Loan facility to encourage Kenya's small scale sugarcane farmers

About one million Kenyan small scale sugar cane farmers are hoping a cash injection from two agricultural bodies can help revitalise the troubled industry. The Kenya Sugar Board (KSB) will loan out 500 million Kenya Shillings ($7 million) to farmers in sugar growing areas via the Agricultural Finance Corporation (AFC), a State agricultural lending body. This marks a shift from past funding initiatives, which often channelled money to farmers through out-grower institutions.

Agriculture minister Kipruto arap Kirwa recently launched the fund n Kisumu with Sh945,000 ($14,000) in start-up loans. Farmers are loaned the money at interest rates of 12 per cent per year. The scheme is expected to lead to an additional 9,000 acres of cane being grown over the next five years. The extra acreage is predicted to add around 418,000 tonnes of cane for processing. The loans are also meant to encourage research and development of cane, develop irrigation systems and help farmers get tractors and trailers to ease transportation of the product.

Faced by intense competition from cheaply produced sugar from Common Market for Eastern and Southern Africa (COMESA) countries ever since the market was liberalised, local producers have been under heavy pressure to increase efficiency and lower prices, while growing the 500,000 metric tonnes now produced in Kenya. "This accounts for close to 67 per cent of the national requirement of 750,000 metric tonnes," said KSB chairman Saulo Busolo.

The new scheme is part of measures geared to bridge the outstanding demand and reduce unused capacity by the six factories.

Business Day