High sugar prices to persist due to low supply in the global market

By Ben Kinyanjui

High sugar prices could last a little bit longer due to sugar shortages in the global market, Agriculture minister Sally Kosgey has said.

The minister said major sugar producing countries including Brazil had converted sugar cane from producing sugar to biofuel hence denying the world market the much required sugar supplies.

“Sugar shortage is a global problem. Some countries that used to produce a lot of the product now use sugarcane to produce biofuels,” she says.

Though Kenya produces almost 70 per cent of its sugar need, the balance is imported from the Common Market of East and southern Africa (Comesa) countries but the high demand has pushed prices higher.

By October last year, Kenyans were paying some of the highest sugar prices in the world raising fears that there were unscrupulous businessmen who were out to freeze Kenyans by distorting the market.

However, Kosgey was quick to dismiss the claim saying the shortage was caused by can shortage and factories that closed down for annual maintenance.

And in an effort to boost cane farming, the Kenya Sugar Board released Sh500 million to the farmers to be used as loans. It is charged at five per cent interest per annum.

The loan facility, which is to be channeled through the Agricultural Finance Corporation (AFC), is expected to improve sugar production in the country, especially after the country began experiencing shortages that have led to high prices.

“Our farmers will now be able to improve on their productivity with the loans,” said Kosgei Wednesday, during hand over of the cheque to AFC.

She, however, warned farmers against deliberate defaults in their loan repayments, with some of them expecting the government to write-off the debts.

Take advantage

“We don’t want them to take advantage of failing to repay the loan and sitting back expecting the government to write off loans. They must pay back the loan, now that it is attracting the lowest interest rate in the market,” she said.

However, the move is not enough to tackle the myriad problems facing the multi-billion shilling industry.

The government is yet to restructure the sector and privatises most sugar factories that it owns. The western region is also said to be a high cost sugar producing zone compared to the coastal region.

An attempt by Mumias sugar Company and the Tana and Athi River Development Authority to start cane farming in Tana River County could provide an alternative as the area is suitable for irrigated cane farming.