1. ISO 9001: 2008 Certified ADAPT IT SMART SUMMIT DURBAN KENYA SUGAR INDUSTRY PROFILE Presented by Francis K. Ingara Engineering Department KENYA SUGAR BOARD

2. ISO 9001:2008 Certified OUTLINE Kenyan Sugar Industry – at a glance Industry Performance New Projects Milestones Challenges Required interventions

3. ISO 9001:2008 Certified KENYAN SUGAR INDUSTRY (At a Glance) Number of growers>250,000 Number of mills11 Average capacity (TCD) 3,000 Area under cane (Ha)213,710

4. ISO 9001:2008 Certified KENYAN SUGAR INDUSTRY (At a Glance) Cane yield (t/ha)51.67 Cane Delivered (MT)5,822,633 TC/TS10.23 Sugar Produced(MT)493,937

5. ISO 9001:2008 Certified FACTORY CAPACITIES Installed, Current & Proposed Capacities Move table here FactoryOriginal Capacity (TCD) Current Capacity (TCD) Proposed Expansion (TCD) Nyando Chemelil8003,3604,200 Muhoroni8002,2006,500 Soin500100600 Kibos & Allied8001,6503,000 Sub-Total Nyando Sugar Belt 2,9007,31014,300 Mumias1,2509,2009,600 Nzoia2,0003,3607,000 West Kenya25003,0004,500 Butali 1,0001,2501,500 Sub-Total Western Sugar Belt 6,75016,810 22,600 SonySugar2,1603,1206,500 Transmara1,250 2,500 Sukari1,500 2,500 Sub-Total Sony4,9105,87011,500 Total14,56029,99048,400

6. ISO 9001:2008 Certified JAGGERY OPERATORS Lubao Jaggery Shajanand Ltd. Homalime Co. Farm Industries Ltd Over 300 informal including mobile jaggeries. Total cane crushed: 1.45 Million tonnes

7. ISO 9001:2008 Certified KENYAN SUGAR INDUSTRY (At a Glance)

8. ISO 9001:2008 Certified 8 AREA UNDER CANE: OUTGROWER VS NUCLEUS graph

9. ISO 9001:2008 Certified 9 SUGAR CANE SUPPLY 90% of cane supply to the factories is from contracted cane farmers, while 10% is from the respective factory the nucleus estates. The area under cane has gradually risen over the past 10 years by 74% to reach 213,710 Ha in 2012.

10. ISO 9001:2008 Certified AVERAGE YIELD TREND

11. ISO 9001:2008 Certified CANE YIELD The cane yields have been declining owing to continuous land use. The high cane demand has also led to occasional harvest of younger cane, reducing the yield. To mitigate this, we are currently undertaking research on soil management in the various agro- ecological zones, aimed at improving soil fertility. We have also embarked on a cane development program that will ensure adequate cane supply to all factories

12. ISO 9001:2008 Certified SUGAR PRODUCED

13. ISO 9001:2008 Certified PRODUCTION & CONSUMPTION TRENDS

14. ISO 9001:2008 Certified 14 TOTAL PRODUCTION, CONSUMPTION AND IMPORT

15. ISO 9001:2008 Certified MILESTONES

16. ISO 9001:2008 Certified MILESTONES 1.Co-generation The industry has potential to generate up to 190 MW of electricity from this source, which is currently under-exploited. Currently, only Mumias Sugar Company produces electricity for commercial use, having installed modern power generation equipment at a feed in tariff of 10 US cents per mw. The rest of the factories produce at a lower scale for consumption by the respective factories.

17. ISO 9001:2008 Certified MILESTONES 2. Ethanol Production The National Bio-fuel Policy has been developed, which allows for 10% blending of ethanol with petrol. Mumias has already developed an ethanol plant, currently being commissioned.

18. ISO 9001:2008 Certified FactoryAnnual T.CMolasses t.p.apEthanol (L) p.a Mumias 2,400,00070,00017,500,000 Nzoia 900,00027,0006,750,000 SonySugar 750,00022,5005,625,000 West Kenya 750,00022,5005,625,000 Chemelil 900,00027,0006,750,000 Muhoroni 540,00016,2004,050,000 Kibos & Allied 450,00013,5003,375,000 Sukari Industries 420,00012,6003,150,000 Butali 350,00010,5002,625,000 Transmara 350,00010,5002,625,000 TOTALS 7,810,000232,30058,075,000

19. ISO 9001:2008 Certified CHALLENGES

20. ISO 9001:2008 Certified CHALLENGES FACING THE INDUSTRY High cost of production Cost of Sugar Production in COMESA and Selected EAC countries CountryCost USD/ tonne Kenya>500 Sudan250-340 Egypt250-300 Swaziland250-300 Zambia230-260 Malawi200-230 Uganda? Tanzania?

21. ISO 9001:2008 Certified CHALLENGES FACING THE INDUSTRY High Cost of Inputs Punitive taxation regime Diminishing land sizes Reliance on rain-fed cane production Inadequate capital for operations, factory rehabilitation, maintenance of infrastructure, modernization and expansion

22. ISO 9001:2008 Certified CHALLENGES FACING THE INDUSTRY Weak Research and Extension linkages Cane Fires Challenging regulatory framework with slow pace of amendment of laws and gazettement of regulations

23. ISO 9001:2008 Certified CHALLENGES FACING THE INDUSTRY Changing farmer attitudes to view sugarcane production as a business Motivation of farmers to produce higher quality cane Reduced levels of factory efficiencies

24. ISO 9001:2008 Certified REQUIRED INTERVENTIONS

25. ISO 9001:2008 Certified Improved Productivity Introduction of cane quality monitoring processes Introduction of quality based cane purchase system to motivate farmers to deliver higher sucrose tonnages opposed to higher cane tonnages Improved factory performance management and reporting for easy benchmarking

26. ISO 9001:2008 Certified Pilot Cane Testing Project at Nzoia Sugar The project scope includes the construction and equiping of a laboratory with cane sampling and testing equipment, installation of a cane payment IMS for capturing data from the weighbridge, cane testing laboratory and compilation of growers cane proceeds on the basis of the current legal cane payment fomula. Installation was through a turn-key project in which Bosch and Adapt IT were responsible for all project delivery activities.

27. ISO 9001:2008 Certified Pilot Cane Testing Project at Nzoia Sugar

28. ISO 9001:2008 Certified Pilot Cane Testing Project at Nzoia Sugar

29. ISO 9001:2008 Certified Pilot Cane Testing Project at Nzoia Sugar

30. ISO 9001:2008 Certified Pilot Cane Testing Project at Nzoia Sugar Project installation delivered successfully last December to KSB Kenya Sugar Research Foundation is currently undertaking trials on the economic feasibility of changing the countries cane payment system from that based on weight to one based on quality. To date over 1170 samples have been tested in the research phase of the project.

31. ISO 9001:2008 Certified THANK YOU