Home BUSINESS NEWS Sugar subsector continues to shrink : The Standard

Sugar subsector continues to shrink : The Standard

by biasharadigest
Sugarcane farmers in Muhoroni transporting cane to milling industry after harvest. [Jonah Onyango, Standard]

More farmers are shunning sugarcane farming for other crops even as the cane delivered to millers continues to shrink. According to the Economic Survey 2020, cane deliveries to factories declined to 4.6 million tonnes in 2019, from 5.3 million tonnes in 2018.

This is despite government efforts to help revive the sector.
In the run-up to the 2017 polls, the Jubilee administration planned to splash Sh3.2 billion to resuscitate Mumias Sugar Company, and another Sh500 million to pay debts owed to farmers.
However, only Sh500 million was given to pay farmers. The balance remained just a promise.

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Mumias Sugar Company that used to control nearly two-thirds of the sweetener’s market in the country is now a shadow of itself former self, burdened by debts, mismanagement wrangles, graft, low cane supplies and flooding of the market with cheaper sugar imports.
But it’s not only Mumias that has been hemorrhaging. The plague is also affecting other sugar firms.
Interestingly, in that year, before the run-up to the 2017 polls, the sugar cane sub-sector had its worst performance in five years.

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So dire was the situation that the sub-sector’s average yield per hectare dropped from 62.1 tonnes in 2016 to 55.1 tonnes in 2017, according to Economic Survey 2018 by the Kenya National Bureau of Statistics (KNBS).
As farmers abandoned their farms, the total area under cane farming dropped from 2.2 million hectares to 1.9 million hectares – forcing the country to import 9.8 million tonnes of sugar – tripling the domestic production of the commodity.

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But things worsened after Mumias Sugar was placed under receivership last year by KCB Bank for defaulting on loans amounting to Sh545 million
This, coupled with series of arson attacks on the firm’s plantations, crippled the company further.
By last year, the Government hastened plans to privatise five sugar companies to shore up domestic production in the country.
The five factories Muhoroni, Nzoia, Chemelil, Miwani and Sony were struggling with debts amounting to Sh40 billion, which have been written off to attract investors in the firms.
But the benefits of the move will take long, considering that the country’s production yields continue to decrease – with the majority of farmers opting to uproot their cane for maize farming.
“I was a sugarcane farmer, but I have since uprooted the crop for maize. Sugarcane farming is no longer profitable,” Emmanuel Wasike a farmer told Financial Standard.
The biggest challenge, he noted is delay in payment and flooding of the market with imported sugar.
“It’s no longer feasible to sustain your family on sugarcane farming because they take long to pay – sometimes close to two years,” said Wasike. This year, the sector still faces doldrums.
With the closure of Mumias Sugar last year, the area under cane production decreased by 2.5 per cent – from two million hectares in 2018 to 1.9 million hectares in 2019 according to KNBS.
With cane farming apathy, the sub-sector for the first time dropped from the 10 million mark in sugar cane production by non-contracted domestic sugar farmers.
The sub-sector dropped to its lowest mark in the last five years at 9.3 million tonnes last year from 12.3 million tonnes in 2018.Subsequently, this saw the country double its import of the commodity to 4.5 million tonnes up from 2.8 million tonnes – the second highest for the sub-sector in the last five years.
The statistician attributed the increase in imports of the commodity to an effort to cater to the domestic demand of the product.
“I will go back to sugarcane farming if payment is processed quickly because I am struggling to raise my family,” said Wasike.

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Economic Survey 2020

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