advertisement

Opinion & Analysis

Revoke duty-free sugar imports extension

A shopper picking a packet of sugar at a Supermarket. FILE PHOTO | NMG
A shopper picking a packet of sugar at a Supermarket. FILE PHOTO | NMG 

We need to be more vigilant in tracking decisions and moves by cabinet secretaries and principal secretaries between now and the time a new Cabinet is appointed.

Very strange things are happening in the sugar sub-sector right now. A new gazette notice has just been published extending imports of duty-free sugar to December 31.

Why are we allowing duty-free sugar imports at a time the country is flooded with cheap Brazilian sugar?

What I find even more suspicious is the wording of the gazette notice. It says: ‘‘duty shall not be payable on the sugar which will have been loaded into a vessel between September 1 and December 31, destined to a port in Kenya and consigned to a local sugar miller.’’

Clearly, the wording is as vague as to allow several interpretations and to open wide loopholes for merchants to exploit.

For instance, what is to stop transit sugar from being diverted into Kenya. After all, the conditions for bringing in sugar are only two; namely: be destined to a port in Kenya and secondly, consigned to a local miller.

Note that sugar imports for Uganda, Rwanda, and Burundi markets all qualify to be described as ‘‘destined to a port in Kenya.’’

In retrospect, the terms of the earlier gazette notice that was put out in May was much clearer. I think the just published notice has been issued to serve the selfish interests of a group of 14 politically-connected sugar importers who have been lobbying the government to have the window extended to allow them bring in more raw sugar from Brazil.

As we all know, the gazette notice for duty free sugar imports that was put out by the government in May expired on August 31.

In just under 90 days - in the months of June, July and August - the merchants managed to dump a whopping 690,000 tonnes of cheap Brazilian sugar into the country. This is according to import entry statistics from the Kenya Revenue Authority.

Clearly, the scale was unprecedented because annual national sugar consumption in this country is estimated at 900,000 tonnes.

It means that merchants took advantage of the duty free window to flood the market with an equivalent of 66 per cent of national annual sugar consumption in just under three months. The implications for local sugarcane farmers couldn’t be more dire, especially since some of the biggest importers are sugar millers.

Who will buy sugarcane from the farmer when millers have now found it much more profitable to bring in cheap raw sugar from Brazil? Where will a company like Mumias, which is just planning to resume production, sell its sugar?

When you trace the problem, you will see that the shenanigans that have now culminated into the controversial decision to publish the new gazette extending the duty free window started the moment it closed on August 31.

Even in the face of clear evidence that too much cheap sugar had been dumped into the market, the government was still bent on extending the duty free window.

Two weeks ago, the Ministry of Agriculture wrote an appeal to the commissioner of customs requesting that some 14 importers be allowed to bring in sugar duty free despite the fact that the window had closed.

Kilimo House defended the importers on the manifestly laughable excuse that the imports could not arrive in Mombasa within the August 31 framework because loading had been delayed because of low tides.

But in a remarkable display of independent-mindedness, the commissioner of customs refused to agree, pointing out that the consignments by 14 importers could only come in duty free if the National Treasury published a new gazette notice.

In the interest of the struggling sugar farmer, the government should not allow any more imports of cheap sugar from Brazil. The gazette notice should be revoked.

advertisement