Board’s inconsistency adds confusion to sugar wars

By Macharia Kamau

The sugar sector has been witnessing ugly scenes played out between Mumias Sugar Company (MSC) and West Kenya Sugar Company, resulting in injuries and destruction of property.

Mumias Sugar Company has accused West Kenya of illegally harvesting its cane and operating an illegal weigh bridge in areas in claims to be its cane zone. But the accusations did not deter the latter.

Later, attacks and counter-attacks were witnessed on either West Kenya or Mumias tractors. West Kenya lorries and tractors transporting cane from Mumias or Busia were attacked, and had to be escorted by police to their factory, in Malava.

MSC went to the Kakamega High Court last month seeking to commit the Managing Director of West Kenya for contempt of Court. While the main hearing of the application is pending, the court has allowed West Kenya to continue harvesting cane from farmers who are not contracted to MSC.

Free movement

It has also directed police not to detain tractors from either West Kenya or MSC sugar companies pending inter-parties hearing.

The court also directed the police to escort thousands of tonnes of cane that hard been packed in the West Kenya yard to their factory. Where is the genesis of this problem?

To better understand it, it is important to look at the role the industry regulator, the Kenya Sugar Board (KSB) has played. Documents indicate the regulator has failed to provide clear directions that can regulate the sugar industry over “zones”.

In 2006, KSB, the Ministry of Agriculture and West Kenya entered into an agreement that was later declared illegal by the High Court, which stated that West Kenya zone ran for 24km.

This was meant to block the licensing of Butali Sugar Company that was less than 14km from West Kenya.

Faced with the court, KSB changed its position, now in support of licensing Butali through a sworn affidavit dated 2010, terming it “... an honest mistake so to its implications and effect on the provisions of the Act”.

The Board further admitted that agreement was “illegal and unenforceable” as it had not granted West Kenya an exclusive zone.

The Board defines the word ‘Zone’ in the document as “the area within a radius of up to a maximum of 40km of a sugar mill.” It adds that this arose from a study to determine the farthest distance a farm can be from a miller without transport costs unduly eroding farmer earnings per tonne of sugar sold.

However, it states: “Northing in the Act discloses a legislative intention to confer exclusive commercial territory to sugar millers by the use of the term zone.

It justifies this by providing the inter mill distances as follows: Chemelil-Muhoroni-11km, Miwani-Muhoroni-17km, Kibos-Miwani-7km, West Kenya-Mumias-28km, Mumias-Nzoia-22km and West Kenya-Nzoia 22.9km.

Board’s position

Strangely, the Board has taken the following position in the current crisis between Mumias and West Kenya in a circular dated August 15, and signed by Chief Executive Rose Mkok.

“Zoning has not been abolished in the Kenya Sugar industry and each miller is required to contract adequate cane growers in their respective command areas to satisfy their crushing capacity or a programme each year.”

She adds that there exists an agreed “Industry Cane Harvesting Framework,” which requires any miller intending to procure sugarcane outside their “mill command zone must notify and get concurrence of the respective miller from the area they wish to procure cane, including from independent growers.”

Rules of engagement

It further directs that the miller contacted must not bar individual’s choice of independent growers to sell their cane to other millers, provided they prove they are not contracted. The question arising from the current crisis is how can this directive be enforced?

West Kenya, with a reported capacity to crush an equivalent of 100 acres of cane a day, says it is buying cane from non contracted farmers in Busia and Mumias.

It has argued that Mumias failed to renew contracts with many farmers for over two years and were eager to sell their cane to them.

They have also argued that farmers in Busia area are excited to deliver cane to West Kenya Weigh Bridge where they are allowed to witness the exact tonnage of their cane and get high pay within a week unlike Mumias.

In 2010, Justice Martha Koome, in a ruling that paved the way for Butali stated “Apart from the fact that it would amount to unfair restraint in trade, it would also be counter productive as it would kill competition and bring complacency in the industry of development of cane production.

The plaintiff (West Kenya) is a miller like any other and ought to compete with other millers.”

Perhaps, the spirit of fair competition is the only way out.