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Sugar factories told to adhere to set cane prices

By John Shilitsa | August 31st 2016

Sugar milling firms have been challenged to pay farmers as per the new cane pricing formula that came into force three months ago.

According to Agriculture and Food Authority (AFA) boss Alfred Busolo, the new formula gives a level play ground to both the factories and farmers.

Currently, sugar firms are expected to pay a flat rate of Sh3, 554 per tonne of cane delivered at the factory for crushing.

"The formula was reached by all stakeholders including the industry regulator, representatives of farmers and sugar factories to address the discrepancies in pricing that existed earlier," Mr Busolo told the Standard.

He advised factories not to give unrealistic price offers due to the scramble for scarce raw materials.

Busolo said the regulator will review the prices every month based on the market forces.

Already farmers from Western have started to reap big following scramble for raw materials by factories a situation that has seen prices go up drastically.

Mumias Sugar Company is leading in payments at Sh3, 800 per tonne followed by Nzoia Sugar Company, which is giving farmers Sh3, 554. West Kenya, Kibos Sugar and Allied Industries and Butali Sugar Company are paying Sh3, 400 each.

Farmers have welcomed the new cane formula saying it will help them invest more in sugarcane development.

Earlier, Kenya National Federation of Sugarcane Farmers Deputy Secretary General, Simon Wesechere said farmers need to access subsidized inputs including fertilizer and certified seed cane to help them upscale production.

"Most farmers have been rendered insolvent due to challenges that come with sugarcane farming hence the current biting cane shortage which could spell doom to leading factories such as Mumias sugar."

He said the regulator must consider compelling Millers to pay farmers at least Sh6, 000 per tonne and create enabling environment for investors in the sugar sub-sector in order to revamp the industry.

Speaking separately, Mumias East MP Benjamin Washiali took issue with critics of ongoing Mumias sugar bailout arrangement by government.

"We have those claiming that the company will have to pay back a grant of Sh1 billion given to them by the government, that is farfetched argument," he told the Standard at Shianda CDF offices.

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