By James Anyanzwa
Kenya: The Mumias Sugar Company (MSC) board has recommended radical measures to boost cane supply and turn around the fortunes of the country’s largest sugar miller.
Among the new measures are taking over ownership of sugar cane growing from farmers and reviewing the company’s internal processes and procedures to curb revenue wastage. The company will also revamp cane transportation through the creation of buying centres.
New measures
Dan Ameyo, the newly appointed board chairman, said implementation of the new measures would start in the next six months.
“I have a clear vision of what I want to do at Mumias. My priority is to secure the sustainability of cane production and for that to happen, our engagement with the farmers has to be critical,” Ameyo told The Standard last week.
“We are going to re-examine the existing model of cane production and transportation because for farmers to gain, costs must be reduced.”
Under the proposed cane production method, Mumias is seeking to lease land from farmers and take over from them production, development and ownership of the crop.
This is scheduled to enhance sustainable supply of quality cane.
“We will re-examine the whole cane production model to reduce costs to farmers. We need to get a way of ensuring that there are some incentives to farmers,” Ameyo said, adding that the proposed cane production model would be voluntary for existing farmers.
He noted that under the current model, most farmers do not have the technical capacity to take proper care of the cane while it is still on the farm, resulting in poor quality and losses to the farmers.
“This is one area where Mumias extension officers have failed the farmers,” he said.
“Mumias will have to take up cane husbandry to ensure production of quality cane. Mumias will not survive without quality cane being secured.”
Contracted farmers
MSC contracts its cane farmers across four counties – Kakamega, Bungoma, Busia and, lately, Siaya. Currently, the company has contracted about 110,000 farmers across the counties. Ameyo said the sugar miller would also recruit new farmers to increase the total acreage under cane.
He said cane transportation would also be reorganised and the company’s internal processes reviewed to seal wastage loopholes.
“I will call a board meeting soon to begin looking at these options. We are not going to force farmers into it, but we are looking at those who want to produce quality cane but do not have the technical capacity,” he said. “In the next six months, we will have policy shifts in the way we approach sugar production in the company to give farmers a good return and secure cane supply for Mumias.”
He said cane supply is critical for the company’s operations.
“Mumias will not survive without quality cane being secured. It is one of the ways we want to re-engineer our operations,” said Ameyo.
MSC posted a pre-tax loss of Sh105 million for the six-month period ended December 31, 2013, from a loss of Sh1.58 billion in a similar period the previous year.
The improved performance was attributed to prudent cost management, improved production efficiency and increased revenues from other business lines such as ethanol and water.
However, the company’s management noted that serious challenges such as cane poaching, counterfeiting and illegal importation of cheap sugar continue to impact the miller’s operations.
The sugar industry experienced a significant shortage of sugar cane in the Western Kenya sugar belt.
It is argued that proliferation of mills in this region has caused stiff competition for sugar cane, resulting in heightened poaching.
Soil fertility
This has been aggravated by falling yields of production per hectare due to low soil fertility, poor crop husbandry and unpredictable rain patterns.
Cane theft has also seen MSC lose funds invested in cane development at the rate of Sh400 million annually while the company operates below its full potential (60-65 per cent capacity).
