Market News

Millers want lower cane price, poke holes in formula

cane

A crane offloads sugarcane from a tractor in a western Kenya factory. FILE PHOTO | NMG

A section of millers want the price of cane to be reduced further than the limit set by the Pricing Committee.

The committee has slashed the price per tonne of cane from Sh4,025 to Sh3,700, but millers say the cost should be Sh3,190 if the correct formula is used.

However, Agriculture and Food Authority (AFA) director-general Alfred Busolo said the millers were consulted and represented during a meeting to discuss the new price.

“It is true the price was not purely based on the formula as there are other factors that we considered,” he said.

Mr Busolo said part of the reason why the consumer prices are down is because millers were allowed to import the commodity duty-free.

The cane cost is pegged on consumer sugar prices and other variables as indicated in the pricing formula.

If the sugar price stabilises, the cost of cane remains the same. If sugar prices change in the course of the month, then the recommended cost of cane will be calculated based on the new prices.

Millers have been grappling with unmoving stocks, unable to offload at the desired price due to stiff competition from cheap imports.

READ: Cane prices slashed by Sh325 a tonne after standoff with millers

The ex-factory price of sugar has been on the decline since mid-last year following an increase of duty-free sugar in the country that stood at over 900,000 tonnes between May and November.

Millers argue that the new price will make their operations difficult and might create delays in paying farmers.

“The pricing committee should have based the new price on the formula, which would have brought a tonne of cane to Sh3,190,” said one of the millers who requested anonymity, fearing antagonising the regulator.

Some of the millers, especially the state-owned ones, have maintained the price they previously paid farmers.

Sony Sugar Company is paying growers Sh4,300 a tonne despite the price cut, saying the company will maintain the payout.