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Citizen Weekly

Monday, 16 February 2015

Nzoia unable to sell sugar as Wetangula plots protests

Nzoia Sugar Company is unable to sell sugar worth Sh500 million which is being withheld in its warehouse due to low price tags and the influx of cheap sugar imported from the Common Market in East and South Africa member countries.
Nzoia Outgrowers Company director Joash Wamang’oli while addressing the press in Bungoma town said the firm cannot sell the produce now due to low pricing in the market as compared to high percentage the company is pays out to farmers. Wamang’oli now wants the government to lend the firm money to pay cane farmers as they wait for the increase in the market price so that they can service the loan.
“Let the government understand the woes facing Nzoia sugar cane farmers. The factory is currently suffering because it cannot sell sugar at a throw-away price and what we need is the government to bail us out so that after selling the commodity, we can repay the loan,” said the director who is a former legislator.
He said that cane farmers and the firm’s board and the management have not found the solution to save farmers from the agony of seeking for an alternative means of feeding or educating their families due to delayed payment as a result of poor business at the Bungoma based milling plant. Bungoma Senator and leader of minority Moses Wetang’ula criticised the government for failing to protect millers against exploitation by middlemen dealing in cheap imports which is hurting the farmer and local firms.
Wetang’ula wondered why the government was taking too long to end cheap imports of sugar by breaking the cartel of sugar barons in the country that are killing the sugar sector.
“Let the government get to the bottom of the problem that is affecting producers and ensure that they are the greatest beneficiaries,” said Wetang’ula.
Wetang’ula accused a local firm of importing cheap sugar and repackaging it and selling at a high price, saying he will lead Cord politicians in storming the firm and name the real culprits.
“Farmers and millers have invested heavily in farm inputs and machinery yet the few individuals are benefiting from smuggling in cheap sugar which is repackaged and later sold locally,” he noted.
Wetang’ula warned that if the influx of cheap and untaxed sugar is not controlled, it will kill the sugar industry high resources used yet there is no profit.
“Let the government facilitate local millers in cane development and also reduce the transport cost to save the farmers losses that they are currently facing,” said the Bungoma senator.
Sugar factories in Western Kenya are in a crisis after accumulating 9,355 tonnes of the commodity which they are unable to sell due to suspected dumping of duty-free sugar in the market.
Kanduyi MP Wafula Wamunyinyi said the government must take drastic measures in stopping the cartel that is threatening the sugar industry with collapse. Wamunyinyi who has a history of successful demonstrations and protests said he is planning a major protest in Bungoma town against the government’s failure to protect sugar millers and farmers.
“I can’t sit and watch my voters who are mostly cane farmers living in squalor due to poor cane price as millers struggle with selling their produce, let the government do a honourable thing of fighting the sugar barons or else we shall tell them loudly while in streets protest,” said Wamunyinyi.
Western millers notably Mumias, Nzoia, West Kenya and Butali Sugar have raised concerns over the massive dumping of duty-free sugar and warn that they may find it difficult to meet obligations like paying farmers and salaries.
Traders are opting to buy cheaper imported sugar instead of that produced by local sugar millers. Nzoia Sugar managing director Saul Wasilwa says they will be forced to reduce the prices to move the stocks.
“The stocks are hardly moving, and we may have to cut down our prices as the only alternative to improving sales,” Wasilwa told Citizen Weekly in an excusive interview.
The sugar directorate indicates millers are selling a 50-kilogramme bag of sugar at about Sh4,200, down from Sh5,000 in September. Sony Sugar adds that price had recently dropped to Sh3,950.
But retail prices have been on the rise in recent weeks. The two kilogramme packet is retailing at Sh260 from Sh230 in October.
By press time, our spot check indicated that Nzoia Sugar had stocks of 3,372 tonnes, Trans Mara (2,796 tonnes), Sony (2,073 tonnes) and Chemelil (593 tonnes). Earlier on, the government confiscated a consignment of 800 bags of illegal sugar in Mombasa. Statistics from the sugar directorate indicate that unsold stocks have nearly doubled since October 2014 from 4,894 and this could worsen after Mumias and Butali Sugar factories resumed operations after shutting down for more than a month for yearly routine maintenance.
Nzoia Sugar says that daily sales have dropped from a daily average of 20,000 bags in October 2014 to the current 5,000 as traders shun local millers. The industry regulator estimates the cost of producing a tonne of sugar at about Sh47,000 in Western Kenya compared to Sh27,000 in rival producers such as Egypt. Kenya has an annual sugar deficit of nearly 300,000 tonnes, which is usually upped by imports from producers in the region. Kenya and Uganda are locked in a row over sugar importation with the latter demanding full access of their commodity to the Kenyan market.