Sugaronline Guest Editorial - The last nail in the coffin for Kenya’s sugar industry? By Jane Thirikali

Published: 09/22/2017, 11:24:00 AM

Yet again, Kenya's sugar industry on the verge of going up in smoke.



Yet again, Kenya's sugar industry on the verge of going up in smoke.

 


It has been a long campaign over the past year for Kenya’s two biggest political “parties” but there’s still a long way to go before the country and its sugar sector can finally settle into stability. If recent trends toward sugar imports continue, however, that stability may never come.

During the campaign, the ruling party made many promises. Some came to pass, such as commissioning the 70% complete Standard Gauge Railway line running the 500 km from Mombasa to Nairobi that brings the trip down to four hours compared to 10 hours by road.

Coffee farmers had their debts to third party financiers paid off by the exchequer, livestock and cereal farmers had their debts to government banks waived. Sugar was not left out either, as state-owned sugar companies Mumias and Nzoia both got new CEOs and US$5 million and US$3 million respectively as part of a promised bailout package.

Other promises, not surprisingly, had the usual rider – “vote for us to ensure we deliver on our promises.”

Another US$2 million was to be dispatched to Mumias if the ruling party won the 2017 elections but the seven-month old opposition coalition advised farmers not to be duped into voting for the ruling party. After all, they said, all of their woes emanated from the poor leadership by said party.

There is some truth to what the opposition coalition is alluding to – politics is killing local agricultural enterprise. Between June and August 31, 2017, sugar could be imported duty free, when more than 177,000 metric tonnes of raw—not white—sugar was imported into the country in the holds of five bulk marine vessels for bagging locally.

The sugar imported from Swaziland and Brazil is meant to improve supply and bring down prices but prices continue to be high at US$1.22 per kilo in the supermarket, imported, bagged and delivered at around US$1,000 per tonne. High quality, fit for direct human consumption, local sugar is currently being sold to distributors at US$840 ex mill, while imported raw sugar is wholesaling for US$780 ex-warehouse Mombasa.

Speaking to one government official, he said the local sugar industry was “dead” and that it was not the regulator’s “fault” raw sugar instead of white was being imported. Instead, he said, the government standards body should be blamed.

This time last year, the ruling coalition became the ruling “super” party made up of two large parties and several other small ones. A few months later, the opposition consisting of one large party and several small ones similarly devolved into an opposition coalition. Since then, the opposition coalition has been to the courts 30 times in an attempt to make sure that the 2017 elections were “free, fair, auditable and transparent”.

In this country, nothing is won fairly: not even major football matches. There must always be some act of corruption, and rigging the vote is usually the main culprit, a fact confirmed last week by the Supreme Court regarding the August 8, 2017 elections. The court nullified the Presidential result, the first time such a thing has happened in Africa to a sitting president, with a new vote set for within 60 days.

Not to be out done, Mumias has requested, and the regulator seems to have denied, permission to import upwards of 600,000 tonnes of sugar…more than its annual sugar production.

Farmers say this will result in Kenya’s largest sugar miller shifting away from its key role of milling, meaning certain death for a majority of sugar farmers. The Presidential elections, the Supreme Court decision and the “death” of the local sugar industry will render 2017 a perfect storm with results no different than mega-hurricanes in the Atlantic.

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