Mumias is selling a 50 kilogramme bag of sugar at Sh4,100 while the competition sells theirs at Sh4,400. PHOTO | FILE
The agriculture regulator has put Mumias Sugar Company on the spot over the low price at which the firm is selling its sugar despite the listed miller struggling to make ends meet.
Mumias is selling a 50 kilogramme bag of sugar at Sh4,100 while the competition sells theirs at Sh4,400. The Agriculture, Fisheries and Food Authority (AFFA) said that the low price is affecting Mumias’ recovery plans.
AFFA director-general Alfred Busolo said he would discuss the matter with the company’s management today to understand the rationale behind the low pricing.
“We do not understand why the factory is selling its sugar at a lower price of Sh4,100 at a time when the rest of the millers are selling at above 4,400,” said Mr Busolo.
Kenya abandoned price controls in the 1990s in favour of economic liberalisation.
Mumias said losses widened to Sh2.26 billion in the six months to last December from a loss of Sh2.08 billion in the same period a year earlier due to increased finance costs.
The heavily-indebted firm has been struggling with cash flow problems in recent years, forcing the government to step in with bailout funds. Mumias has also faced raw material shortages and complained of low sugar prices.
Mr Busolo said that the miller had cut production due to cane shortage and that it would make business sense for them to sell sugar at par with other millers.
Mumias cut production to two times a week due to cane shortage occasioned by poaching by competitors.
Mumias chairman Dan Ameyo declined to comment on the issue saying it is an operational matter and only the CEO can speak on it.
Data from sugar directorate indicate that the firm produced only 47 tonnes of sugar on July 7, way blow the targeted 800 tonnes.
The millers has been undergoing financial challenges resulting from poor performance in the last couple of years.
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