There have been some bitter exchanges around the sugar industry following President William Ruto’s visit to western Kenya.
President Ruto’s statements in the wake of the ‘abduction’ of tycoon Jaswant Rai, whose family runs the sugar empire in western Kenya, have made the sugar war reach its fever pitch.
This war began immediately after the President took office.
In the very first Cabinet he chaired as the 5th President of Kenya, he approved the privatisation of sugar mills. Though he later agreed to revive the millers, he ordered the sugar plants closed until December 31, 2023.
The sugar industry is one of the most important agricultural sectors in the former western and Nyanza provinces.
In 1997, it employed 35,000 workers, was a major source of income for more than 100,000 small-scale farmers and supported over two million people.
Sadly, by 2000, the number of people employed had reduced to 10,552. Indeed the status and importance of sugarcane as a source of livelihood and viable economic pillar is now under threat.
The challenges facing the sugar industry can be as many as the people you ask. However, they can be divided into three main categories— policy and marketing problems — which favour dumped imported sugar to the detriment of locally produced sugar, poor cane husbandry practices at the farm level, leading to low yields both in quantity per ha and in sucrose content and low productivity at the factory level, resulting in low income for farmers due to reduced yields and capacity under-utilisation.
But the root of all these challenges is corruption, through which cartels thrive in importing illegal sugar and mismanagement of factories, which include flawed tendering processes and issuance of licences, use of low-quality sugarcane varieties, poor agronomic management, inflated cost of inputs practices and delayed harvesting among others.
The worst part of mismanagement has been “company incest”. In this, intra-company marriages abound, and cases of HR manager’s daughter being married to the marketing counterpart’s son and the procurement manager being married to the daughter of the head of operations are not nothing new.
The arrangement kills accountability in management and breeds corruption and favouritism. Many companies have collapsed as a result.
Whereas CIF landed prices of imported sugar retail at about Sh75 per kilo, Kenyan sugar at the factory gate is sold at about Sh125 per kilo. This is mainly because of the unfavourable macroeconomic and microeconomic factors already stated above coupled with mismanagement and corruption.
It is a pity that whereas countries like Brazil produce a tonne of sugar by crushing six tonnes of sugarcane, Kenyan millers have to crush 14 tonnes to get one tonne of sugar. But why this discrepancy?
It is all to do with enough water and good soil. To this, add a pinch of political goodwill and our production may even surpass that of Brazil!
Good practices in sugar manufacturing need to be adopted.
First, the reuse of waste and by-products from sugar processing such as bagasse, filter cake and molasses could help boost profitability in addition to reducing production costs and environmental impact.
Bagasse can be used for pulp production, for feeding confined cattle and as fuel for boilers; filter cake, which is rich in phosphorus, can be used as fertiliser while molasses can be turned into ethyl alcohol, which is raw material for production of protein, animal feed, pressed yeast for baking and antibiotics.
Second, preventive maintenance in the off-season could be adopted. The sugar production season normally starts in mid-May to November, thus making the period between December and April the ‘off-season’.
At this time, it is important for the sugar producer to plan preventive maintenance actions at the plant.
This helps reduce the occurrence of future problems, failures, interruptions and possible unnecessary stops of steam turbines, speed reducers and thermo-electric plants.
Third, it would be beneficial to invest in smart technologies. The sugar producers must observe innovations to improve processing and achieve the best yields.
Novelties in intelligent machines and equipment make agribusiness activities increasingly profitable and efficient.
The fourth entails cost reduction in sugarcane logistics. Industry data indicates that the cutting, trans-shipment and transport stage of sugarcane is equivalent to 28 percent of the cost of a tonne of cane and 10 percent of the value of each bag.
These numbers alone demonstrate how important it is to look for ways of optimising this step.
Fifth, is to partner with manufacturing firms such as Indumak Solutions so as to optimise the packaging step. Indumak is singled out since it offers a complete line of equipment to automate each stage of sugar packaging.
These include dosers, packers, balers, complete palletizing systems and accessories that add speed to the process and collaborate for stricter quality control within the manufacturing plant. It’s a cost-effective investment which can help transform the sugar industry.
In an environment free from corruption and mismanagement, these best practices can help the Sugar industry to once again be as sweet as it was back in 1997.
Dr Ogola is the CEO at African Health and Economic Institute and Director of the Institute of Strategy and Competitiveness.