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{
"id": 252986,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/252986/?format=api",
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"type": "speech",
"speaker_name": "Dr. Kituyi",
"speaker_title": "The Minister for Trade and Industry",
"speaker": {
"id": 293,
"legal_name": "Mukhisa Kituyi",
"slug": "mukhisa-kituyi"
},
"content": " Thank you, Mr. Temporary Deputy Speaker, Sir. I intend to speak not more than five minutes. Mr. Temporary Deputy Speaker, Sir, I stand to support this Motion because it is something that is good for Kenya. It is not something against Government. In supporting this Motion, I would like to say one or two things why all the good things that have been said need to be done. I believe that some of the things have not come out clearly. First, the reality that the problem of poverty among sugar-cane farmers is not entirely because of excessive taxation by the Government. While you see efficiency going up, profits too are going up like the case of Mumias Sugar Company Limited. The profits are declared to be dividends to shareholders. They are given to investors and not equally shared with farmers. So, you can reduce taxes, but unless you address the question of equity with regard to what happens to the surplus that is generated, you will just see higher dividends declared for institutional investors who operate nothing to do with sugar but only speculate in Nairobi at the stock market. We must start by saying that we want to improve productivity and reduce State taxation. We must also address questions of equity so that profits are not always translated into dividends for investors. Secondly, it is true that there is massive poverty in the sugar-cane-producing areas. It is also true that liberalisation is an enemy force where people are vulnerable like the majority of farmers in western Kenya who are predominantly dependent on sugar-cane production. However, there is also the reality that the crisis in western Kenya today is not caused by flooding of imported sugar. I share the sentiment that criminals who use their money to bring sugar cheaply hurt everybody in this country. Today, the crisis is the opposite of what is being said. Last year, the European Union reduced subsidy to sugar by close to 39 per cent. The net effect was to make subsidy-dependent producers of sugar like Mauritius and the Caribbean not competitive any more. Many of those places have converted their sugar plantations into other things. If we couple that with the sustained high price of petroleum which has led to the transition from sugar production to alcohol production, the net effect is that there is a deficit of sugar in the world today. The truth is that up to 200,000 tonnes of sugar can be imported to Kenya. Nobody is importing 200,000 tonnes to Kenya today. We have a deficit in the country because the international prices are higher than the prices in Kenya. Mr. Temporary Deputy Speaker, Sir, we can address the question, but we are trying to look for a solution of yesterday's problem. The problem today is how we can go downstream value- adding products in the sugar industry and how we can produce upstream like improvement in irrigation and competitive priced products. How can we streamline the farmers' organisations like what we see in many of these places that, if I own a tractor I live near Nzoia Sugar Factory. I plough for you two acres. One acre is under sugar-cane. You pay me Kshs2,000 for ploughing for April 19, 2006 PARLIAMENTARY DEBATES 543 you because I will be paid through the farmers' company. The other acre is for maize. You pay me Kshs1,300 directly. How can we destroy those distortions which make suppliers' services expensive for sugar-cane farmers more than other farmers in the area? It is true that there is a problem with the way we regulate power generation in this country. Mumias Sugar Company has idle capacity for generation of power from bagasse. The problem is that we licence private power providers who are paid double what we are ready to give to Mumias Sugar Company when they sell to KenGen. Rationalisation of payment for power by independent suppliers will bill a lot on the use of bagasse for generation of power, sufficient to cover this region. Mr. Temporary Deputy Speaker, Sir, there is a reality we are not talking about, that if we come to the face of liberalisation, some of the sugar factories will fall victim to the Kenya sugar factory. We are just talking about competition from Sudan and Malawi. The reality is that the main threat for the survival of Muhoroni and Miwani if we properly liberalise the sugar industry in Kenya today, will come from SONY, Nzoia and Mumias Sugar companies which have a low factor cost of production of sugar than Muhoroni and which can, therefore, ferry at below production cost of Muhoroni. Apart from looking at neighbours, what can we do to raise the productivity of particularly those factories that have a nominally high cost of producing sugar today? Thank you."
}