Ending Mumias Sugar Court Battle for Renewal

Columnists

Ending Mumias Sugar Court Battle for Renewal


Entrance gate to the Mumias sugar company. PICTURES | ISAAC WALE | NMG

Summary

  • Production increased from around 635,700 tonnes in 2015 to 491,100 tonnes in 2018 of ground sugar.
  • Among the 14 sugar mills, Mumias Sugar was the largest processor with an annual installed capacity of 520,000 tons. This has changed.
  • According to the auditor general, the company is technically insolvent. As of February 2020, its total debt stood at 90.4 billion shillings.

Sugarcane is a major cash crop in Kenya, but production continues to decline due to various challenges.

At the farm level, poor seed quality, disease, high input costs and late payments are a headache.

Kenya’s total national consumption exceeds production by more than 300,000 metric tons. Production increased from around 635,700 tonnes in 2015 to 491,100 tonnes in 2018 of ground sugar. This year, it should reach around 650,000 tonnes against domestic consumption of one million tonnes.

Among the 14 sugar mills, Mumias Sugar was the largest processor with an annual installed capacity of 520,000 tons. This has changed.

According to the auditor general, the company is technically insolvent. As of February 2020, its total debt stood at 90.4 billion shillings.

Public sugar factories are also in difficulty and some have stopped production.

This trip required a turnaround. In December 2021, Sarrai Group obtained a lease for the revival of Mumias Sugar. However, a number of court cases challenging the award delayed the start of operations.

Right now, the focus should be on turnaround since the economic viability of the business is beyond doubt.

As battles for supremacy continue, the small farmer finds himself with a sour taste in his mouth as the economy also feels the pinch for a number of reasons including loss of jobs and tax revenue.

Sugar cane growers are grappling with fluctuating prices, rising expenses and mounting debt, crop losses due to uncertain rainfall and closed factories.

There is a need to revive Mumias Sugar immediately, either through privatization as it is or through state bailouts to end the suffering of the impoverished farmer downstream.

The revival of this fallen giant will benefit as it will create backward and forward linkages for the benefit of stakeholders including the local community, farmers, employees and businesses.

The State should remedy this by accelerating the recovery of other public millers.

Rachel J. Bradford