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- Jul 29, 2006
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State blames Mumias for sugar shortage
Floodgates have been opened for sugar barons to mint millions of shillings after the Government allowed for importation of the sweetener from countries outside the Common Market for Eastern and Southern Africa (Comesa).
The Agriculture and Food Authority (AFA) told Weekend Business that the move is a last resort aimed at neutralising the effects of the failure by Mumias Sugar Company to turn itself around.
The sugar miller, which once controlled more than half of the market was in April shut down for three months and is sourcing for a new managing director. It has emerged, in the last 48 hours, that Australian Errol Johnston will not be seeking a renewal of his term.
Huge shortfall
Kenya produces 600,000 metric tones (MT) of sugar per year against a demand of 870,00 MT. This deficit is usually filled by controlled importation from Comesa countries but a ravaging drought in Africa has created a huge shortfall.
“The sugar shortage is also being experienced in the traditional sugarcane producing regions within the Comesa block due to drought,” AFA Acting Director General Alfred Busolo told Weekend Business. “There is also no sugar in the East African Community (EAC) which has caused a hike in prices. The only way we can reduce this is by increasing quantities,” he said.
The price of sugar has soared to levels last seen in 2012 with consumers being restricted to purchasing just two packets from some supermarkets such as Nakumatt while some major brands have disappeared from the shelves. Yesterday, a two kilogramme packet of Mumias Sugar was retailing at Sh390 in major supermarkets, up from Sh330 in February while Sony Sugar was retailing at Sh380 up from Sh300 two months ago.
Some 40,000 MT of the commodity imported from Comesa will arrive in Kenya in two weeks while another 60,000 MT will arrive in the next two months, said AFA.
This will leave a deficit of more than 100,000 MT that will be imported from non-Comesa countries where production is way cheaper but AFA says this would not bring the prices down to the original levels. “Sugarcane prices are high all over the region and in Uganda it is $850 per metric tone,” said Busolo.
“However we will allow importation of a maximum 2,000 tonnes per importer in order to prevent some importers from gaining unfairly due to the shortage,” he assured.
AFA has licensed 162 companies to import sugar. The cost of a tonne of sugar from Comesa rose from $500 (Sh50,000) in March to $750 (Sh75,000) currently, making the imports more expensive than the locally manufactured sugar, for the first time. As a result, there are concerns that the current shortfall of sugar has been caused by cartels who want to capitalise on the situation as it happens every election season. Also of concern is why the Government has been pushing for extensions of a moratorium that prevents flooding of cheaper sugar from the Comesa region in order to protect its farmers from competition despite declining yields.
Before it closed, Mumias was already facing an acute shortage of cane forcing it to operate at 30 percent of its installed capacity. The volume of sugarcane crushed by the miller had dropped by 45 per cent to 319,746 tonnes from 581,541 tonnes.
Nzoia Sugar Company, which is one of the country’s leading millers is currently milling less than 2,000 tonnes per day against an installed capacity of 3,000 tonnes.
Privatisation laws
Overall, recent data shows that by the end of last week, locally produced sugar stocks declined to as low as 5,000 tonnes against the required 9,000 tonnes mainly due to poor performance of local millers. A plan by the Government to privatise five of its millers as part of sorting out the mess has stalled for three years as stakeholders failed to agree on a number of issues.
The latest in this sugar drama is a demand by governors to amend privatisation laws and allow farmers and county governments assume the running of sugar factories in their jurisdictions.
Migori Governor Okoth Obado, who is also the Council of Governors’ agriculture committee chairman, said any move to privatise millers without involving counties will be counterproductive.
“The national Government has been talking about privatising sugar millers, including Sony Sugar in my county. But in my view, I would like Sony to be left to Migori County farmers or the county Government to run so that we can turn it around,” he said.
Chanzo: Standard Media
Floodgates have been opened for sugar barons to mint millions of shillings after the Government allowed for importation of the sweetener from countries outside the Common Market for Eastern and Southern Africa (Comesa).
The Agriculture and Food Authority (AFA) told Weekend Business that the move is a last resort aimed at neutralising the effects of the failure by Mumias Sugar Company to turn itself around.
The sugar miller, which once controlled more than half of the market was in April shut down for three months and is sourcing for a new managing director. It has emerged, in the last 48 hours, that Australian Errol Johnston will not be seeking a renewal of his term.
Huge shortfall
Kenya produces 600,000 metric tones (MT) of sugar per year against a demand of 870,00 MT. This deficit is usually filled by controlled importation from Comesa countries but a ravaging drought in Africa has created a huge shortfall.
“The sugar shortage is also being experienced in the traditional sugarcane producing regions within the Comesa block due to drought,” AFA Acting Director General Alfred Busolo told Weekend Business. “There is also no sugar in the East African Community (EAC) which has caused a hike in prices. The only way we can reduce this is by increasing quantities,” he said.
The price of sugar has soared to levels last seen in 2012 with consumers being restricted to purchasing just two packets from some supermarkets such as Nakumatt while some major brands have disappeared from the shelves. Yesterday, a two kilogramme packet of Mumias Sugar was retailing at Sh390 in major supermarkets, up from Sh330 in February while Sony Sugar was retailing at Sh380 up from Sh300 two months ago.
Some 40,000 MT of the commodity imported from Comesa will arrive in Kenya in two weeks while another 60,000 MT will arrive in the next two months, said AFA.
This will leave a deficit of more than 100,000 MT that will be imported from non-Comesa countries where production is way cheaper but AFA says this would not bring the prices down to the original levels. “Sugarcane prices are high all over the region and in Uganda it is $850 per metric tone,” said Busolo.
“However we will allow importation of a maximum 2,000 tonnes per importer in order to prevent some importers from gaining unfairly due to the shortage,” he assured.
AFA has licensed 162 companies to import sugar. The cost of a tonne of sugar from Comesa rose from $500 (Sh50,000) in March to $750 (Sh75,000) currently, making the imports more expensive than the locally manufactured sugar, for the first time. As a result, there are concerns that the current shortfall of sugar has been caused by cartels who want to capitalise on the situation as it happens every election season. Also of concern is why the Government has been pushing for extensions of a moratorium that prevents flooding of cheaper sugar from the Comesa region in order to protect its farmers from competition despite declining yields.
Before it closed, Mumias was already facing an acute shortage of cane forcing it to operate at 30 percent of its installed capacity. The volume of sugarcane crushed by the miller had dropped by 45 per cent to 319,746 tonnes from 581,541 tonnes.
Nzoia Sugar Company, which is one of the country’s leading millers is currently milling less than 2,000 tonnes per day against an installed capacity of 3,000 tonnes.
Privatisation laws
Overall, recent data shows that by the end of last week, locally produced sugar stocks declined to as low as 5,000 tonnes against the required 9,000 tonnes mainly due to poor performance of local millers. A plan by the Government to privatise five of its millers as part of sorting out the mess has stalled for three years as stakeholders failed to agree on a number of issues.
The latest in this sugar drama is a demand by governors to amend privatisation laws and allow farmers and county governments assume the running of sugar factories in their jurisdictions.
Migori Governor Okoth Obado, who is also the Council of Governors’ agriculture committee chairman, said any move to privatise millers without involving counties will be counterproductive.
“The national Government has been talking about privatising sugar millers, including Sony Sugar in my county. But in my view, I would like Sony to be left to Migori County farmers or the county Government to run so that we can turn it around,” he said.
Chanzo: Standard Media
