Kenya’s 11 sugar factories have an annual production capacity of about 600,000 tonnes of sugar against the annual consumption of 800,000 tonnes.
Sugarcane yield in Kenya stands at an average of 60 tonnes of sugar cane per hectare compared to the global an average of 63 tonnes per hectare.
This compares unfavourably to the yields in Zambia (113 tonnes) and Malawi (105 tonnes) or Colombia (115 tonnes). The bad news is that the Kenyan yield is on a downward spiral and at times averages a paltry 51 tonnes per hectare.
In 2015, a group going by the name Western Development Initiative Association petitioned Parliament to investigate the imminent collapse of the sugar industry in Western Kenya.
Parliament tasked the Departmental Committee on Agriculture, Livestock and Co-operatives to investigate the matter with specific objectives of finding a lasting solution to salvage and save over six million sugarcane farmers across the country from incurring further losses if the industry was to collapse.
The committee’s findings were startling. Their report revealed that “the average cost of producing one tonne of cane in Kenya is $22.5 while that of the region’s is as low as $13 per tonne.
The average cost of producing a tonne of sugar in Kenya is $870 compared to $350 in Malawi and $400 in Zambia, Swaziland and Egypt and $450 in Sudan. The cost of production in Brazil is $300, up from $270 three years ago.”
Kenya’s 11 sugar factories have an annual production capacity of about 600,000 tonnes of sugar against the annual consumption of 800,000 tonnes.
Sugarcane yield in Kenya stood at an average of 60 tonnes of sugar cane per hectare compared to the global an average of 63 tonnes per hectare.
This compares unfavourably to the yields in Zambia (113 tonnes) and Malawi (105 tonnes) or Colombia (115 tonnes). The bad news is that the Kenyan yield is on a downward spiral and at times averages a paltry 51 tonnes per hectare.
The low productivity is as the result of deteriorating soil fertility, low adoption of high yielding sugar cane varieties, poor agronomic practices, land subdivision into uneconomic sizes and many other issues that cannot be easily solved without taking drastic measures like abandoning the industry altogether to save farmers from further agony.
To complicate the issues even further, the colder climate means it will take an average of 18 months until the first cane crop can be harvested compared to 12 months in other African countries.
Further, the outgrower model of leveraging subsistence farmers with shrinking land sizes makes it difficult to achieve economies of scale and increase productivity.
Submissions to the committee from different stakeholders point to the fact the industry is undermined by, among by among other issues, high cost of production and obsolete technology.
In the past, experts have warned that in the absence of consolidating existing manufacturing facilities and changing the cane production model, the industry would collapse. Although it is assumed that farmers will benefit from the sugar industry, it never really happens.
It is the consumers, among them the very same farmers, who suffer most by paying more for sugar than anywhere else. Sugar prices in Kenya are about twice as expensive as the average the international price.
While a kilograme of sugar costs Sh60 in Europe, it costs as much as Sh200 in Kenya. It is for this reason that Kenya has a problem of contraband sugar.
Several studies show that there is a high preference of malnutrition and poverty in sugar growing areas.
In her Master’s degree thesis titled ‘‘Socio-Economic Impact of Sugarcane Farming on Livelihoods and the Biophysical Environment in Trans Mara Sub-County in Kenya’’, Beryl Oyugi argued that “many farmers earn their income only to exhaust it on repayment of debts accrued during the more than 24 months of waiting to harvest the sugarcane.”
Repayment of debts reduces the farmers’ propensity to buy and/or grow food for their own subsistence, hence the persistent food insecurity and malnutrition.
With signing of the historic African Union free trade agreement, the odds of producing sugarcane in Kenya are simply against the country. There is need to rethink a new path.
Perhaps we could consolidate the factories and change the business model. As it stands, it is an exercise in futility to consider reforms within the current state of affairs. Certainly, Governor James Ongwae should abandon his dream of hiving off forestland to build a sugar factory.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
