Jaswant Rai tightens market grip, produces half of Kenya's sugarThursday July 21 2022
At least half of the sugar produced in Kenya is now controlled by one man after the billionaire Rai family opened their fourth milling plant in Bungoma.
Naitiri Sugar Company which started milling in May is the new addition to the family’s sugar conglomerate that now spans the country.
The new plant extends Rai’s position as the leading sugar manufacturer from a combined capacity of his existing three mills of West Kenya, Olepito, and Sukari.
The new player is adding at least 6,000 tonnes of sugar per day, a move that will increase the supply of the commodity in the country and cut cheap imports.
Data from the Sugar Directorate indicates that Rai’s sugar factories controlled up to 43 percent of the total production in the country in the 10 months to October last year.
The fall of Mumias, which controlled nearly 60 percent of the country’s total sugar production at its prime, and the collapse of some state-owned millers have left the space that is now being filled by the private sector.
The companies, which are led by their chairman Jaswant Rai, have expanded their cane catchment area to as far as Trans-Nzoia and Uasin Gishu Counties- the regions that are predominantly maize growing.
Saulo Busolo, former chairman of the Kenya Sugar Board, says because the country remains sugar deficit, there is no harm in millers expanding their market share to bridge the Shortage.
“The questions that we should be asking is whether the company in question is paying farmers promptly after harvesting and if they issue permits for cutting cane on time," said Mr Busolo who is also the chairperson of Kenya National Alliance of Sugarcane Farmers Association.
"If they meet all that, then the question of dominance should not arise.”
Mr Rai’s appetite for investment in sugar was manifested last year when through his West Kenya Sugar Company, placed a bid for lease of Mumias Sugar Company.
However, KCB’s receiver manager, in court documents said he refused Rai’s bid to lease the ailing miller as the move would have given him a dominant position in the sector.
The controversial lease was given to his brother’s Uganda-based conglomerate, which also operates a number of sugar plants in the neighbouring country. The tender was later stopped by courts after West Kenya moved to challenge the award.
Sarrai Group is a Ugandan conglomerate consisting of different agro-manufacturing companies, which run three factories in producing about 170,000 tonnes of sugar annually. It also has operations in Malawi.
The family is not new to conflict. Last year, Sarjij Kaur Rai (now deceased), the wife to Tarlochan Singh Rai, teamed up with her sons, Jasbir and Iqbal, objecting to the will claimed to have been written by the matriarch, saying he could have been coerced in crafting the document that distributed his assets among the eight beneficiaries.
In 2020, West Kenya was among the investors who eyed the leasing deals for the five State-owned sugar factories.
The Kabras-based miller showed interest in running Chemelil, South Nyanza, Nzoia, Miwani and Muhoroni sugar mills on lease terms as part of reforms by the government aimed at reviving the ailing factories.
Between 2019 and last year, West Kenya Sugar Company invested more than Sh1 billion in cane development largely in Nyanza, western and parts of the Rift Valley to create a sustainable supply of to its factories.
The Kabras-based miller has contracted more than 200,000 farmers who are spread across nine counties of Busia, Kakamega, Bungoma, Trans Nzoia, Uasin Gishu, Kericho, Kisumu, Vihiga and Nandi, giving it the largest sugar catchment in the country.
This has given rivals such as Butali and Kibos a difficult time in getting the supply of raw material.
These millers have over the years been fighting over cane, accusing each other of raiding their sugarcane.