Millers’ earnings have been hit by high cost of cane, attributing recent losses to the exorbitant price even as the government says the processors are bleeding due to inefficiency.
Millers have raised concern over the Sh4,025 paid to growers saying it is affecting ability to survive.
Mumias Sugar Company
in its financial statement last week said the rise in cost of raw material by 28 per cent is one of the reasons it registered a 42 per cent loss.
However, the regulator has attributed the losses on inefficiencies and harvesting of immature cane.
“You cannot run inefficiently and expect to make profit. The prices that are currently in place benefit both the farmer and the millers,’ said Alfred Busolo, director general Agriculture and Food Authority.
Kenya Sugar Millers Association (KSMA) wants the cost to be reduced to Sh3,000 per tonne for it to be in tandem with the falling consumer cost of sugar, which currently stands at a year low of Sh130 a kilo.
KSMA argues it will be unable to pay farmers and meet other financial obligation with the current price.
But millers will have to wait longer before the price of cane is reviewed after the governors from sugar growing zones rejected the proposed reduction, pushing the meeting that had been planned by Sugar Pricing Committee last month to review the cost to a later date.
The pricing committee pegs the cost of cane on consumer sugar prices and other variables as indicated in the formula and it is supposed to be changed monthly based on the changes at the shelf.
The price of sugar has been falling following an increase in imports in the last couple of months