Nairobi, 7 July - Kenya has scrapped the licences of all its 55 sugar importers saying they have misused them, evaded taxes and were hurting local farmers, the agriculture minister said on Friday.
Kenya, a net importer of sugar, produced 475,670 tonnes of sugar in 2006. Critics have long complained that the process of getting sugar import and export licences were riddled with irregularities and corruption the depressed local crop prices.
Agriculture Minister William Ruto said his decision to scrap all import licences was a follow up to last month's cancellation of all but two export licences.
"We have gangs hanging around Nairobi and Mombasa with friends in very high places pretending to be doing business with sugar and I was informed that they were very powerful people, very influential people," Ruto told reporters.
Ruto said he cancelled the licences after finding that the imported sugar went untaxed, which depressed the market price for sugar and in turn disrupted production and processing.
"I want anybody to come and explain ... why we don't have legally imported sugar in the country and why the factories have stockpiled their produce from farmers because they cannot sell."
Farmers in half of Kenya's growing areas were leaving cane in the field for months beyond the usual 15-18 months at which it should have been harvested, he said.
Kenya has been allowed to set a limit of 200,000 tonnes of sugar that can be imported tax-free under rules of trade in the 19-member Common Markets for Eastern and Southern Africa economic bloc.
Ruto said part of the blame lay in tax regulator Kenya Revenue Authority, which had failed to inspect cargo at the port and allowed sugar disguised as other products into the country.
"Some are ... either brought in as bitumen, or as rice or as pasta, and yet it is actually sugar," he said, adding that only sugar from COMESA was legally allowed into the country.
"Kenya Revenue Authority has failed this country."
Separately, Ruto said his ministry and others were planning a 30 billion Kenya shillings ($458.5 million) fund to help the agriculture sector, boosting research into new crop and animal varieties and training.
"We are envisaging that the Agricultural Development Fund we have proposed ... should be 4.5 percent of our national budget," he said.
Ruto was speaking after launching new seed varieties for maize, wheat, tea and sorghum and cassava among other crops that are early maturing, and resistant to drought, disease and pests.
He said sugar farmers would benefit from new varieties, but had not because the market has been depressed for so long.
"We haven't been able to develop as many varieties as we should, because the occasion to use new varieties has not even arisen," Ruto said.