The level of preparedness of sugar firms in Kenya ahead of the end of Comesa safeguards in february 2014
The sugar industry is currently facing numerous challenges. The sugar firms operate in a very dynamic environment and therefore must devise creative strategies to stay competitive. The status of the industry in Kenya is influenced by both internal and external factors. The external factors are the challenges facing the sugar industry at a global level while internal factors are country specific and are multidimensional. This study sought to assess and determine the level of preparedness of the sugar firms in Kenya ahead of the lapse of COMESA safeguards in February 2014.This was achieved by establishing the challenges facing the sugar firms, Competitive Strategies that the sugar firms have adopted in their operations, and the impact of the same in their performance. The study adopted a cross -sectional survey design with all the operating sugar firms in the industry being selected for the study. Kenya Sugar Board as a regulating authority was also included in the study. Data collection was via structured questionnaires with closed, open-ended type of questions. Three managers from each factory, preferably from the marketing, planning and finance departments were required to fill up the questionnaire. Data analysis included both qualitative and quantitative techniques. Target population of this study was the all the operating sugar companies in Kenya. The completed questionnaires were edited for completeness and consistency. The data was then coded to enable the responses to be grouped into various categories. Frequency distribution tables and bar charts were used to generate outputs. The study found out that the sugar industry was faced with numerous challenges such as high cost of production; unregulated cheap imports, obsolete technology, capacity underutilization and cane poaching. The study concluded that the sugar factories were not ready or prepared to effectively compete with the international sugar producers by the end of February 2014.The study recommended that the government should speed up the privatization process of the state owned millers so as to make them more effective and efficient in their operations. Having Boards of Directors and management team that are serious, can enable the mills attain profitability. However, to attain regional and international competitiveness, the mills need a massive injection of capital and an upgrade of technology. The second recommendation was that the companies should enhance the product base in order to increase their revenues bases. Co-generation must be adopted by all mills and greater efforts must be applied in other diversification activities relating to downstream processing of sugar by-products, including ethanol for the sector to attain overall competitiveness. Thirdly the study recommended that factories needed to effectively manage supply chain and adequately invest in research and development with an aim of having high yielding and early maturing cane varieties. The last recommendation was for the rehabilitation, modernization and expansion of the factories in order to maintain sufficient capacity for the production of sugar that would meet domestic consumption requirements and even surplus for export. Therefore the Kenyan sugar sector must address its competitiveness regionally and internationally, and not competitiveness among Kenya sugar producers themselves. The sector players and all stakeholders must move away from using national parameters to measure success or improvement, but rather adopt regional standards and operational parameters and efficiencies attained by other regional producers.