Business Daily (Nairobi)
Steve Mbogo
30 October 2009
Sugar millers in Kenya have, for a long time, relied on white sugar as the only source of revenue, leading to challenges that have pushed once known factories into oblivion while others stand on weak foundation.
But it is emerging that the factories have opportunities linked to prudent handling of sugar waste, which easily fits into the global push for going green.
For Kenya, whose forest cover is at less than two per cent, a paper technologist says sugar bagasse (a residue) can be used instead of wood to produce paper -- at a cheaper energy cost."I always believe Kenya will get to a level where sugar will be just one of the products of sugarcane processing," says Eliud Wamocho, a Webuye-based paper technologist.
"Bagasse is used widely for paper manufacturing in countries like India where cottage industries use it as the raw material. We can do the same in Kenya."
The irony is that the now closed Pan-African Paper Mills (Pan Paper), which is located at the heart of Kenya's sugar belt could have used the residue to manufacture paper.
The use of the raw material for paper manufacturing would mean that the factory use less or no trees.
If Pan Paper used bagasse, it would cut its energy costs by up to 30 per cent.
According to the former CEO of Pan Paper, Mr Neranjan Saha, the cost of electricity accounted for 33 per cent of all the factory's running expenses.
Research shows that bagasse requires less power to make paper compared to wood.
It is estimated that about 10 per cent of paper production worldwide is from agriculture waste like bagasse, which can also be used to make particle board, fibre board, cardboard, molasses and compost.
Mumias Sugar Company (MSC), Kenya's largest sugar miller and, from last month, a supplier of electricity to the national grid, is the company that is so far recording gains from the 'green economy.
Next month, the company is expected to launch a water bottling plant.
The water, the miller says, will not be sourced from a borehole, a spring or even a river, but from condensed steam that runs its electricity turbines.
Besides, the sugar firm in Western Province will start producing ethanol -- a growing alternative to petrol for running engines -- from molasses, one of the by-products of sugarcane.
Mumias plans to set up a processing plant with capacity to produce up to 22 million litres of ethanol annually.
The company projects it will start earning at least Sh75 million annually from next year from the sale of carbon emission reduction made possible by its co-generation project.
It has produced 38MW of electricity from the project, making it one of the major green projects in Kenya.
It is already selling 26MW to the national grid.
"A feasibility study has been completed on the viability of setting up an ethanol plant in Mumias and ways of implementing the project are being explored," said the company in a statement.
The project will be financed through equity and borrowing.
It was not clear how much the water bottling plant will bring in revenues but projections for the ethanol plant targets Sh1.8 billion every year.
The company said a project that involves sugar fortification by adding nutrients for improved health is under implementation and is expected to bring in more revenues.
Financial results indicate that MSC made an after-tax profit of Sh1.6 billion in the year ending June 2009 up from Sh1.2 billion end of June 2008.
These projects fall under what is known as the 'green economy,' the growing new economic development model that appreciates conservation of the environment, unlike the 'black economy' that has long been powered by fossil fuels.
Using the Mumias case as the reference, sugarcane farmers have opportunity to increase earnings if all the six factories in the sugar belt if they diversified into more products.
Turning these ideas into a reality by the other millers could be the difficult part going by the avalanche of complaints by farmers about pricing and delayed harvesting of cane.
However, improving efficiency at the millers is one of the key benefits expected if the factories in the Nyando belt are finally privatised.
Cheap imports
Sugarcane farmers have undergone a lot of tribulations, brought about by exploitation by middlemen and mismanagement of factories that has led to collapse of some like Miwani Sugar Company, importation of cheap sugar that floods the local market and failure to invest in new cane growing technology.
A visit to the Mumias factory by Business Daily revealed the water bottling facilities are in place but it was not possible to confirm the date of commencement.
Molasses 'B', another by-product, is used for manufacturing alcohol, rum, fodder yeast, baker's yeast, and carbon dioxide.
Filter cake from the sugarcane production is used as compost, animal feed and to make wax while the water and waste from the processing line can be used for ferti-irrigation, biogas and animal feed.
Every 100 tonnes of cane crushed produce 120 tonnes mixed juice, 37 tonnes of bagasse and 3.5 tonnes molasses.
This kind of diversification would allow farmers to earn higher income and support Kenya's demands for ethanol, electricity generation, and create more jobs.
Sugar-deficit market
For Mumias Sugar Company, the expected opening up of local market to duty-free sugar imports next year has meant the race for diversification must be faster.
According to the Common Market for Eastern and Southern Africa (Comesa) rules, Kenya must provide tariff-free access to the bloc's members of 300,000 tonnes of sugar by next year with an additional 40,000 tonnes each year through 2012.
But a reprieve for local sugar factories may be found in the fact that Comesa remains a sugar-deficit market by some 500,000 tonnes annually, meaning that volumes to take advantage of the Kenyan market may be inadequate.
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