Sugarcane Production Contracts and Cane Prices

Sugar Companies produce many by-products of the sugar extraction process; including bagasse, filter mud, and molasses. A typical sugarcane complex with a capacity of 3,000 tons per day can produce 345 tons of sugar, 6,000 liters of alcohol, 3 tons of yeast, 15 tons of potash fertilizer, 25 tons of pulp, 15 tons of wax, 150 tons of press-mud fertilizer and 750 kilowatts of power from bagasse. Ignoring Yeast, Potash fertilize, pulp and wax which Kenyan sugar companies do  not currently produce, a ton of sugar cane produces as follows:

 

PRODUCT PER TON of CANE

Factory Price

Sugar

115Kg

KES16330.00

Alcohol

2litres

KES160.00

Filter mud Fertilizer

50kg

KES2125.00

Energy from Bagasse

0.25KW

KES1.44

TOTAL

 

KES18,616.44

The shelf edge prices for a kilogram of sugar is KES200.00, assuming gross profit percentage of 40% for retail supermarkets, the factory prices is KES143.00 otherwise the factories are colluding with the buyers to fleeces their companies and customers.

Mumias Sugar Company Ltd just increased farmer payments per ton of cane to KES4125.00 that gives the factory KES14,491.44  gross per ton. I have no opinion on the relationship of what the farmer gets paid against the gross income, it’s for the farmers to decide.

The government in Kenya finally decided that farmers  have a right to deal in Sugarcane as they think fit provided the contracting processors do not honor the production contracts.

Last updated on : 00/00/0000