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Debate rages over future of Nyanza's sugar industry after Uhuru visit

BUSINESS
By Dalton Nyabundi | Dec 20th 2018 | 3 min read
By Dalton Nyabundi | December 20th 2018
BUSINESS
A sugarcane transporter drives a tractor to Chemelil milling factory. [Denish Ochieng/Standard]

A proposal to merge three sugar millers in Nyanza has started drawing mixed reactions.

The proposal fronted by President Uhuru Kenyatta last week when he visited the region, has it that Chemelil, Muhoroni and Miwani factories be merged into a single, profitable entity.

Heated debate

But players in the sugar industry have already started a heated debate on the matter.

The Kenya Union of Sugarcane Plantation and Allied Workers (KUSPAW) is neither in support nor against the idea.

KUSPAW Secretary General Francis Wangara said in an interview that the proposal seemed good, but should be taken as a long-term plan.

He argued that the most urgent thing was to steer the millers back to profitability independently.

Mr Wangara said creating a single entity immediately would be a big investment and wondered how it would be funded and managed.

Atyang’ Atiang’, the chairman of Kenya Associating for Sugarcane Farmers and Allied Products, said it was not the first time efforts to merge the millers were being made.

Inexperienced managers

Mr Atiang’ said the proposal would add no value to farmers. He blamed the Government for the financial woes facing the millers, and said instead of proposing a merger, the Government should step in and help each miller independent of the other.

“These millers have good financial potential if exploited,” said Atiang’.

“It is Government appointees who came with no background in running sugar mills who have run down the factories.”

Some large-scale sugarcane farmers interviewed, however, were of a different opinion.

Japheth Oketch, a farmer in Koru, said it was time the merger occurred, since the Government had poured millions into the three factories in efforts to revamp them without results.

“These millions end up in individual pockets,” said Mr Oketch. According to Uhuru, the three factories have gobbled up Sh30 billion in Government bailout plans.

Some MPs who were present in the meeting Uhuru held about the merger effort were also in support of the plan.

Three MPs - Otiende Amollo (Rarieda), Gideon Ochanda (Bondo) and Onyango K’Oyoo (Muhoroni) yesterday confirmed that the merger issue was on top of discussions at the meeting.

Opposition leader Raila Odinga also attended the Kisumu State lodge meeting.

According to Mr Amollo and Mr Ochanda, several other leaders present at the meeting were in support of the merger.

The MPs said the President had proposed a bench-marking tour to Sudan for the leaders to see how the neighbouring counry’s Kenana Sugar Company operated.

The factory is an ultra-modern behemoth that is extremely efficient and profitable.

The President compared it to Mumias Sugar Company, which in its early days had a crushing capacity of 10,000 tonnes of sugarcane a day.

Obsolete equipment

Ochanda said the three millers had obsolete and rundown equipment and the merger could be timely.

“Merging these factories and pursuing individuals who ran them down could give farmers a chance,” said Ochanda.

Speaking in Rarienda on Sunday, Amollo said the proposal was a good way of exploiting the Nyando sugar belt’s potential.

He argued that it was a much better deal than privatising the individual millers.

Amollo said the leaders were specifically against privatisation since they feared that corrupt State bureaucrats would take advantage and loot the millers.

No Privatisation

“We told the President that sugar was very important to us. If privatisation comes, we have no money to buy these factories. Eventually, they will be taken up by a few wealthy outsiders,” said Amollo.

He said the President assured the leaders that no privatisation would occur, and that neither would the factories get bailouts.

Amollo said the merger idea was supported strongly in the meeting.

Mr K’Oyoo, however, disputed Amollo’s claims, saying the merger idea was supported by a small section of the leaders and was not fully endorsed.

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