SUGAR PRODUCTION

Sugar production down by seven percent

Sugar companies operating below capacity due to severe shortage of the raw material

In Summary

• Only five factories including Transmara, Sukari, Butali, Kibos and West Kenya Sugar Companies operated continually for the whole month.

• A total of 292,579 metric tonnes were sold between January and August compared to 316,982 tonnes traded in the same period last year, which is a drop of eight percent.

Sugar stock at a warehouse in Muhoroni Sugar Company
LOW PRODUCTION: Sugar stock at a warehouse in Muhoroni Sugar Company
Image: MAURICE ALAL

Sugar production has dropped by 23, 046 metric tonnes between  January and August this year, according to the Sugar Directorate.

Interim director Solomon Odera, attributed the drop to the  2017/2018 drought which he said the industry is yet to recover from.

"In addition, lack of prompt payment to farmers  by some millers has also dampened cane development in the sugarcane growing regions, hence a fall in production in most of the sugar factories," he said.

 

The August sugar report released yesterday by the directorate shows that the January to August sugar production was 302,627 metric tonnes compared to 325,673 metric tonnes  over the same period last year, a seven percent drop.

Odera said the continued closure of Mumias, Kwale and Chemelil sugar factories has had a major negative impact on production.

“Moreover in the month of August 2019, Nzoia and Olepito Sugar Factories did not operate, thus blighting sugar production. In addition, South Nyanza and Muhoroni companies crushed cane for only ten and four days respectively,” he said.

He said inadequate sugarcane for milling has greatly hampered and negatively affected continued operation of sugar mills, hence the continued decline in production.

Only five factories, Transmara, Sukari, Butali, Kibos and West Kenya Sugar Companies operated throughout the month.

The report shows that the total sugar closing stock held by all the sugar factories at the end of August 2019 was 9,244 tonnes against 8,595 tonnes observed in August 2018.

Odera said the average sugar prices of a 50kg bag at the factory at the beginning of the year 2019 was Sh4,082 which then dropped to Sh3,868 per 50kg bag in February.

 

He said the downward trend was halted in March when the prices settled at an average of Sh3,912 per 50kg bag.

 

The prices increase steadily in April and May to a mean  of Sh3,990 and Sh4,632 per 50kg bag respectively.

“But due to the increasing pressure from cheap sugar imports, the price reversed steadily downwards from June through to August 2019. The period closed in August with a monthly average of Sh4,156 per 50 kg bag, " said Odera

The price range by last month was between Sh4,100 - 4,300 per 50kg bag.

Wholesale sugar prices picked a similar trend to that of the factory prices.

The prices in January 2019 averaged  Sh4,305 per 50kg bag and decreased to a low of Sh4,131 per bag in March 2019.

By June, the price had gone up again to Sh4,744 per 50kg bag.

“The price range in August 2019 was between Sh4,100 - 4,700 per 50kg bag. Local sugar prices ranged between Sh4,200 - 4,700 giving an average of Sh4,426 per 50kg bag, while imported sugar traded at an average price of Sh4,318 per 50 kg bag,” the report shows.

The report further shows that retail sugar prices at the beginning of the year 2019 was at an average of Sh112 per kg and dropped by Sh107 per kg in March.

Odera explained that due to the increasing wholesale sugar prices, retail prices went up by Sh116 by June.

By August, the average price for both local and imported sugar was at Sh102 per kg.