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Commodities

Sugar millers’ bid to cut price of cane derailed

Millers want cane prices reduced to Sh3,000 per tonne, saying the current costs make their business uncompetitive.  FILE PHOTO | NMG
Millers want cane prices reduced to Sh3,000 per tonne, saying the current costs make their business uncompetitive. FILE PHOTO | NMG 

Millers will have to wait longer for the price of sugarcane to be reviewed after governors from growing zones rejected their application to cut the cost of cane.

The governors met with millers and farmers’ representatives in Kisumu last week and opposed the petition to reduce the price from Sh4,025 a tonne to Sh3,000. The factories made the demand following a sharp decline in shelf price of sugar.

The move saw the meeting scheduled by the government Sugar Pricing Committee meant to be held this month pushed to December.

Ex-factory price for a tonne has fallen to Sh3,800 from Sh6,000 in May.

“The pricing committee is not meeting this month and the current price will be maintained until we meet next month,” said Agriculture and Food Authority (AFA) director general Alfred Busolo.

This is a setback for millers who were hoping the price would fall this month. They argue the current buying price is making it difficult for them to meet their financial obligations such as paying farmers.

The pricing committee pegs the cost of cane on consumer prices and other variables in a formula. It is supposed to be changed monthly.

The price of sugar has been falling following an increase in imports in the last couple of months.

According to statistics from the Sugar Directorate, imports between January and October amounted to 900,000 tonnes.

Sugar production in the country dropped 49 per cent in the nine months to September as factories grappled with the drought-inspired shortage of raw material to mill.

September report from sugar directorate indicated the quantities produced dropped to 252,415 in the first nine months of 2017 from 493,419 tonnes in corresponding period last year.

Millers forecast the factory price of sugar will fall further in the coming days.

“We request you to issue an urgent circular in regard to the sugarcane price as it is not possible for the sugar millers to sustain the current price based on the current price of sugar,” they said last month.

Millers say based on the sugar pricing formula, the cost of one tonne of cane should be Sh3,017.

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