Bitter Sugar: High profile sugar cases leave farmers poorer, lawyers smile to the bank

Senior officials of Sarrai Group Rakesh Kumar, Sarbjit Singh Rai and Stephen Kihumba before the High Court in Milimani on Thursday,May 18, 2023 where they had been summoned to show cause why they should not be jailed for contempt of court. [Collins Kweyu, Standard]

Away from headlines capturing cases filed in different courts challenging the 2021 bidding processes that saw Sarrai Group take over troubled Mumias Sugar, the sugar industry has tasted a fair share of judgments.

Some have set a judicial precedent. Notable disputes have exposed the industry’s litigious face including sensitive topics of privatisation, zoning, licensing and role of regulators.

The conspicuous case on privatisation was Petition No. 187 of 2016 (County Government of Bungoma and four others vs. Privatisation Commission and another) which protested national government’s planned privatisation of its five mills.

In the gazette and subsequent adverts in media, the national government invited expressions of interest in the purchase of its shares in the five mills; South Nyanza Sugar (Sony), Nzoia, Chemilil, Muhoroni (in receivership) and Miwani (in receivership).

The petitioners challenged the move demanding to know extent of the national government’s agricultural policy role. “The national government in the purported privatisation of government shares in the companies, through the privatisation programme approved by the cabinet in October 2010 is unconstitutional and unlawful,” they said adding yet another ground of their objection.

On November 10, 2017 the High Court, Nairobi struck out the petition on grounds that it touched on intergovernmental relation disputes on concurrent functions. 

Outside the courts, the plan to privatise the companies could succumb to political pressure leaving the state shares in the companies intact. 

The notion of monopoly by sugar millers, both under the Sugar Act, 2001 and under the Crops Act, 2013 was equally rejected in other cases in the industry like the Nairobi High Court HCCC 206 of 2010 (West Kenya vs. Kenya Sugar Board and Butali Sugar) and Kakamega High Court Judicial Review No. 3 of 2013 (Republic vs. Kenya Sugar Board ex-parte West Kenya).

Other cases that championed zoning that were dealt a blow were Kisumu High Court Civil Case No. 175 of 2012 (Chemelil Sugar vs. West Kenya) and Kakamega High Court Civil Case No. 223 of 2012 (Mumias Sugar & Others vs. West Kenya).

Iconic battle

But the most iconic battle was between Malava siblings (Butali and West Kenya) which involved challenging one another’s right of operation. The court was particularly not happy with such “imperialist tendencies” forcing it to call Malava siblings to order.

“I cannot fail to express my indignation at the number of cases the applicant (West Kenya) and Butali have instituted in respect of the issues surrounding their operations. The parties herein have persistently engaged in an unhelpful litigation geared towards championing protectionist interests in a manner reminiscent of the old imperialist tendencies to the detriment of the people who toil to ensure their industries thrive,” said justice George Odunga in his November 4, 2015. 

Then, West Kenya in a judicial review filed in the constitutional division of the High Court, Nairobi had challenged the powers of Agriculture Fisheries and Food Authority (AFFA), Cabinet Secretary Agriculture on licensing Butali Sugar.

Odunga warned the parties not to “hog the judicial process” by instituting a multiplicity of suits.

Kenya National Federation of Sugarcane Farmers (KNFSF) deputy secretary general Simon Wesechere fears the cash some millers are willing to pour into litigation outweighs what they put in cane development.

“Granted, they can spend all they wish to but the downside of it is that it is not helping our members (farmers). Before some of them got lost in courts and abandoned us on sugarcane plantations I could show you thousands or rich farmers but today I can just point out a few millionaire sugar matters lawyers and thousands of poor farmers,” he said.

“It cannot be far-fetched to think that some millers deliberately spend more time in court and lose focus on cane development and sugar manufacturing to create an artificial shortage so that they can make super profits through cheap imports as regulators watch helplessly,” he added.

He argues that as elite lawyers and judges argue and listen to the cases filed by the billionaire millers, the industry which in 1980 and 1981 was self-sufficient in sugar production, with just seven factories, has shrunk to pitiable standards making Kenya a net importer of the sweetener with at least 52 per cent of our sugar coming from countries like Uganda which solve their industrial disputes with some decorum.

Wesechere wants the Ministry of Agriculture and related ministries to fast-tract establishment of a tribunal to solve the sugar disputes which he feels are not adding value to the sub-sector and farmers “but that of cartels who want to kill manufacturing through courts.”

His reasoning is aligned with that of stakeholders who gave their views in all sugar growing areas in the wake of making the Sugar Report 2019, who emphasised on the urgent need to develop a stand-alone Sugar Act that will facilitate the existence of a stand-alone Sugar regulatory body and research institute.

“The Act should also provide for the re-establishment of the Sugar Arbitration Tribunal to handle industry disputes,” said the stakeholders who gave their views between December 2018 and May 2019 towards creating the report geared at revolutionalising the sub-sector and which is at the implementation stage.

The AFA board and Agriculture ministry were tasked to start a three-year implementation plan of the report alongside the county and the private sector.

AFA has so far started implementing zoning as recommended by majority stakeholders in the report with a view of making millers invest in cane development to cut on the existing acute shortage.

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