KENYA – Kenyan sugar millers have threatened to cease operations by Friday amid a contentious disagreement over sugarcane pricing with farmers.
The dispute stems from a court ruling directing millers to pay farmers Kes5,900 (US$45.04) for every tonne of sugarcane, an increase from the previous rate of Kes5,100 (US$38.93).
The court’s decision followed a resolution by the cane pricing committee on April 8, which announced the revised sugarcane prices, raising them by Kes800.
However, the Kenya Sugar Manufacturers Association (KSMA) decried the court order, labeling it as a threat to the economic sustainability of sugar factories and related businesses.
Joyce Opondo, Secretary of the Association said, “To force millers to revert to pay farmers at the old price of Kes5,900 (instead of Kes5,100) is a direct violation of our rights and basic trade fundamentals and an outright and ill-informed attempt to cripple our operations and consequently the livelihood of the very farmers and other industry dependents.”
In response to the court directive, the millers have issued a notice to the Ministries of Agriculture and the National Treasury, demanding government intervention to address their grievances.
They have threatened to suspend operations starting Friday until their demands are met, citing concerns about job losses, revenue implications, and crop wastage due to lack of market demand.
The millers are particularly questioning the functioning of the Sugarcane Pricing Committee (SPC), comprising representatives from farmers, millers, county governments, and industry regulators.
The committee is tasked with monthly reviews of sugarcane prices based on prevailing market conditions.
However, the influx of cheap sugar imports sanctioned by the government has led to a decline in local sugar prices, prompting the committee to adjust the cane rate downward to Kes5,100 (US$38.93) per tonne.
The millers argue that the court order to revert to the higher price is a violation of established trade principles and contractual agreements between them (millers) and farmers.
The court order, emanating from a case filed by sugar cane farmer Charles Atyang Atiang, challenges the decision to reduce sugarcane prices.
Atiang argues that the decision fails to protect the interests of farmers and threatens the stability of the local sugar industry.
“The circular reducing the price did not take into account the current inflationary trends in the country and the fact that the local market has been swamped with imported duty-free sugar which has contributed to reduced sugar shelf prices,” he said.
Atiang further contends that the government’s actions exceed its authority under relevant legislation, as the waiver of import duty was not intended for trade in the local market but for emergency relief.
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