Of all the types of poaching taking place in east Africa, that of sugarcane may be the least known.
But while wildlife conservationists seek to rally public support for elephants and rhinos, prospects for Kenya’s sugar sector remain bleak.
Small-scale farmers in western Kenya – who make up the backbone of a $540m industry that supports 2m people – regularly sell their crops to impromptu roadside buyers come harvest time rather than honour contracts with millers who provide inputs in exchange for the crops they help finance. The practice sends up prices and goes by the name of cane poaching.
Mumias Sugar Company, which processes 60 per cent of the country’s production from more than 100,000 farmers, says it made pre-tax losses of $26m last year as a result of the combined impact of illegal imports and cane poaching, which it called “the major challenge to our operations”.
“Cane poaching is a symptom of certain challenges in the industry,” says Rosemary Mkok, chief executive of the Kenya Sugar Board. The list of “challenges” in Kenya’s inefficient industry, which stands out as among the worst organised in the continent, is long.
“The Kenyan sugar industry remains under global and regional threat,” the World Bank said in a report late last year. “The industry is also highly inefficient, and only survives due to high tariff and non-tariff protection.”
Kenya’s western farmlands produce about 550,000 tonnes of sugar a year, with imports – officially capped and allowed in solely from the regional trading bloc – of about 250,000 tonnes to meet demand. Yields are the worst in the region, and prices remain the highest.
“The sugar sector has been utterly obliterated in the past 18 months because of inefficiency,” says a Kenya sugar trader.
It costs at least twice as much to produce sugar in Kenya (at $500 a tonne) as it does in neighbouring Tanzania and Uganda, as well as significant exporters Zambia, Swaziland and Egypt. Kenya’s government think-tank, KIPPRA, says the average productivity per hectare in Kenya is 60 tonnes, nearly half as much as Zambia (113 tonnes) and Malawi (105 tonnes). Most farmers produce sugar from plots smaller than a hectare.
“The market has been really bad, because there are too many mills fighting for the same cane without any regulation,” says Twalib Hatayan, a Mombasa-based former sugar trader, who now plans his own plantation.
Five debt-laden, inefficient government-owned mills (of a total 11 in Kenya) are due to be privatised as part of a wholesale reform of the sector, but the process is much delayed.
“Kenya sugar is in crisis – it has done very little to reform the sector in 10 years,” says Edward George, head of soft commodities research at Ecobank. “What are they privatising? The machinery’s old and there are massive debts – no one has wanted to buy these mills in years.”
Worse, a trading deadline from regional bloc Common Market for Eastern and Southern Africa is due to expire in April this year, meaning Kenya will no longer be protected from what could be a flood of cheap imports from countries such as Malawi, Zambia and Mauritius.
Given a global surplus, imports regularly undercut prices for Kenya’s domestically produced sugar. The east African hub economy is seeking a two-year extension to the deadline, but it may be hard to achieve, as any further extension would be in violation of World Trade Organisation rules that permit a maximum of 10 years for special trade protection measures.
Worse still, a series of voracious smuggling networks from Somalia and the Middle East regularly delivers ever-cheaper sugar that dodges 120 per cent tax rates (a rate applicable to sugar imported from Dubai, for example).
Ms Mkok cites three large busts of illegally imported sugar in the past month alone, saying much of it is intended for repackaging to make it look as if it is bona fide and produced from local mills.
“It is quite a problem; we have upscaled our surveillance and, as a result, we caught a huge consignment at the coast that came from Dubai,” she says, adding that another recent sting discovered arms and explosives hidden in sugar that came south across the border from Somalia.
Even those dedicated to the industry believe that improvements are several years away. A belated government strategic master plan commits itself to a sector overhaul that still seems impossible to deliver, and Ms Mkok says the KSB will soon recommend adding new sugar-growing regions beyond western Kenya but the shift could take years.
Experts say it takes up to 18 months for sugarcane to mature in western Kenya, whereas the much hotter, humid coast can deliver a crop in nine months.
Some greenfield projects are close to commissioning, such as the Kwale International Sugar Company, which will revive a 1920s coast plantation. Its $200m processing facility, backed by a 25 per cent stake from Mauritius-listed sugar miller Omnicane, is due to open this year.
Mr Hatayan says: “Sugar has been grown in the west of the country for political reasons more than anything else – trying to create employment for western Kenya, even though it wasn’t viable. He plans to plant his sugarcane in the Tana River Delta if the paperwork goes through.
He adds: “The coast has always been neglected, but we just have to accept and change. We need to grow something else in the west and grow sugar in the right place.”