Kenya Sugar Millers Threaten Shutdown Over Court-Ordered Increase in Farmers' Pay

By John Lopez

May 08 2024, 15:38 PM EDT

Kenya's sugar industry is facing turmoil as sugar millers have issued a stark warning of a potential shutdown following a court-ordered increase in farmers' pay.

Kenyan Millers Threaten Shutdown Over Cane Pricing Dispute, Risking 30,000 Jobs

According to a report by Citizen Digital, the Kenya Sugar Manufacturers Association has vehemently opposed a court ruling directing them to pay farmers 5,900 Kenyan shillings ($45.05) per tonne, up from the previously set KES 5,100.

The increase, mandated by the cane pricing committee on April 8, 2024, has sparked a fierce backlash from the millers, who argue that it violates contractual arrangements and infringes upon the committee's mandate.

The implications of this dispute are significant. The millers have threatened to commence the shutdown from this Friday onwards, potentially leading to the loss of 30,000 jobs and a staggering revenue decline of KES 2 billion monthly.

Additionally, there are concerns about the impact on sugar trading and the commodity's availability in the market. However, with one farmer, farmers remain resolute in the face of these threats.

Kenya Sugar Millers Threaten Shutdown Over Court-Ordered Increase in Farmers' Pay — Kenyan sugar industry turmoil escalates as millers resist court-ordered pay raise for farmers. Threatened shutdown risks 30,000 jobs and impacts market stability. Photo by Victoria Priessnitz on Unsplash

Kenyan Sugar Projections

Meanwhile, the United States Department of Agriculture (USDA) predicts a 40% increase in Kenya's sugar production in the marketing year 2024/25, reaching 750,000 metric tons; however, the numbers may fall short due to recent complications.

This surge is attributed to an expansion in harvested areas following Kenya's Agriculture and Food Authority (AFA) lifting a ban on sugarcane harvesting. Consequently, as per USDA forecasts, sugar imports are expected to decline by 30% to 455,000 metric tons as domestic production takes precedence.

Moreover, recent adjustments by Kenya's Sugar Pricing Committee, reducing the price of sugarcane by 2% in response to declining retail sugar prices, further complicate the landscape. Jude Chesire, head of the Sugar Directorate, stresses the efforts to stabilize prices through measures aimed at bolstering imports and enhancing millers' efficiency, as reported by AllAfrica.