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Kenyans should brace themselves for a sharp rise in prices of sugar and massive job cuts after the government suspended the milling of sugar in all sugar factories for five months.

A meeting convened by the Agriculture and Food Authority (AFA) with all sugar millers in Kisumu on July 13 agreed that all the factories cease their operations from last Friday, July 14, 2023 till November 30, 2023 to allow cane to mature.

The decision to suspend sugar milling was announced by AFA Ag Director (sugar directorate), Jude Chesire, who had chaired the meeting saying it was the only viable solution towards saving the worrying situation.

“It is a decision taken in the interest of all sugar milling companies. We are doing this to protect our sugar firms from total collapse as a result of acute shortage of cane,” Chesire said.

The move comes at a time various players in the sugar sector have been pushing for the suspension of milling operations to give room for cane in the Western Kenya sugar belt to mature in order to address the worsening cane shortage crisis.

Stakeholders in the sector say the scramble for cane, the primary raw material, has pushed millers to resort to crushing immature cane, which results in poor-quality of the sweetener. Some millers had been forced to source for cane from neighbouring countries such as Uganda and Tanzania to remain afloat.

But the suspension was not taken lightly by farmers, with the Western Development Initiative Association (WEDIA) threatening to move to court to stop a decision it claims would work to the disadvantage of the farmers.

WEDIA chairman Joseph Barasa questioned where the government thinks farmers with cane maturing in the next few days or month would take their cane since they had not been prepared for the move.

“Besides the famers being caught off guard, this is going to open the floodgates to importation of cheap sugar into the country. The whole idea is fishy and out rightly meant to kill the sugar sector,” Barasa warned.

According to the Kenya National Alliance of Sugarcane Farmers Associations (KNASFA) chairman Saul Busolo, the decision to suspend the cane millers’ operation is a double-edged sword, as besides allowing the cane to mature properly, it will lead to skyrocketing of sugar prices as well as provide some unscrupulous individuals the platform to import cheap sugar.

“The first impact to be felt will be a sharp increase in sugar prices because some traders are going to hoard the commodity in order to make a killing from the resultant shortage. And a tradition, the government will take advantage of the situation to allow importation of cheap goods into the country,” Busolo warned.

The one-time legislator warned that unless handled well, the move could sound the death knell for sugar manufacturing companies in the country.

Busolo and Barasa questioned the rationale behind the government decision to halt operations of all sugar factories at the same time, claiming that it could be intended to cause a major shortage of the commodity and thus lead to influx of cheap imports.

With the prices of sugar retailing at Sh220 per kilogramme, players in the sector are now warning that the precipitated shortage of cane would skyrocket prices of the sweetener to retail at about Sh300 a kilogramme.

Kenya produces about 600,000 tonnes of sugar a year, against an annual consumption of 800,000 tonnes. The deficit is bridged by imports from the neighbouring countries. There are fears that suspension of sugar milling could lead to an unprecedented crisis.

As a result of the decision to suspend operations, sugar millers have directed their staff to take fifteen days paid leave effective July 14 till end of the month when they would have decided on the way forward.

“Following a consultative meeting held in Kisumu today, July 13, 2023 between the Government (Food and Agriculture Authority) and all millers in Kenya, a decision was made to suspend sugar production operations in the region up to November 30, 2023 to allow cane to mature,”: an internal memo signed by Sohan Sharma, the chief executive officer at the West Kenya Sugar Company Limited to their staff stated.
Critical areas

As if signalling the hard times ahead for the workers, Sharma went on to warn: “Consequently, all staff, with the exception of those working in critical areas will be required to proceed on paid annual leave up to July 31, 2023. The company will use this period to run a consultation process after which you will be advised on the way forward.”

Sharma however promises that the company shall treat all employees with dignity and fairness during this period in the knowledge that what is being “faced is temporary and will soon pass”.
Affected sugar millers included Mumias, Chemelili, Nzoia, South Nyanza (Sony), Muhoroni, Butali, Kibos, Transmara, Soin and Miwani sugar factories.

Kenya is currently facing shortages of the commodity which has seen the prices increase by more than 50 per cent in the last two months.

The suspension of sugar milling comes amid claims that the Government has already sanctioned some private firms to import sugar to cover the 180, 000 metric tonnes deficit.

Unfortunately, the importation is not open to all registered sugar importers; each of whom have equally paid Sh200,000 for registration. It is to be done by a select few who have been mysteriously allocated quantities to import,’’ Barasa claimed.

Those shortlisted, Barasa claimed, would be allowed to bring in duty free sugar from any part of the world without restrictions to COMESA rules.

Two months ago, AFA, in a move to address the shortage, announced the delineation of the sugar belt into six regions in an attempt to limit conflict and the fight for raw materials.

“Such arrangements will ensure that millers continue to operate within capacities supported by mature sugarcane in their respective regions,” said Chesire.