Kenya : Sugarcane Price Hike to Squeeze Millers’ Margins Further
The government raised sugarcane’s minimum price to Kshs. 5,750 per tonne, marking a 9.5% increase since April. Aimed at compensating farmers facing rising costs and delayed payments, the move follows sugar levy implementation and leasing of four state mills to private firms to revive the struggling sugar industry.
The government has increased the minimum price of sugarcane effective to Kshs. 5,750 per tonne, a Kshs. 250 increment from the previous Kshs. 5,500, which was set in the last hike just three months ago.
- The back-to-back price adjustment, approved by the 4th Interim Sugarcane Pricing Committee, brings the total increase within the last four months to Kshs. 500 per tonne, representing a 9.5% rise since April.
- The decision was made after a review of ex-factory sugar prices for the April to June period, and is meant to ensure fair compensation for cane growers grappling with escalating input costs and historical issues of delayed payments.
- Millers will face higher costs for their primary raw material, which will directly impact their production costs and profit margins if not adequately offset by market prices for sugar.
Principal Secretary, Dr. Kipronoh Ronoh Paul, CBS, in an official communication to sugar millers, stressed the immediate implementation of the new price and the importance of timely payments to farmers.
According to the government, the higher price per tonne directly translates to increased income, offering better financial stability and incentivizing farmers to continue cultivation amidst rising operational costs. This could potentially reverse the trend of farmers abandoning sugarcane for other crops due to poor returns.
The hike comes just weeks after the start date of a 4% Sugar Levy on the ex-factory price for all locally produced sugar sold, and the same rate for imported sugar calculated on the Cost, Insurance, and Freight (CIF) value of each shipment.
The announcement comes after recent conclusion of leasing exercise of four state-owned sugar factories to private millers in a bid to revive the ailing sugar industry.
The four mills, Nzoia, Chemelil, Sony, and Muhoroni, will be leased for 30 years to West Kenya Sugar Company, Kibos Sugar & Allied Industries, Busia Sugar Industry, and West Valley Sugar Company, respectively.
To Read more about Sugar Industry continue reading Agriinsite.com
Source : The Kenyan Wall Street
