The imported sugar is offloaded and the trucks are filled with tons of sand and driven to the western border towns of Malaba or Busia.

There, forged documents are obtained to show that the sugar has "left" Kenya. The sand, meanwhile, is dumped in the neighbouring country, Uganda. Once the documents show that the sugar has left Kenya, the insurance bonds for the transit are cancelled and traders make a killing on the domestic market -- thereby crippling the sale of domestic sugar and threatening Kenya's white sugar mills.

"The situation is clearly becoming unmanageable," said Mark Too, chairman of the policy agency Kenya Sugar Authority (KSA). "Insurance bonds mustnot be used for transit sugar because the system has been abused and does not serve the intended purpose. Bank guarantees are a better option to ensure there are no more diversions," he told Reuters.

Sugar imports have become a political minefield in Kenya. Industry leaders say cheap imports and dumping have created a glut on the domestic market and Kenyan millers are holding millions of dollars worth of unsold stocks.

Kenya produces an average of 400,000 metric tons of sugar compared to consumption of around 600,000 metric tons. Too said 210,000 metric tons were imported in the first eight months of 1998 but taxes had been paid on only 123,000 metric tons.

On Friday Kenya moved to take the cost of imported sugar beyond the reach of profitable business -- raising the dumping duty to 70 per cent or 10,000 shillings ($167.39) from 20 per cent. Agriculture minister Musalia Mudavadi said consolidated taxes would bring the cost of imports to 40,000-42,000 shillings ($669.56-$703.04) per metric ton versus36,000 shillings per metric ton ($602.61) for local produce.

Like Mudavadi, Too said taxes alone were not the solution. He called for stringent enforcement and warned "the time for robbing Kenyans by these sharks is swiftly coming to a close." For years traders connected to powerful politicians exploited Kenya's lax system of regulation.

Muhoroni, in the heart of the sugar-growing Nyanza belt in western Kenya, is located 217 miles from the capital, Nairobi. It is home to Muhoroni Sugar Co built in 1966 to become the first white sugar factory since independence.

A vast expanse of sugar fields cover the plateau and at local markets, cane, bananas, oranges and cornmeal lure the buyer.

Ageing cane competes for attention with lush young shoots. Grass-thatched huts of small peasant growers contrast with the villas of estate farmers. "We have had our problems," said Jeanine Brooks, a 66-year-old Briton of French descent who has farmed around Muhoroni for the last 47 years. "Payments (for harvested cane) havelately not arrived on schedule. Everyone is concerned but we hope that there will be action to improve the sector."

Brooks's sugar cane covers 1,000 acres. She also keeps cattle and grows lime on her 3,000-acre farm.

For smallholders like Mbeo Oduor, any delay in remittance of sugar cane cash spells disaster -- no school fees, no food for his large family, no money for the extended family, no drinks to entertain his friends.

Muhoroni contains one of western Kenya's seven white sugar millers, but the millers -- Mumias, South Nyanza Sugar (SONY), Chemelil, Miwani, Nzoia and West Kenya -- face similar problems. As part of a government plan to improve management in mills, Nzoia and Chemelil are to be put under a technical and Financial manager pending cabinet approval. A technical manager will also be sought for Muhoroni, Mudavadi told Reuters.

"Sugar factories owe us money to the tune of two billion shillings ($33.4 million) for cane harvested and not yet paid for," added Nickanor Odumo Abok, chairman ofthe Kenya Sugarcane Growers' association.