Lawmakers sitting in the Agriculture committee raised concern with the duty-free import and the manner in which the suppliers were identified.
This was even as it emerged that the government lost more than Sh16.5 billion in revenue resulting from the importation of tax-free maize and rice.
Linturi, however, did not disclose the forgone revenue as a result of sugar importation into the country.
The amount could thus be higher factoring the amount forgone as a result of duty-free on sugar imports.
Appearing before the Agriculture committee chaired by Tigania East MP John Mutunga, Agriculture Cabinet Secretary Mithika Linturi told MPs that maize importation cost the state Sh3.3 billion, while rice was Sh13.2 billion.
“It is worth noting that there was revenue lost but it was foregone to safeguard Kenyans,” the CS said.
“Therefore, the revenue forgone resulting from maize importation was Sh3.296 billion, while [for] rice it was Sh13.166 billion totalling to Sh16.462 billion.”
The government last year approved importation of duty-free sugar, rice and maize into the country to plug food deficit and stabilise high prices of food commodity.
Linturi attributed the deficit to the prolonged drought that led to poor harvest across the country.
The government also allowed a six-month duty-free importation window for traders to ship in 1.1 million metric tonnes of maize and 1.1 million metric tonnes of rice.
According to the CS, a total of 156,957 metric tones of maize valued at Sh6.6 billion was imported between January and September while 707,107 metric tones of rice worth Sh37.6 billion was shipped into the country.
He further said that only 163,827 metric tonnes of sugar have been imported into the country since the duty-free importation window was opened.
Linturi was also at pains to explain how the suppliers were identified in the importation of the basic commodities.
Mutunga questioned the criteria the government applied to identify the suppliers who were engaged in the multibillion-shilling transactions.
“Are you saying that any company would be allowed to import? There was no criteria for identifying the suppliers?” he said.
The Tigania East MP was responding to Linturi’s admission that there was no procurement of the suppliers and that the ministry only invited interested bidders who were vetted and allowed to import.
“The ministry issued a public notice dated December 2022 inviting eligible millers and traders interested in importing the food commodities to submit their details for pre-qualification,” Linturi had earlier told the committee.
“A total of 461 applications were received out of which 186 did not meet the criteria for pre-qualification. 275 applicants were responsive and allowed to participate in the importation of food commodities.”
Nyando MP Jared Okelo further questioned why the sugar prices in the market did not fall despite government bringing in sugar into the country.
“The main reason why government was involved in the waiver was to reduce the cost of the commodities, how much was sugar retailing before and after the imports?” the lawmaker said.
Linturi told the committee that the country has an annual sugar deficit of about 600,000 metric tonnes and relies on the Comesa region.
He said the annual national consumption of sugar is estimated at 1.14 million metric tonnes out of which local farmers produce about 300,000 metric tonnes.
“This comprises about 980,000 metric tonnes of brown/mill white sugar and an estimated 160,000 metric tonnes of white refined sugar,” he said.
“Currently, the sugar industry is facing an acute cane shortage across all zones with the exception of the Trans Mara catchment area. Consequently, sugar production is lower, driving ex-factory, wholesale and retail prices up.”
The CS admitted that the sugar prices have remained higher, a development he blamed on the global supplies.
“Duty waivers for sugar have stabilised prices for a short period. However, the price of sugar within the country is high due to scarcity of sugar in the world leading sugar producers such as Brazil, high demand from other sugar deficit countries," Linturi said.
"The depreciation of the Kenyan shilling against the US dollar, the suspension of sugar exports by India due to low production and the introduction of Sh5 excise duty on imports.”
He said that he is in discussions with the Indian government to allow Kenya to import sugar from the Asian nation.
The CS also defended the extension of the window for the importation of duty-free sugar, saying the move was necessitated by the turnaround time required to ship in the sugar consignments.
Initially, the tax-free sugar importation was to end on September 30, 2023, but this has now been extended to December 30.
"Some importers allocated the quantities under the duty-free window were finalising financing arrangements with the banks to enable them secure and ship the consignments," he said.
