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Sugarcane stakeholders mull over pricing committee

Business
 Farmers line up to sell sugarcane at Ekerorano market in Kisii County. A bundle retails at Sh20. [Sammy Omingo, Standard]

Sugarcane stakeholders are in talks to establish a pricing committee tasked with setting fair rates for the produce delivered by farmers to millers.

The move follows a deadlock between millers and farmers over pricing with some millers delaying payments to farmers for up to three weeks.

Farmers have demanded that millers pay Sh5,900 per ton of cane as ordered by court but millers are advocating for Sh5,100.

A cease-fire meeting convened by the Sugar Directorate head Jude Chesire and chaired by Agriculture Principal Secretary Paul Rono came up with resolution to set up a pricing committee to end the standoff in the sector.

“There are ongoing good faith consultations between the farmers and the Sugarcane Pricing Committee (SPC) to resolve the cane payment stalemate occasioned by the court order in the High Court in JR Misc. E 047 of 2024 April 24, 2024,” reads the resolution of the meeting held in Nairobi on Tuesday and Wednesday last week.

“In line with the provisions of the Constitution of Kenya 2010, the process of policy review of the sugarcane pricing formula involving all stakeholders will be initiated. The timeline for this process of policy review is projected to take six months from the date of this meeting.”

The stakeholders at the same time said that the necessary requisitions be made under the 2024/25 budget estimates to facilitate the discussions.

The current sugarcane 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, farmers representatives Charles Atiang and Simon Wesechere said, depends largely on sugar price leaving out other co-products such as molasses, co-generated electricity among others.

The farmers complained that the interim SPC had a farmers representative handpicked by themselves and handed over to AFA Directorate for appointment, “effectively making them puppets of the miller and in essence, making miller representation at the committee to be made up of four rather than the specified  two members.”

“It is a good thing for millers to feel and realise, belatedly though, that human beings have rights. Hence, we remind them of how they have ‘sat’ on our rights for far too long to the extent that of all cash crops in this country, it is only sugarcane farmers who transport manufacturers’ raw material all the way from the farm to the factory at a whopping 40 per cent of gross income,” said Wesechere.

The millers had threatened to shut down operations on May 10, 2024, following a court ruling that farmers should be paid Sh5,900 per ton of cane saying the mandate of setting prices was a preserve of the SPC domiciled in the Agriculture Ministry and not the courts. 

Atiang, filed the case before Justice Jairus Ngaah citing a reduction of the price per ton as stipulated in a circular issued by the interim SPC last month. According to the circular, the price was reduced from Sh6,020 to Sh5,100 per ton, effective April 8, 2024.

In his affidavit, Atiang expressed concerns that the decision of the Committee did not adequately consider factors such as inflationary trends, the influx of imported duty-free sugar affecting local prices, and the rising production costs for farmers.

Kakamega Deputy Governor Ayub Savula lauded the ongoing talks to resolve the stalemate saying the county which is a leading sugarcane producer would vouch to have loyal farmers and county representatives sit in the new SPC.

“The sugar sub-sector needs reforms and I am happy that the stalemate is coming to an end. Let the millers in the meantime pay farmers for the cane they delivered as the courts ordered. I know that when the right committee is formed then we will have competitive cane buying prices,” he said.

Savula welcomed the decision by the National Assembly and the Senate to pass the Sugar Bill 2023 which among other things seeks to reintroduce the Kenya Sugar Board (KSB), that used to extend credit to farmers to develop cane.

In 2013, the KSB, Coffee Board of Kenya, Tea Board of Kenya, Coconut Development Authority, Cotton Development Authority, Sisal Board of Kenya, Pyrethrum Board of Kenya, Horticultural Crops Development Authority were merged into Directorates under AFA following the enactment of the Crops Act, 2013.

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