The shutdown of milling sugar in the country due to a historic sugar cane shortage is perhaps the greatest indicator of how loose regulations in the sugar sub-sector and interference by barons can bring down an otherwise profitable venture.
The sub-sector that supports over 8 million Kenyans and is directly linked to some 400,000 farmers has luckily received the attention of the president, his cabinet and sugar belt-growing leaders who want to craft strong laws and free them from the hands of barons who even pose as model millers.
Today, 52 per cent of the sugar Kenya uses is imported as the sub-sector suffers from a myriad of challenges including the high cost of production, low productivity, inefficiencies across the value chain, weak regulatory framework, weak extension support, low-value addition initiatives, cyclic markets, uncontrolled and illegal sugar imports, ageing equipment, obsolete technology, and delayed payment to cane farmers.
Farmers are happy that the bulk of these challenges are going to be addressed in the Sugar Bill, 2023 in the National Assembly and the Treasury memo to revive the State-owned mills that majorly supported private sugarcane millers popularly known as outgrowers.
The sugar industry comprises 16 milling factories with an installed capacity of 41,000 TCD, five of which are publicly owned.
The public mills are; Chemelil Sugar Company, Miwani (under receivership), Muhoroni (under receivership), Nzoia, Sony and Mumias where the National Treasury is the single largest shareholder.
Even as the Government directs its attention at reviving the sugar industry, stakeholders are optimistic the goodwill from the President will yield positive results.
“I pray that President William Ruto will stick to his word to kick out cartels and barons in the sub-sector. The barons who run importation and mills are at the centre of mass sugar importation. But he should not kick them out and replace them with another set of barons,” said Richard Ogendo, Secretary General of the Sugarcane Growers Association.
The Kenya National Federation of Sugarcane Farmers (KNFSF) deputy secretary general Simon Wesechere lauded the president saying some millers were renowned in blending imported sugar with the little they mill.
“A random farmer will tell you the repackaging centres operate in Webuye, Mombasa and Nakuru under scrupulous millers and top ranking government officials. The President should deal them a fatal blow as they are not only robbing the farmer but also the country of taxes,” he said.
“The baron’s core business is in importation that’s why they don’t care about cane development. It is no wonder there is no cane to crush.”
During the just concluded Sugar Conference in Kakamega, dubious millers came under the spotlight for unilaterally determining cane prices without considering the views of farmers.
Speaking during the two-day sugar conference at Kakamega’s Masinde Muliro University farmers The Smart Harvest spoke to attributed the current shortage of sugarcane to the disconnect between the millers and farmers.
Gamaliel Anamanjia, a representative of outgrowers, a group of farmers that supply over 94 per cent of sugarcane that is crushed by the country’s 16 mills, said actions by millers made many farmers abandon the crop.
“You may incur up to Sh6,000 in developing a tonne of sugarcane but pay whatever amount the miller decides. Today they are paying between Sh5,200 to Sh5,500 without considering the farmers’ input. No one is asking about this and we have nowhere to run,” Anamanjia said.
“Worse are private millers who don’t want to hear anything from us. As a seasoned farmer and head of the defunct Mumias Outgrowers Company (MOCO) I can tell you this is the key reason many farmers quit the crop to a point that factories have historically shut for four months due to cane shortage.”
He said current cane prices are unilaterally decided and based on a formula which takes into account cane weight, net ex factory sugar price and farmer sharing ratio.
The downside of this formula they argued is that it depends largely on sugar price leaving out other co-products such as molasses, co-generated electricity among others.
Anamanjia regretted that the collapse of outgrowers companies following the scrapping of the Sugar Development Levy (SDL) led the sugar industry that contributes to food security, employment creation, regional development and improved livelihoods for more than eight million Kenyans, into disarray.
“We were over 400,000 small-scale farmers and supplied the bulk of cane to the millers, some of whom have no nucleus estate to develop their own cane. We had a voice but today farmers lack that voice to even bargain for better cane prices,” he said.
Anamanjia hoped that if President Ruto keeps his word on reviving public mills and reintroducing the SDL, the acreage under cane would steadily increase.
He recalled that between 2015 and 2018 they quit the crop when ranking public mills including Mumias and Nzoia crumbled in operation.
Indeed, the Sugar Industry Stakeholders Taskforce Report of 2019 which gave an in depth look on the developments recounts there was a decline in total area under cane since 2015 from 223,605 hectares (Ha) to 191, 215 ha in 2018.
This also affected the yield from 66 tonnes per hectare to the 55 tonnes per hectare. The cane milled during the two years also declined from 7,164,790 metric tonnes to 4,751,605 metric tonnes in the same period representing 45 per cent of the total cane requirement for all the factories.
“The decline was largely attributed to farmer’s withdrawal from cane farming as a result of low farm returns due to delayed harvesting, delayed payments, high cost of input and services, poor quality seed and limited access to credit facilities for cane development, following the scrapping of SDL,” says the report.
They also said some of the millers delayed paying them after cane delivery translated to lost opportunity and financial losses attributed to time value of money and accumulative cost of credit.
It emerged that Butali, Mumias and Trans Mara, among others, paid farmers promptly, some within seven days of cane delivery.
Feeling the heat of the decrease of sugarcane, crooked millers resorted to crushing underage cane of low sucrose content contributing to low milling efficiencies relative to regional producers.
The farmers equally took issue with the weighing of their sugarcane at factory gates and private weighbridges scattered in the sugarbelt region that cuts across 14 counties. They argued that the millers held the knife and yam in this exercise as no farmer was allowed inside the weighing stations to witness his cane being weighed.
“You watch your cane harvested and transported to the factory and are asked to wait outside even for days for the results to be declared. We have nowhere to run when such injustices happen to us at the weighbridge. What will make me not give up on the crop?” posed another farmer Alvin Ambetsa.
“It is different with cereal farmers who witness their maize weighed and the results are given to them instantly.”
Jude Chesire, the new Director of Sugar in the Agriculture and Food Authority (AFA) vowed to streamline the weighing process.
“The collapse of out-growers institutions created a gap, the framers today lack representation at the weighbridges which has led to suspicion and complaints on recorded weights,” he said.
“We are however going to make random patrols and checks at all mills to ensure fairness of the process. We will definitely take strict measures on millers who oppress the farmers.”
He expressed optimism that the sub-sector was headed in the right direction because of the recent political goodwill from the government.
He likened the support by the Presidency, the National Assembly, leaders from the sugarbelt regions to the sub-sector as timely.
“Goodwill is likely to bring good laws to regulate the sector to its former glory days. We want every miller to have a fair chance to operate and make profit. This way the millions who depend on sugar will also get a better life,” he said.
With a structured sub-sector, Chesire believes the acreage under sugarcane would increase from its current average of 0.7 Ha as farmers adopt mechanisation and even cut their dependency on rain-fed farming.
The conference which received views that may end up in the Sugar Bill, 2023 that is at the reading stage, comes as the country continues to rely on imports to bridge the sugar deficit.
The country is a net importer of the sweetener with 52 per cent of the sweetener coming from neighbouring countries. Last year alone, sugar valued at Sh23.923 billion was imported creating a drain to the country’s foreign exchange.
National Assembly Speaker Moses Wetang’ula asked MPs to support the Bill that will see to it the return of the Kenya Sugar Board, SDL and establishment of a cane research centre to pioneer innovative cane development.