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Economy

Cash-strapped sugar millers seek bailout

A tractor transports sugarcane to a factory in Kisumu County. Kenya's annual consumption of sugar. PHOTO | FILE
A tractor transports sugarcane to a factory in Kisumu County. Kenya's annual consumption of sugar. PHOTO | FILE 

State-owned millers have stepped up calls for bailout as cane poaching threatens to drive most of them out of business.

The millers said the cash would enable them develop their own sugar cane amid rising cases of poaching that has cut production and lowered quality due to crushing immature cane.

Chemelil Sugar managing director Charles Owelle said the factories need their own farms because cane growers sell their produce to the highest bidder.

“We have had several meetings with the farmers and it’s like we are not winning the fight any soon. The best thing to do now, is to have our own sugar cane plantations,” he said.

The national government has been scouting for private investors to buy the processors while governors in sugar belt counties have been seeking to be handed ownership of the public sugar firms.

Cane shortage

Mr Owelle said cane poaching had been heightened by companies that are built close to one another. He urged the government to intervene for the State-owned millers to survive.

“It is against the law for companies to be built close to each other.”

The sugar Act states that a zone should be 40 kilometres away, yet companies such as Miwani, Muhoroni and Chemelil are 18 kilometres apart and all in Kisumu County,” he said.

Mumias Sugar corporate manager Moses Owino said currently the company is operating below capacity.

“The problem of cane shortage that Mumias Sugar is facing now is because of the companies that are licensed in its sugar catchment areas,” he said.

In July last year, Mumias temporarily stopped operations due to a lack of the raw material.

“Mumias is seeking to raise more funds that will see the company increase the acreage under cane. We are targeting early maturing varieties,” said Mr Owino.

“Mumias Sugar spends Sh3 billion on cane development. Then some factories poach the cane by enticing farmers with early payment. This will stop incase each company develops its own sugar cane.”

Late last year, Nzoia Sugar Company engaged Mumias Sugar Company in a dispute over alleged cane poaching in its zone.

According to the company, Mumias was harvesting cane in Nzoia zone.

Kenya Union of Sugarcane Planters and Allied Workers secretary-general Francis Wangara said the shortage of cane had affected operations of the State-owned factories adversely.

“The issue of cane poaching is a menace. There is serious cane shortage.

“Bailing out the companies will be a noble idea because no company should be allowed to operate without cane,” he said.

Mr Wangara said licensing of more private sugar factories without considering the availability of the raw material had made the situation worse for the State-owned millers.

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