Drop in sugar production in Kenya blamed on roads
Friday, 30 July 2010
Sugar production over the first five months of the year slumped by 28 per cent, new data shows with officials blaming the trend on heavy rains that affected cane transportation to factories.
Provisional data by the Kenya National Bureau of Statistics (KNBS) indicated that sugar production fell to 34,450 tonnes in May from 48,100 tonnes in January, breaking a trend from 2009 when the industry witnessed its highest ever production buoyed by good weather.
"Unexpected heavy rains dealt a major blow to the industry in terms of interrupted movement of cane from the farms. Most feeder roads in the cane growing areas were impassable," Mr Okoth Obado, the chairman of the industry regulator, Kenya Sugar Board, said.
Most parts of the main growing areas of western Kenya early this year experienced torrential rains that destroyed roads.
The heavy black cotton soil that is dominant in these areas also worsened the situation.
Industry estimates show the cost of cane haulage from farm to mill in Kenya constitutes 35 per cent of the total cost of cane, partly because of tattered infrastructure.
Roads and bridges in the sugarcane growing zones, are maintained by millers and local authorities using cess levies.
At the peak of the deluge in May, Mumias Sugar Company that controls about 60 per cent of the country’s total production, raised the alarm, saying said it was receiving almost half of its daily cane supply owing to the heavy rains that cut farms from the machines.
"The rains have had a serious negative impact on cane haulage from the fields. We are getting an average 5,000 tonnes of cane against a daily capacity of 9,000 tonnes," Mumias chief finance officer Peter Kebati told Reuters.
Mr Obado, however, said the situation had improved in most key growing areas and millers were back to normal production.
"Things have since improved; we expect a recovery in sugar production," the official said.
The country’s sugar output rose by five per cent to 548,207 tonnes in 2009 -- an all time high.
This helped to ease the pressure on purchases from external markets with imports falling by 16 per cent to 184,530 tonnes.
Luckily for local companies, importers last year only managed to secure supplies estimated at 25 per cent of the targeted volume as producers diverted to more lucrative global markets.
KSB projects that sugar production will rise by between 10 and 15 per cent this year from last year’s level based on good weather.
Consumption over the 2009/10 window is expected to clock the 6.3 million tonnes mark against a production of about 8.1 million tonnes.
Strategic investors
Most millers are boosting efficiency ahead of 2012 when the market will be fully liberalised. Miwani, Chemelil, Nzoia, Sony and Muhoroni now run by the State are set to be sold.
A blueprint released in January by the Agriculture ministry said strategic investors are to be handed a 51 per cent stake during the sale while growers would get a 30 per cent shareholding.
The remaining 19 per cent will be off-loaded through an initial public offer (IPO) once the millers have been turned-around.
