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Economy

Sugarcane farmers to get poor pay as supply at 7-year low

Cane shortage has seen millers operate below their installed capacities. FILE PHOTO | NMG
Cane shortage has seen millers operate below their installed capacities. FILE PHOTO | NMG 

Sugarcane deliveries to millers has dropped to more than a seven-year low, reflecting poor performance of local factories and a drop in farmers’ earnings.

Data from the Kenya National Bureau of Statistics (KNBS) shows that three million tonnes were delivered in the nine months to September, down from 5.5 million in the same period last year.

This marked the lowest quantities of sugarcane fed to factories since KNBS started making public monthly data on the raw material supply for sugar production.

The shortage has seen millers operate below their installed capacities, creating an acute shortage of the sweetener in Kenya. This forced the country to step up imports to plug the shortfall that saw retailers resort to rationing early in the year.

Farmers’ earning have also been affected because of the shortage, which the sugar directorate has attributed to drought that hit the country in the first quarter of the year.

The dry weather after low rainfall in October and November last year as well as the long season of April to June, drove up prices of basic food commodities including sugar, milk and vegetables.

Inadequate cane supply has also been blamed on delays by millers in paying farmers, prompting some growers to abandon the cash crop.

The scarcity of cane led to low sugar production that lifted the cost of a kilogramme of sugar to Sh200 in May from Sh120 in January before government intervention through duty-free imports helped lower the price to the current Sh130.

Kenya normally produces about 600,000 tonnes of sugar a year compared with annual consumption of 870,000 tonnes.

The deficit is covered by strictly controlled imports from the Common Market for Eastern and Southern Africa (Comesa) trade bloc.

Reduced supply of cane also hit earnings of local millers especially cash-strapped State owned firms.

Mumias Sugar Company #ticker:MSC partly linked its Sh6.8 billion loss to the cane shortage that cut the listed miller’s production of the sweetener by 67 per cent.

Experts have also blamed the high cost of production for the problems facing Kenya’s sugar industry. Poorly funded government factories with ageing machinery that is prone to breakdowns.

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