuff has to be subjected to further processing before it can be consumed by human beings.
REFINED SUGAR
Kenya did not have capacity to refine raw sugar until the other day, when Kibos Sugar Company came out to announce that it has built capacity to produce refined sugar.
Indeed, Kibos has been lobbying the government aggressively to tweak duties on refined sugar so as to force local manufacturers using the commodity to buy from them.
But the scale of the imports of raw sugar coming right now is way beyond the capacity of Kibos.
You have to be naïve to the extreme to believe that the greedy merchants are bringing in the raw sugar to sell it to a refinery that has yet to put even one kilogramme of refined sugar into the market.
Clearly, the intention of the greedy merchants is to sell the stuff to the open market for brown sugar.
Indeed, the deluge of Brazilian raw sugar right now is bound to disrupt the sugar supply chain in major ways.
COMESA
Mark you, the Brazilian raw sugar will be landing in Mombasa at about Sh2,500 per 50kg bag compared to a price of Sh4,500 for a 50kg bag of brown sugar for human consumption imported from Comesa.
If you do the maths and calculate these prices against the money local millers are paying to the farmer for a ton of sugarcane, the inescapable conclusion you will arrive at is that the price for cane has completely collapsed.
It is the poor cane farmer who will ultimately bear the brunt of the market disruption caused by imports of bulk raw sugar from Brazil.
Indeed, when you scrutinise the names of importers on the shipping documents, it is clear that some of the importers of the Brazilian sugar are also players on the milling side.
The sugar business is dominated by this clique of barons operating out of Nairobi and Mombasa. Influential and politically well- connected, the merchants reap billions from the trade while farmers continue languish in poverty.
