The ongoing fight between farmers and millers over the pricing of sugarcane provides yet another compelling reason to complete reforms aimed at making the industry more competitive.
Farmers have opposed millers’ petition to reduce the price of sugarcane from Sh4, 025 a tonne to Sh3, 000 in line with sharp decline in the shelf prices of sugar.
The factory price for a 50 kilogramme bag of sugar has fallen to Sh3, 800 from Sh6, 000 in May, adding weight to the millers’ petition. But farmers are not the problem.
The agriculture sector regulator, Agriculture and Food Authority (AFA), is to blame for this latest crisis.
The authority established a pricing committee that pegs the cost of cane on consumer prices and other variables in a formula. It is supposed to be changed monthly to a level that guarantees a return to both the miller and farmer.
But the committee has delayed its meetings, adding pain to the already struggling factories.
But the sugar crisis is not new. It is a continuation of a long-running problem that has never been adequately addressed. Since the 1980s, the sugar industry has been consistently crippled by a combination of factors.
Critics have blamed high cost of production for the woes facing the country’s sugar industry.
Poorly-funded government factories have ageing machinery that is prone to break downs and operate inefficient systems that produce sugar that cannot compete in the market.
The Kenya Sugar Directorate estimates the cost of producing a tonne of sugar at about Sh50, 000 in Western Kenya compared with nearly half the amount in rival producers such as Egypt.
This is an untenable situation that must be arrested swiftly. Control of cane pricing is a typical case of seeking short-term solutions to a long-term problem.
What Kenya needs is to modernise the State-owned factories for them to survive competition. They also need top notch managers who are free from political influence. The twin issues can only be addressed by privatisation.
We also need to revamp our farming through introduction of fast maturing and high-yielding cane to boost production that will temper farmers demand for higher prices.
Urgent and well-thought out interventions are required to save the sugar industry from collapse.
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