Kenyan Sugar Millers Threaten To Stop Operations Over Court Ruling Directing Increase In Cane Prices

• Kenya Sugar Manufacturers Association expressed disagreement with a court decision directing them to pay farmers KSh 5,900 per tonne instead of KSh 5,100
• The association noted that the closure of factories would result in the loss of 30,000 jobs and a monthly revenue loss of about KSh 2 billion
• Stanley Korir, a farmer in Nandi, told TUKO.co.ke that millers rely on farmers for their operations, and as such, they would incur bigger losses if they shut down

TUKO.co.ke journalist Japhet Ruto brings over eight years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.

Barely three weeks after sugarcane farmers won their case to increase prices in court, sugar millers have threatened to stop operations starting on Friday, May 10.

Why millers threatened to cease operations

In a letter to the Agriculture and Food Authority, the Treasury and Agriculture ministries, the Kenya Sugar Manufacturers Association expressed disagreement with a court decision directing them to pay farmers KSh 5,900 per tonne instead of KSh 5,100 that the cane pricing committee set on April 8, 2024.

Through their chairman, Jayantilal Patel, the millers claimed that the price violated the cane pricing committee's mandate and their contractual agreement with the farmers.

They further claimed that this would have far-reaching financial ramifications for the millers.

How many jobs could be lost?

Citizen Digital reported that the association noted that the closure would result in the loss of 30,000 jobs, a monthly revenue loss of about KSh 2 billion, and a decrease in the sugar trade.

They also disclosed the cost to farmers, claiming that they would lose KSh 3.6 billion each month they receive from millers for the cane supply.

However, the possibility of a shutdown did not seem to affect the farmers.

Stanley Korir, a farmer in Nandi, told TUKO.co.ke that millers rely on farmers for their operations, and as such, they would incur bigger losses if they shut down.

"Millers can stop operations if they want, but the managers running the factories should know that they must compensate us well for our produce. It will be counterproductive for them to shut down as I think they will incur more losses than paying the extra KSh 800 per tonne," Korir said.

When did cane crushing resume?

The government lifted the five-month ban on local sugar manufacturing in December 2023.

Kenyan sugarcane farmers won big after West Kenya, Butali Sugar Mills and Mumias Sugar Company increased cane prices to over KSh 5,200 per tonne.

Local sugar mills in Kenya produced 63,075 tonnes of the sweetener in February 2024, the highest number since they resumed operations.

Sugar prices in retail shops across the country eased to around KSh 150 to KSh 200 for a 1kg pack.