Mumias seeks new products to shield it from sugar imports
What you need to know:
Mumias Sugar generates a substantial amount of revenue from selling electricity to the national grid from its cogeneration plant as well as ethanol from its distillery segment.
Mumias Sugar Company has expressed confidence that its product diversification strategy will shield it from any losses as a result of sugar imports from Common Market for Eastern and Southern Africa (Comesa) bloc once the safeguards end in September 2014.
The sugar miller generates a substantial amount of revenue from selling electricity to the national grid from its cogeneration plant as well as ethanol from its distillery segment.
Company chairman John Bosse disclosed during the firm’s annual general meeting at the Tom Mboya Labour College in Kisumu last Friday that the cogeneration plant netted Sh435 million this year compared to Sh350 million in 2011.
Mr Bosse also credited better sugar prices earlier in the year for the miller’s four per cent increase in profit to Sh2.013 billion despite a drop in cane supply from Sh1.9 billion posted last year.
“The company’s product diversification and cost reduction are expected to shield it from competitive pressure,” said Mr Bosse.
Chief executive Peter Kebati said the competition expected from Comesa imports was unlikely to affect adversely the local sugar industry.
“These nations prefer better paying markets in other parts of the world and I doubt Kenya will be as attractive to them,” said Mr Kebati.
In 2003, Kenya sought safeguards to protect the local industry from threats by cheap sugar imports, limiting supply from Comesa.
The safeguards were to expire in March 2008 but the country was given an extension which was set to expire in February but was pushed to next year.
The sugar industry faces turbulent times. The Kenya Sugar Board recently raised the alarm over an imminent shortage of cane supply as production by contracted farmers dwindle.
