President Uhuru Kenyatta spells out plan to revive sugar industry

President Uhuru Kenyatta ended his silence on the controversy in the sugar sector with a pledge to revive the industry and have the farmers in the sugar belt benefit.

Speaking yesterday at the Nairobi International Trade Fair just hours after jetting in from the US, the President said his government had written off debts worth Sh39.7 billion that sugar millers owed the Sugar Development Levy Fund.

He said his administration had to “take a hard decision to support the sector” that had “lost momentum, and fallen below the high standards of the past”. Mumias Sugar, the biggest sugar miller in the country where the government has a stake, is also a beneficiary of Sh1 billion from the government, plus another Sh2 billion in rights issue expected in the current financial year.

The millers up for privatisation are Chemilil Sugar, Muhoroni Sugar, Sony Sugar, Nzoia Sugar and Miwani Sugar.

“The costs of production have risen; farmers and factories still labour under a burden of debt and ageing equipment, which means low productivity,” said President Kenyatta.

He added that Sh1.4 billion was also given out to buy equipment in nine sugar mills, Sh1.2 billion for cane development, Sh2 billion for credit to farmers and Sh1.5 billion for rehabilitation of sugar mills.

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The President also issued a terse message that the managers must make sure the money is used to return the companies to profitability.

The news comes a month after a reported sugar import deal between Kenya and Uganda raised a political storm, with the Opposition saying the deal was likely to kill the sector, which is the economic backbone of the Western Kenya counties of Busia, Kakamega and Bungoma.

In yesterday’s address, Uhuru was upbeat that farmers would not only boost the economy, but also benefit from their sweat.

Subsidy programme

In the face of the biting challenges in the sector, Kenya’s average cane yield improved by five tonnes from 55 in 2013 up to 60 tonnes last year.

He said: “In recognition of serious threats of climate change, my Government is committed to attainment of the 10 per cent tree cover from the current 7 per cent.”

Mr Kenyatta further reiterated his government’s commitment to cushioning farmers against the high cost of input. He said: “This year, reflecting this subsidy programme, prices of fertiliser were reduced from Sh3,700 to Sh1,800 for DAP, and from Sh2,700 to Sh1,500 for CAN.”

More than 206,000 metric tonnes of fertiliser was distributed through the National Cereals and Produce Borad (NCPB) to farmers this year in a subsidy programme that cost the Government Sh3 billion.

The Government last month broke ground for the construction of a fertiliser plant in Uasin Gishu that will ensure quality and cheaper farm input. “Initially, the plant will blend fertiliser and eventually get into fertiliser manufacturing. When it is done, we can be sure of availing far cheaper and high quality fertiliser to our farmers,” he noted.

He also announced establishment of a Fertiliser and Seed Development Fund with initial investment of Sh3 billion: “But we expect to gradually increase the funding to Sh15 billion in the near future.”

This year the country expects 43 million bags of maize up from 38 million harvested last year.

On irrigation projects, the Head of State said his administration is keen in lessening dependence on rain-fed agriculture and has since raised acreage under irrigation.

“Last year, through the Expanded National Irrigation Programme, my Government rehabilitated and expanded national irrigation schemes by approximately 25,000 acres. This financial year, we have allocated Sh13 billion for the completion of 175 irrigation projects. Once completed, this will bring an additional 42,500 acres under irrigation,” he added.

The government also looks to increasing rice production.

He acknowledged challenges facing tea growers but observed that in 2014 the export earnings hit Sh101 billion.

Some of the initiatives to improve the coffee sector include liberalisation of marketing and milling of coffee, debt waiver, and establishment of Commodities Fund, which has to date disbursed over Sh2 billion to 80,000 beneficiaries.