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Sugar miller in a spot over ‘bad’ cheques

By Harold Odhiambo | Feb 8th 2020 | 2 min read
By Harold Odhiambo | February 8th 2020
Police officers keep an eye by the entrance of Muhoroni Sugar Company during a strike by farmers demanding for their pay. (Denish Ochieng, Standard)

A fresh row is brewing between struggling state-owned miller Muhoroni Sugar factory and farmers after the miller allegedly issued farmers with bad cheques.

Farmers who say the miller owes them millions of shillings claimed that cheques they were issued had been dishonoured by local banks.

The company, which has been crushing barely 20 percent of its capacity, has been struggling to offset its debts with its rusty equipment grossly affecting sugar output.

Two weeks ago, however, farmers started having a sigh of relief after the management started paying the debts. But the farmers claim the process was a mockery.

Kenya Sugarcane Growers Association Chairman Charles Atyang said all the cheques issued by the miller were rejected by banks.

“It is a surprise for us. We know the company has been struggling but the reason they cannot pay us after milling the cane we supplied to them is unacceptable,” said Atyang.

The farmers have threatened to stop supplying cane to the miller and are appealing to the government to fast-track the privatisation process to help the troubled miller get out of the woods.

In one of the cheques seen by The Standard, the miller paid Sh839,014 to a farmer’s co-operative society but was rejected by a commercial bank.

Yesterday, however, the miller defended the payments and claimed it had an administrative issue with some cheques and claimed the issue is being politicised.

Issues at finance

Francis Ooko, the receiver manager, said there were some issues at the finance department with the balancing of their financial records which affected the payments.

“There was a problem with some cheques but we are sorting them out. The sugar industry has been doing badly and it is not just about Muhoroni alone,” said Ooko.

Ooko, who also sits on the privatisation commission, said the process of privatisation will take time and urged all stakeholders to back the current management, which is working hard to stabilise sugar production at the factory.

Last year, the company that is under receivership, grappled with shortage of cane after several farmers withdrew supply over lack of payment.

The developments come at a time when various players are still debating the radical proposals that have been outlined by the sugar task-force to address the myriad of challenges facing the industry.

Part of the task-force recommendations seek to bar private millers from poaching cane from regions outside their areas of operation.

The return of zoning means that the State-owned millers, which own nucleus estates with large swathes of land, will benefit hugely.

There have been protracted battles between private-owned mills and the State-owned mills in the past over raw materials.

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