The Sugar Industry in Kenya: Are We Driving the Last Nail into the Coffin or Trying to Resurrect the Dead?

The sugar sub-sector in Kenya has gone through the roughest patch, sometimes recovering, but always relapsing to oblivion.

Some of the reasons for this situation have been attributed to mismanagement of the factories and consistent macroeconomic challenges, some emanating from government policies.

Today, over 200,000 smallholder farmers are supported by sugarcane farming in Kenya. It is estimated that over six million Kenyans derive their source of revenue directly or indirectly from the sugar industry.

One interesting phenomenon is that due to local production of sugar, this sector saves Kenya about Kshs 45 billion in foreign exchange.

Most recent estimates show that around 73,000 hectares are under sugarcane farming in Kenya. There is sufficient market, in fact, the factories in Kenya have a production capacity of 600,000 tons against a national consumption of 800,000 tons, which means they cannot meet the demand.

So where do we go wrong?

One of the biggest challenges with this industry is the mismanagement of sugar companies. While farmers toil day and night to nurture enough crop to sustain a cycle of production around most factories, they end up waiting for endless periods without payment.

Besides discouragement to continue farming, the smallholder producers are also not able to invest adequately to increase production. The tales of delayed payment, and in some instances complete non-payment, are scattered across the sugar belt.

Mumias, Sony, and Muhoroni are among the worst hit factories with farmers’ broken promises. At the height of its performance, Mumias enjoyed leadership in innovation in production and packaging of sugar across the region producing close to 118,000 metric tonnes and competing with Kakira Sugar in Uganda at 180,000 metric tonnes capacity.

Mumias is now a pale shadow of its former self, staring insolvency with a Kshs 15 billion loss and a struggle for control between its management and County Government of Kakamega due to a perceived asset disposal plan.

Prudent management continues to be a key component in enhancing competitive advantage for most organizations, particularly in the sugar sector.

You might have noticed in most retail stores across town, a new brand is taking over the place of Mumias Sugar. Mara is a product of Transmara Sugar owned by Alteo Group. Alteo is the largest sugar producer in Mauritius with a strong presence in Africa, operating three sugar factories in Mauritius, Tanzania, and Kenya.

Sugarcane is the major crop in the tinny Indian Ocean island producing over 5.8 million tons of cane per year. Sugarcane occupies 36 percent of Mauritius’ total land area and 70 percent of its cultivated land. It is the culture of prudent management and stakeholder collaboration that is making Transmara Sugar successful despite a number of economic, infrastructure and political challenges in Narok County.

Cost of production is a big issue. The cost of electricity and other raw materials is high and hence the final product does not favorably compete with what comes from other markets. Consider sugar and allied products from Brazil, which is imported at a cost lower than our local supplies.

The influx of sugar has been attributed to the fact that local production does not meet the demands of consumers, compounded by the availability of more affordable provisions from other countries. Further, the government occasionally opens the window of sugar import, a phenomenon that is usually abused by unscrupulous businesspeople. The scandal last year of sugar-laden with mercury is a perfect example of the intricacies around government steered opportunities that send the industry reeling with deeper issues.

Until these issues are addressed, our sugar industry remains in a critical health situation.