KENYA – Sony Sugar will this week receive a loan of Sh500 million from the Co-operative Bank to pay farmers’ arrears after it missed out on a cheap loan from the defunct Kenya Sugar Board.
The money, which will be issued in two tranches, will be used to pay the dues that have been in arrears since March.
“I met with the management of the Cooperative Bank who agreed to wire to us the first batch of Sh200 million this week,” said the firm’s managing director Jane Odhiambo. According to the sugar directorate, Sony missed the loan last year because its application was received late.
“The application from the miller did not reach in time and that is why they were not considered for the loan,” said the interim director Rosemary Mkok. She said the miller has made another application this year and the regulator is conducting due diligence, with a decision to be made in the next seven days.
Last year, the sugar directorate advanced Sh1 billion to Nzoia Sugar, with Mumias receiving Sh500 million in form of loans to meet its obligation to farmers. Low sugar prices as a result of cheap imports nearly paralysed activities of the factories as millers were left with huge volumes of stock.
The Sony MD said the ex-factory price of the commodity went to as low as Sh3,000 against the production cost of Sh4,800 per 50 kilogramme bag. At the moment, the stock of sugar held by processors has dropped by 68 per cent in the last five months.
Industry statistics indicate that millers were holding 13,000 tonnes of sugar in their factories, down from 42,000 tonnes in February. The optimum level is 10,000 tonnes. The industry had attributed the high stocks to large volumes of illegally imported, cheap sugar circulating in the market.
The ex-factory price of the sweetener has climbed to Sh3,200 from Sh3,050 in May. The sugar directorate has set aside Sh366 million to re-introduce a loan scheme that will see farmers advanced cash at an annual interest rate of less than five per cent.
Cane farmers will get advance payments of up to 40 per cent of their expected earnings, a year before delivering their crop to millers.
August 31, 2014; http://www.businessdailyafrica.com/Corporate-News/Sony-opts-for-Sh500m-bank-loan-after-missing-cheaper-facility/-/539550/2436594/-/9jidftz/-/index.html
