By Luke Anami, Peter Atsiaya and Kepher Otieno
In the classic movie, The Good, The Bad and the Ugly, the climax is the Mexican standoff in a cemetery, between the three heavily armed main characters. For five long minutes, Blondie (a bounty hunter played by Clint Eastwood), Angel Eyes (a psychopath) and Tuco (a bandit) who have been chasing stolen gold across the harsh Mexican desert, find themselves in an impasse. All three are deadly gunslingers, extremely fast on the draw, but for those five infernally long minutes, none holds the upper hand.
Sugar cane on its way to a factory for milling. Sugar millers say high production costs, poor roads, legal hurdles, and a multiplicity of taxes and levies are threatening their survival. Photo: File |
Farmers, albeit with the hidden help of political interests funded by sugar barons, are baying for higher farm-gate prices for cane.
In Mumias, this has seen the destruction of acres of mature cane through acts of arson, with the tacit support of politicians.
And caught in the middle of all this is Dr Evans Kidero, the Mumias Sugar Company CEO, who, as head of the Kenya Sugar Manufacturers Association (Kesma) has the backing of millers against the Kenya Sugar Board (KSB) and politicians.
Higher payments
The regulator, a State institution that partly depends on the levies it deducts from millers, has angered them by backing higher payments to farmers.
While the arson appears aimed at hurting Mumias, it is more likely to hurt the very farmers who depend on the crop.
The result is a stalemate, and an uneasy tension, as all sides pause to take stock.
The millers insist they are in business, and cannot afford higher prices, at a time when the costs of production are rising.
High production costs, poor roads, legal hurdles, and a multiplicity of taxes and levies are threatening their survival, millers say. Rising inflation sparked by higher prices of crude oil earlier this year, significantly increased transport costs for cane, and distribution costs for sugar.
But farmers insist that the cost of fuel has since dropped; yet the millers have not increased prices.
"When the cost of fuel went up last year, sugar transporters increased charges for transport. But when fuel prices went down worldwide, there was no adjustment from the transporters to reflect the changes," says Mumias MP, Ben Washiali.
farmers’ woes
"Now farmers are bearing the burden. We want the transport costs reduced to reflect the drop of the fuel pump price in the country," he adds.
But Dr Kidero, argues that this is a short-term view, and fails to recognise that for most of last year, millers were forced to absorb high transport costs on behalf of farmers.
However, Dr Kidero agrees with Washiali that the Government must ensure fuel pump prices for diesel match the international market. He notes that the cost of producing sugar in Kenya is twice what it is in Brazil, one of the world’s largest producers.
He blames some of the woes in the industry on cheap sugar imports. "In countries such as Brazil, sugar is produced as a raw material for ethanol.
Such sugar finds itself in our markets as cheap imports," Dr Kidero says. Furthermore, farm inputs are unusually expensive. "Some of the countries, provide subsidies to farmers. Nothing of the sort is practiced here. Because most of the sugar cane in Kenya is grown on farms averaging just 0.8 hectares or less in size, farmers cannot benefit from the economies of scale," says Kidero.
Cutting taxes on fertiliser, diesel meant for agro-industries, and a reduction in the fuel levy are some of the solutions he proposes.
"At the moment, Mumias spends more than Sh400 million annually maintaining roads within the sugar belt. If the Government can waive the fuel levy as it is the companies that maintain roads in the sugar belt, then the cost will drastically reduce."
Through its Chairman, Okoth Obado, KSB last week directed sugar companies to increase their prices to a minimum of Sh2,500 per tonne, with immediate effect. Mr Obado said the new price was adopted by the Board’s cane pricing committee, and was irreversible. The notice was published on April 9, the same week farmers contracted to Mumias Sugar Company staged a chaotic demonstration over alleged low prices.
But while farmers are cheering Obado and his team, the millers are digging in for a fight. Working under their Kesma, the millers say they are in no mood to cede more ground on the price negotiations.
Better prices
Furthermore, they claim Obado made the announcement without consulting other stakeholders.
"Obado’s statement was misleading, and likely to cause misunderstanding between farmers and millers," said Dr Kidero, adding that the millers were focused on improving cane prices to benefit farmers. He noted that Mumias had increased cane prices from Sh2,425 per tonne to Sh2,489.30, the average for the entire industry.
Dr Kidero said he was surprised that an official of the Kenya Sugar Cane Grower Association, Mr Samuel Anyango, told the farmers not to accept the new prices.
Anyango had protested that the new prices being offered by Mumias were still too low.
"We are focused on ensuring that farmers benefit by raising cane prices but not at the expense of the miller," said Kidero.
The managing directors of at least six sugar companies supported him.
Predictably, KSB Chief Executive Rosemary Mkok has rushed to Obado’s defence, saying the decision to raise cane prices was made by the Board’s cane pricing committee.
