AgricultureThe sugarcane milling sector in Kenya.

Selina LiyengwaAugust 1, 2021949 min
Image source: pixabay.com
Industrial WordPress Theme

Some of the top commercial crops grown in Kenya include tea, cut flowers, vegetables, coffee and maize just to name a few. Sugarcane falls among the top 6 commercial crops grown in Kenya.

According to the parliamentary report of the departmental committee on agriculture, livestock and co-operatives on the crisis facing the sugar industry in Kenya done in 2015, the sugar industry in Kenya directly or indirectly supports the livelihoods of approximately 6 million Kenyans thus contributing to rural household economies.

According to the Agriculture and Food Authority (AFA), the area under which sugarcane is grown in Kenya is about 202,000 ha, with total production averaging 5.262 million tonnes of cane supplied to factories per year. However, average yields of sugarcane have been declining from about 66.4 tonnes per hectare in 2015 to 55.1 tonnes per hectare in 2018. In comparison with the global average of 63 tonnes per hectare, the performance is regarded as poor.

According to the Kenya Sugar Board (KSB), some reasons for this reduced productivity include; low-quality sugarcane varieties, poor agronomic management, high cost of inputs, delayed harvesting and frustration from the industry.

Recently, sugar production has declined from approximately 635,700 tonnes in 2015 to 491,100 tonnes in 2018 of milled sugar. Concurrently, sugar imports have been increasing according to the Economic Survey done by the Kenya National Bureau of Statistics (KNBS) in 2019. The annual domestic demand is well above 900,000 tonnes, meaning the country is a net importer of sugar. Sugar is mostly used for domestic consumption, generating about $5 billion annually. This further strengthens the importance of the sugar sector in the country.

Processed sugar in Kenya reaches consumers through a network of wholesalers, retailers, importers and distributors. The average ex-factory price of sugar in Kenya is $800 per tonne on average, which compares poorly with the world market price of $280 per tonne. This is nearly triple the world market average price and goes to show that Kenyans may be paying too much for sugar. Retail sugar prices range from $1.20 to $1.50 per kilogram.

According to the Agriculture and Food Authority (AFA), 56 companies are registered as sugar importers in Kenya. This means that sugar importers are more than all the sugar factories in the country combined. With a production price of at least $0.8 per kilogram, most local millers find it difficult to make a profit due to high overhead costs, resulting in cash-flow problems as stated by the Kenya Sugar Board (KSB). Poor monitoring of sugar importation leads to unrealistic profit margins for importers compared to the sugar produced locally.

Just like any industry, the sugar sector in Kenya faces some challenges. Sugar production has declined due to poor seed quality that takes a long time to mature. Moreover, smut disease, high cost of inputs and delayed payments to farmers has also contributed to the low sugar production. In the western part of Kenya, sugarcane normally takes about 18-24 months to grow and mature. This is a longer maturity period compared to Sudan that grows early maturing cane which matures within 14 months.

Production costs of sugar have also increased from an averagely of $676 per tonne in 2014 to $1007 per tonne in 2018. In comparison with other African countries such as Malawi and Zambia, this is poor performance as the two countries have production costs of $350 per tonne and $400 per tonne respectively. According to the Global Agricultural Information Network Kenya Annual Sugar Report done in 2016, the cost of locally producing sugar in Kenya was reportedly 60% higher than in Uganda and Tanzania, and 50% higher than in Zambia.

According to the Kenya National Assembly (KNA) parliamentary report of the departmental committee on agriculture, livestock and co-operatives on the crisis facing the sugar industry in Kenya done in 2015, mismanagement of the sugar factories has contributed to the industry inefficiencies. The majority of the state-owned sugar mills operate below capacity and have a huge debt burden. In addition to this, they have inefficient and poorly maintained machinery that breaks down frequently. Although efforts have been made by the government to privatize most of the sugar companies such as Mumias Sugar Company, the companies are still recording losses.

According to the Kenya Anti-Corruption Commission (KACC) Review of the Policy, Legal and Regulatory Framework for the Sugar Sub-Sector in Kenya done in 2010, corruption and mismanagement of the institutions in the sectors poses a great challenge for the industry. Some of the issues include tendering, issuance of licenses, sugar importers, milling factories and traders just to name a few.

Political interference also poses a great challenge as it affects the appointment of managers of milling factories leading to lack of accountability and professionalism in management boards. This also leads to importation of illegal sugar which deteriorates the business.

The demand for sugar in Kenya is ever-growing. At the same time, the sugar industry needs a number of reforms to improve productivity and profitability. Small sugarcane farmers can be motivated by revamping extension services, improving cane varieties, field operations, transport, marketing and timely payments. Principally, legislation that protects farmers or supports the sugar industry exists, lack of professionalism and accountability across all levels of the sugar value chain is what has proven to be problematic.

Selina Liyengwa

Content writer at Cue Africa. Email: selinakanguha9@gmail.com LinkedIn: Selina Liyengwa.

Leave a Reply

Your email address will not be published.

Ohlala WordPress Theme
https://i2.wp.com/www.cueafrica.net/wp-content/uploads/2021/07/Cue-Logo2.png?fit=783%2C225&ssl=1

Cue Africa is a Digital Information Company Focusing on Providing Accurate and Well Researched Business Insights on African Economies.

Email Us : cueafrica@cueafrica.net

Newsletter

Sign Up to be the First to Know the Latest Business In Africa.

Cue Africa 2021 © All Rights Reserved