January 22, 2015
Reuters
By Edith Honan
NAIROBI Jan 21 (Reuters) - Kenya's raw sugar production is expected to rise 4 percent to 617,039 tonnes in 2015, buoyed by extra factory capacity and improved supply of cane, the industry regulator said on Wednesday.
East Africa's biggest economy has an annual sugar deficit of around 200,000 tonnes, which is usually filled by imports from other producers in the region. The country is struggling to improve output due to relatively high production costs and loss-making sugar factories.
The Kenya Sugar Directorate said Kenya produced 591,658 tonnes of sugar in 2014, a 1.4 percent drop from a record harvest of 600,179 tonnes in 2013.
"The decrease in sugar cane crushed is mainly attributed to closure of the mills and cane under-supply in Mumias zone," Rosemary Mkok, managing director of Kenya Sugar Directorate, told Reuters, referring to a part of the country's sugar belt.
Mumias sugar factory in western Kenya was closed for a period to allow its cane to mature and for maintenance, she said. There was also an unscheduled closure of Kibos sugar factory after its boiler broke down, as well as a scheduled shutdown of West Kenya sugar Company for maintenance, said Mkok.
A fourth miller, Soin Sugar Company was also shut for the entire second-half of 2014 to allow for ongoing factory modernisation, the regulator said, affecting overall performance of the industry.
Kenya has long had plans to privatise five sugar factories to reduce inefficiency before the end of trade safeguards that limit imports from the Common Market for Eastern and Southern Africa (COMESA) trade bloc.
The safeguards were due to end in March 2014 but Kenya was granted a one year extension to conclude key reforms in its sugar industry.
"Privatisation of the public owned mills is in progress and will provide a platform for the injection of much needed fresh capital to facilitate modernization, expansion, value addition and diversification," Mkok said.
The cost of producing a tonne of sugar at about $570 in western Kenya, estimates by the regulator showed. The cost is $240 to $290 in producers such as Egypt.
Reference: http://af.reuters.com/article/kenyaNews/idAFL1N0V012T20150121