Two ministries have started discussions with the Treasury on how they can complement their allocations through flotation of debt instruments in the international financial market.

The two - Livestock and Agriculture - are seeking more money to fast track reforms in the sugar and beef sectors.

The Livestock ministry wants to urgently create disease free-zones to help it boost livestock exports to the EU market while the sugar sector wants to ready itself for duty free imports from 2012.

"We cannot borrow from the domestic market because the Government's policy right now is to avoid anything that will add pressure on interest rates and increase inflation in the country," said Agriculture minister William Ruto.

The debt instruments being considered are by way of sector credits funded by the African Development Bank and the World Bank.

Among the reforms is one seeking to consolidate factories in the sugar sector to four major firms - Mumias, Sony, Nyando and Chemelil.

The four would take over the others in the new plan with Chemelil taking over the management of Miwani and Muhoroni factories.

Each factory would then be equipped with modern plants of 30,000 metric tonnes cane crushing capacity backed by power co-generation and ethanol production projects.

That would, however, go against the wishes of farmers, mainly in the Rift Valley sugar producing regions who have been calling for the establishment of more sugar factories closer to their farms.

At one point, even the Government appeared to have caved in to pressure from farmers and issued a private investor with a licence to set up a sugar factory in Trans Mara district, an outfit that is yet to start operating.

However, Mr Ruto said efficiency and economy of scale were now paramount to make the ventures solid enough to withstand competition.

"Comesa free market is coming by 2012 and we must institute efficient mechanisms of producing sugar when the increased competition comes." the minister said.