News Column

Board cracks down on sugar dumping

February 27, 2014

ZEDDY SAMBU -1



The Kenya Sugar Board has intensified a crackdown on sugar barons dumping the sweetener in the country.

Agriculture Cabinet Secretary Felix Koskei said the move, which is under way in Mombasa, Nairobi and Mariakani follows recent influx of contraband sugar sparking an outcry from local millers.

"We have suspended licences for non-importers from Comesa. Licensed importers from Comesa free trade area are also required to submit certificates of origin," Mr Koskei said in an interview.

Officials at the sector regulator said they have involved the police and other government departments in impounding the sugar that has adverse effects on growth of the sector under the stranglehold of cartels.

"We have licensed importers from Comesa region, but smugglers exist. Today (Thursday) we are at Kebs to deal with the issue of standards. Already, we have met KPA officials and the Inspector General of Police and plan to go to KRA," board director Saulo Busolo said. (READ: Sugar importers set to face fresh vetting)

Data from the Kenya National Bureau of Statistics (KNBS) shows that millers produced 612,000 tonnes of sugar last year up from 493,000 tonnes in 2012, reflecting a 23 per cent growth.  (READ: Sugar prices expected to increase)

INCREASED SUPPLY

Sugarcane deliveries to factories rose 16.7 per cent to 6.67 million tonnes from 5.7 million tonnes a year earlier. But millers have been reducing producer prices in what is linked to increased supply of the commodity.

Mr Busolo said Kenya's cost of sugar production is among the highest in the EAC and Comesa sugar-producing countries in spite of the potential to compete, at $600 (about Sh51,000) per tonne, making consumers pay dearly for the commodity.

"Factories are grappling with high volumes of processed sugar and supermarkets and shops are not complaining of sugar shortages, meaning, they are procuring cheaply from the illegal traders," he said.

West Kenya Sugar Company said millers have no option but to increase the price to cushion its bottom line in the face of a high cost of production.

"Even at Sh3,600, the profit margin is extremely narrow and the evidence is clear as most millers are not paying farmers on time," an official at the private miller who asked not to be named recently told the Nation.

There have been unverified complaints from sugar distributors that factories are colluding with cartels to sell large quantities of sugar to them (cartels) cheaply only to adjust the ex-factory prices upwards in order to share the spoils.

The news follows reports that Kenya has won an extension of the Comesa special safeguards on the importation of duty-free sugar from the trading bloc, giving the country more time to complete reforms in the ailing industry.

The decision allows Kenya to limit the entry of imported sugar to 350,000 tonnes needed to meet the annual production deficit as it strives to be competitive.


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Source: Nation (Kenya)


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