Report blames State for sugar sector collapse

Sugarcane farmers protest in Kisumu in  2019. The farmers were against composition of the sugar task force and zoning.

Photo credit: File | Nation Media Group

 The government is entirely responsible for problems facing the sugar industry, according to the Kenya Association of Manufacturer’s (KAM) Sugar Sub-Sector report.

The report lays blame on the government and puts the responsibility of reviving the setcor on it.

In its 2021-2025 Strategic Plan launched last week, KAM’s Sugar Sub-Sector team stated that to get the industry back to its feet, the government would have to ensure there was an effective regulatory framework and oversight mechanism for coordinating imports and exports.

It called for stringent enforcement mechanisms to save the industry from sugar coming from Comesa and East African Community regions, as well as other parts of the world, through charging the required duty.

KAM also recommended that the government needs to curb sugar smuggling by enhancing surveillance, finalise and publish the Sugar Act, and gazette proper sugar regulations.

“Kenya Bureau of Standards should undertake its role in enforcing regulations on repackaging of both locally produced and imported sugar. National and county governments should take up their respective responsibilities in infrastructure development and maintenance as provided for in the constitution,” the association recommends.

Food security 

Kenya currently has 16 sugar factories with a combined processing capacity of 56,800 tonnes of cane per day, out of which only 12 are in operation, five of them public-owned and seven privately owned.

“The industry contributes to food security, employment creation, regional development and improved livelihoods for more than eight million Kenyans,” KAM notes.

But despite this, the industry has continued to face many challenges that have crippled operations of many factories, especially those publicly-owned.

Excessive importation of sugar has been a big concern among local players, arguing that it has always led to an oversupply and glut in the market, adversely affecting local demand.

Stakeholders blame weakness in regulation of the industry due to lack of a proper policy, arguing that the current regulations have are not implementable and have hindered growth of the sector.

“A sizable amount of uncustomed sugar is smuggled into the country through the porous borders. This causes distortions in the market, compromises sugar quality and leads to loss of government revenue, and also impacts the sugar sub-sector negatively,” the association observed.

It also blamed both levels of government for failing to maintain access roads in sugar growing regions, a factor they said has led to delivery time to factories being longer, increasing in-transit losses and denying the local industry competitiveness.

“There are regulatory provisions on standards of sugar packaging. However, enforcement still remains a major challenge, leading to the retailing of sugar whose quality and origin is unknown. This encourages smuggling and is very dangerous for health of the consumers,” KAM’s sugar sub-sector chair, Joyce Opondo, said.

Public-owned millers have been facing more challenges, with three of them – Miwani, Muhoroni and Mumias Sugar Companies – currently under receivership. Mumias Sugar is the largest, with a production capacity of 8,400 tonnes a day.

The government has owned up to being unable to manage the public-owned sugar factories and has insisted on leasing the five poorly performing millers to private players.

“The five firms are not doing well, they are not able to pay farmers, salaries for workers and estate farming that used to happen around them is no longer happening. So there is serious poverty and disaffection among sugar cane farmers and they have been asking the government to find a solution for them,” Agriculture CS Peter Munya said late last year, as he intimated that the government was considering divesting from the sugar industry.

Private sector  

When he received the Sugar Task force report in February last year, President Uhuru Kenyatta also stated that the government did not need to do business and was going to leave it to the private sector to run the millers.

“The private sector will do business while ours is to support farmers’ interests,” the President stated.

Last week, Labour Chief Administrative Secretary Lawrence Karanja told stakeholders that the government was now keen on implementing recommendations from the sugar task force, as part of its role to reviving the sector.

KAM chairman Mucai Kunyiha noted that all the challenges facing the sugar industry are responsible for the sector being unable to meet the market demand.

“Limited research and development, excess sugar importation, weak regulatory mechanisms and sugar dumping hinder the industry’s effectiveness as an economic and social catalyst,” Mr Kunyiha said.

Whether the association’s strategy, or the government’s implementation of the sugar task force’s report recommendations will cure the troubles bedeviling the sugar sector remains to be seen.