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Rank: Member Joined: 9/26/2006 Posts: 463 Location: CENTRAL PROVINCE
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stocksmaster wrote:stocksmaster wrote:Mumias will only stabilise after 2012 once the effects of the COMESA Rules on the sugar industry are fully internalised. The fact of the matter is external sugar is still cheaper than internally generated sugar. Meaning Mumias margins will get a beating once the flood gates are opened in 2012(I dont think COMESA will listen to any further extensions of Safeguards.)
@ Njung'e: What is the way forward? How can the local sugar companies compete? Or should the Western Sugar Belt think of another crop?
The argument that Mumias is diversifying to other products for revenue generation does not hold much. On a revenue generation point, when all the different revenue streams are factored in, sugar will still constitute 80% of Mumias Sugar Co. business (Sugar:co-generation:ethanol will be about 80:10:10). Thus Mumias revenues and profits will largely depend on its core business which is sugar.
Time will tell.
Happy hunting Three years later, and this argument is still valid. Its core business is sugar and if it cannot make money in the sugar trade, the future is very bleak for this company. Happy Hunting Is it time for the Kenyan sugar belt to think of another cash crop that they can produce competitively? Maybe they should plant palm trees and supply bidco with palm oil instead of bidco going all the way to Uganda to farm the same. Happy Hunting. x handle: @stocksmaster79
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Rank: Chief Joined: 1/3/2007 Posts: 18,361 Location: Nairobi
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@stocksmaster - The problem is the suppliers i.e. the farms are fragmented & smallholder which does not work very well for sugarcane. The same would apply to many other crops e.g. Palm Oil whose largest producers have their own estates. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 10/3/2008 Posts: 4,058 Location: Gwitu
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Smallholder tea farming succeeded in Kenya because KTDA factories did not compete against each other unlike in sugar belt where there is poaching and encroachment. Kenya can't compete with Susan, Tz and I think Malawi who are on large scale. Truth forever on the scaffold
Wrong forever on the throne
(James Russell Rowell)
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Rank: Veteran Joined: 6/23/2011 Posts: 1,740 Location: Nairobi
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