Molasses shortage threatens operations at distillers

By Anderson Ojwang

A biting shortage of molasses has forced a leading distiller to cut down operation while others face imminent closure.

Similarly, due to the shortage and stiff competition from other users, the cost of molasses has shot up from Sh3,000 per tonne for the factories to Sh7,000. Other traders are buying the commodity at Sh9,000 per tonne.

Managing director of Spectre International Ruth Odinga said the crisis in the industry was likely to cripple their operations and those of Agro Chemical Food Company and London Distillers, the country’s major distilling firms.

"The crisis is likely to run us out of the business. We do not understand why other traders are being given preferential treatment in regard to purchase of molasses while we are forced to close down," she said.

Shortage of sugarcane coupled with the dry spell has resulted in low cane being crushed by sugar factories. Ms Odinga expressed concern that a declaration by the Kenya Sugar Board (KSB) that distillers be given 80 per cent of the molasses produced by sugar factories was not being implemented.

Inadequate

Last year, during a stakeholders’ meeting between KSB and registered distillers, it was agreed that Agro Chemical, Spectre International and London Distillers get 80 per cent of the molasses at the prevailing market prices.

Other consumers were to share the 20 per cent but with the liberalisation and legalisation of chang’aa and other brews, the demand for molasses has been on the riser

The demand for molasses currently stands at 400,000 metric tonnes per year against a supply of 190,000 metric tonnes with the three distillers currently have a demand of 190,000 metric tonne per year.

Odinga said in October they only received 1,200 tonnes of molasses while in November they received 1,000 tonnes, an amount she says is inadequate.

"We have decided to send home more than 300 employees because we do not have the raw materials. We are operating below the optimum," she said.

Odinga said the Government should consider charging tax on small molasses traders to create a healthy and conducive environment for competition.

"We pay our taxes and I do not think the small traders also pay tax. We fear we could be driven out of the business," she said.