Is Kenya Sugar Board justified to reduce cane prices?

Sugarcane trucks parked in West Kenya Sugar Company. [Mumo Muvune, Standard]

The Kenya Sugar Board has been championing the rights of cane farmers, and the recent adjustment of cane prices does not warrant the uproar.

While we appreciate that price reduction is never a sweet thing to farmers, it is critical to interrogate the circumstances that dictate prices in the sugar sector.

First of all, those in the know are aware that cane production has significantly increased following the reforms carried out by the government in the sector, pushing the domestic supply upwards.

The reality is that the increased supply of cane has driven up the cost of processing and handling. This means it is nearly impossible for millers to stay in business while servicing high payout rates to farmers.

In my view, settling at a price of Sh5,500 was a fair compromise aimed at striking a balance between the interests of both farmers and millers.

In any case, Kenyan cane farmers still enjoy the best cane prices per tonne compared to the rest of East African neighbours.

It should be appreciated that the pricing of cane should generally align with the market forces of demand and supply.