Uproar over sugar task force report

A day after President Uhuru Kenyatta received a report by a task force formed to help revive the ailing sugar industry, hard questions remain amid concerns over whether the proposals will save the sector.

Some industry experts said although recommendations like the return of sugar development levy, prompt payment to farmers, reduction of taxation and imports, were welcome, grey areas of privatisation and zoning were not adequately addressed and would continue to haunt the sector.

A former Kenya Sugar Board Director Samwel Bonyo said they welcomed the re-introduction of the sugar development levy, but opposed zoning of cane producing regions.

“The report does not contain our views. The task force did not take our views. We are opposed to zoning and it must be reviewed,” said Mr Bonyo.

He said the government should revive the Kenya Sugar Board that used to fund cane development and factory maintenance for the millers.

The board was disbanded in 2013 and the sugar sector put under the newly-formed Agriculture and Food  Authority (AFA), together with Coffee Board of Kenya, Tea Board of Kenya, Coconut Development Authority, Cotton Development Authority, Sisal Board of Kenya, Pyrethrum Board of Kenya and Horticultural Crops Development Authority.

Yesterday, Bonyo said lumping the sugar sector with other crop agencies was suicidal as the government stopped funding factory maintenance and cane development.

Industry insiders maintained that the sugar sector would remain in trouble unless State-owned millers were given enough money to improve their cane crushing efficiency to avoid huge production losses.

Yesterday, some farmers poked holes in the task force report, saying it was not a reflection of their views.

They opposed the decision to zone cane growing regions, saying it would hurt farmers who wish to sell their cane to the highest bidders.

According to the task force report, the government will zone sugar cane growing areas and merge poor-performing State-owned companies, if radical proposals in the much-awaited National Sugar Task Force is endorsed by the State.

One efficient miller

The task force members recommended that all the three sugar factories in the Nyando sugar belt - Chemelil, Muhoroni, and Miwani - be merged to form one efficient miller.

Of the three, only Muhoroni, which has been in receivership since 2000, is crushing sugar at far below capacity. 

While Miwani collapsed over 20 years ago and only exists in name, Chemelil stopped milling cane over eight months ago due to a lack of maintenance and money to pay workers and farmers.

But investigations by The Standard indicates that the State-owned millers are not only deeply indebted but are struggling with low-efficiency levels.

Chemelil, for example, has been closed for months due to a lack of cane and servicing. It’s due to resume milling tomorrow. The company has not paid its workers for close to 20 months.

Last week, the company’s Managing Director Gabriel Nyangweso was charged in court with failing to remit workers' statutory deductions and penalties totalling Sh33 million to the National Social Security Fund.

Failure to carry out regular maintenance has affected the performance of the factories, making them incur huge losses.

At Chemelil, for example, the efficiency level, known in the industry as TCT (Tonne of Cane to Tonne of sugar), has sunk to the lowest level. While the recommended TCT is between nine and 11 tonnes of cane for one tonne of sugar, Chemelil is doing up to 20 tonnes of cane for a tonne of sugar.

This means the company cannot generate enough money to pay farmers, workers or carry out maintenance.

This is the same story at Sony and Muhoroni, which have also been beset by production woes, worsened by a shortage of sugarcane as farmers opt for private millers.

Sony has not been able to crush cane consistently in the last two years due to frequent breakdowns.

“The machine was last maintained five years ago (2015). The mill currently does between 700 and 1,000 tonnes per day instead of 2,500 tonnes per day,” said a manager who sought anonymity because he is not authorised to speak to the media.

Supply cycle

“It crushes cane and often breaks down, thus affecting production and supply cycle,” said the manager.

He said the factory currently operates for three days and then stops to accumulate cane.

“We have to accumulate cane for at least three days,” he said.

This has seen their daily production dip by 30 per cent, said the manager.

Farmers, however, are threatening to uproot their cane if the report is implemented as it is and wants President Uhuru Kenyatta to recall it and order for a fresh audit of the report.

They want the government to introduce a free market in the industry to enable them to sell to millers that pay them promptly.

Led by Kenya Sugarcane and Allied Products Chairman Charles Atyang, the farmers said the report was bound to throw the industry back to the gutters.

“The recommendations in the report do not capture the interests of farmers and we will uproot our cane if they insist on implementation,” said Mr Atyang.