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Sector players read malice in sugar shortage

Friday January 24 2020

Sugarcane

Head of Sugar Directorate Solomon Odera informs members of the National Assembly about the state of the sector, on July 6, 2018. Farmers say cartels are destroying the industry. PHOTO | FILE | NATION MEDIA GROUP 

VICTOR RABALLA
By VICTOR RABALLA
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RUTH MBULA
By RUTH MBULA
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Sugar millers and cane growers have raised the alarm over an attempt to create an artificial shortage of the sweetener for the benefit of cartels in the industry.

They allege that the current shortage of the commodity and surge in sugar prices is meant to force importation into the country in an ostensible bid to stabilise retail prices.

The millers, while dismissing claims by Head of Sugar Directorate Solomon Odera that the sugar prices had shot up by Sh30 for a 2kg pack, said it was absurd that this was happening when the sugar prices had gone down.

“We find the claim to be untrue and misleading to the Kenyan public,” said West Kenya Sugar Company Managing Director Tejveer Rai.

He also noted that the price of sugar fell by 13 per cent between December 2018 and December 2019, according to the Kenya National Bureau of Statistics.

IMPACT OF IMPORTS

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Mr Rai, in a statement, indicated that sugar prices have gone down by nearly eight per cent in the past 20 days of January 2020.

Despite a marginal decrease in ex-factory sugar prices, he pointed out that there had been no significant change in retail prices in January 2020 as the shelf price in the leading outlets ranged between Sh115 and Sh120 per kilogramme.

“At the beginning of the year, a 50kg bag was selling ex-factory at Sh4,442 and as at January 21, 2020, the price had dropped to Sh4,100.

If the millers were to go by the current prices of sugar, he noted, the cane prices would fall from the current Sh3,900 per tonne to Sh3,592 per tonne.

“The purported increment in sugar prices intends to create an artificial shortage that may lead to importation of sugar,” Mr Rai.

He cautioned that the impact of the imports has and will continue to severely affect the farmers as the price of sugarcane is linked to the ex-factory price.

UNDERHAND PRACTICES

His sentiments were echoed by Transmara Sugar Company Chief Executive Officer Rajesh Bhargava, who raised concerns over the flooding of the market with imports from non-Common Market for Eastern and Southern Africa (Comesa) countries.

“At this rate, the importers are going to kill the local market and it is going to be uneconomical for us to run our businesses, pay our workers and farmers who supply us with the critical raw material,” he told the Nation.

To steer the turbulent sugar sector out of the current crisis, Mr Bhargava called on the government to check fraudulent import practices.

“In the recent State of the Nation address, President Uhuru Kenyatta reiterated the need to support agriculture, which is part of the Big Four agenda,” he said.

The country’s consumption of sugar has been soaring due to an increase in usage by domestic, industrial and food service sub-sectors.

The millers spoke as cane farmers also disputed reports of a sugar shortage in the country, terming the alleged shortage artificial.

Cane farmers also claim it is a ploy to allow more cheap imports into an already flooded Kenyan market.

REGULATE SECTOR

Speaking to the Nation, the farmers said they were in talks with the Agriculture and Food Authority to see to it that the imports are regulated and that no new licences are issued to importing companies.

The growers, under the Kenya Federation of Sugarcane Farmers and the Kenya National Alliance of Sugarcane Farmers Organisation, said it would be a big mistake to allow imports yet there is a lot of mature cane in the farms.

The growers blamed the government for not being keen to ensure sanity prevails in the sugar sector.

Kenya Federation of Sugarcane Farmers national treasurer Stephen Narupa said more imports will paralyse the already ailing sector, where most State-owned mills are cash-strapped.

“Even private mills are struggling to stay afloat. The cost of production is high, yet millers have to compete with cheap imports, which are already in the market,” said Mr Narupa.

He claimed the government is creating leeway for sugar barons and cartels in the industry to thrive at the expense of farmers.