Factory Level Determinants of Sugar Production Among Selected Sugar Processing Firms in Kenya

Abstract

Sugar consumption has always surpassed sugar production for many years in Kenya. It is therefore imperative to improve local production so as to increase growth and efficiency in the sugar industry while at the same time reducing imports and increasing exports. This study sought to determine the factory-level determinants of sugar production in Kenya. The study was guided by the theory of production. The researcher obtained panel data for five sugar factories including; Chemelil, Muhoroni, Trans Mara, Kibos and Allied industries, together with West Kenya sugar factory. The researcher obtained data from the Kenya Sugar Board’s annual reports. Data collected was for the period 2008 to 2020. The study findings indicated that capital input, labor input, and R&E had a positive insignificant effect on sugar production. Results indicated that firm size had a positive significant effect on sugar production. Results revealed that technology, firm age, governance, and cost-income ratio had a negative insignificant effect on sugar production. Based on the findings, the study concluded that capital input, labor input, and R&E positively affect sugar production among the selected sugar processing firms in Kenya. The study also concluded that firm size positively and significantly affects sugar production. Finally, the study concluded that technology, firm age, governance, and cost-income ratio negatively affect sugar production. The study recommended that sugar processing firms should review their capital input, labor input, and R&E policies to enhance efficiency in production. Equally, they should strengthen the capacity of employees through training to enhance efficiency in production. The firms should also hire enough employees, which is likely to enhance on sugar production. The study recommended that sugar processing firms should adopt appropriate modern technology in the production process. The governance structure of the firms should also be reviewed to ensure competence. The management of the firms should further review the cost-income ratio, and find ways of reducing overall costs while generating more income. The study focused on factory-level determinants of sugar production. Future studies could focus on macro-level determinants of sugar production such as inflation, foreign exchange rate and competition.