Factors affecting performance of Mumias Sugar Company in Kenya
Were, J. K.
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The sugar sub-sector is a source of livelihood to over five million people in Kenya. The cost of production in Kenya is high when compared to that of other regional and world producers. The milling firms in Kenya are riddled with a heavy debt burden. Most of them have, one time or another, been placed under receivership. In fact, left on its own without offering any protection the industry will simply collapse. While Mumias Sugar Company (MSC) has been the most successful of the seven sugar factories in Kenya, its survival remains uncertain due to increased completion for both market and raw materials. In its endeavor to improve efficiency, the company installed a high capacity processer (diffuser), but this was met by another problem of shortage of the raw cane as a good number of farmers contracted to the company uprooted their crops as they went for other substitutes which they believed offered better returns. This situation called for a scrutiny to determine factors affecting the performance of the company. This study employed descriptive research design. The target population was 600 respondents: 458 employees of the company, 64 MOA officers, and 78 Area Leaders (farmers' representatives in Sub- locations). The researcher used stratified random sampling technique. A sample of 10% of the target population was picked from each category, thus 46 employees of MSC, 8 farmers' representatives, and 7 MOA officials. Both primary and secondary data collection techniques were used. The secondary data was obtained from the company's newsletters and Annual Performance reports, as well as Kenya Sugar Board and International Sugar Organization reports. Primary data was collected by use of questionnaires. Data collected was checked for completeness and analyzed using descriptive statistics. Results for quantitative data are presented in tables and figures while qualitative data is presented in prose. The study found that MSC was not utilizing its mill capacity fully due to inadequate supply of raw cane. Competition especially from imported sugar is posing a serious threat as the company is unable to compete effectively due to the high cost of inputs. To increase revenue base and, therefore, lower cost of production, it will be prudent for the firm to diversify its products.