Cane farmers stare at a bitter future as Sony Sugar struggles

Sony Sugar company workers on strike on April 1, 2019, demanding for more than Sh100 million in salary arrears. [Caleb King'wara, Standard]

The future of sugarcane farming in Migori County is uncertain. This is due to the frequent break down of Sony Sugar’s crushing machine.

While the miller’s installed production capacity when it was established in the 1970s was 3,000 tonnes of cane, today it hardly crushes a mere 200 tonnes a day.

The firm’s managers blame this on lack of annual maintenance in the last five years, high cost of cane production and inefficient technology for its woes.

Currently, the cost of production by the miller is one of the highest compared to rival private factories in neighbouring Homa Bay and Narok counties.

Sugar companies like Transmara in Narok and Sukari industry in Homa Bay produce about 2,000 tonnes of cane per day. It has become uneconomical for the Awendo-based sugar miller to operate and pay for its short term obligations.

Although Sony Sugar has a vast area of land under sugarcane cultivation, its current yield per hectare is extremely low compared to other sugar millers. “This has led to the company’s low overall production and resulted in short supply of sugarcane raw material to the mill,’’ admits the company’s Board Chairman Mr Owino Likowa.

But where did the rain start beating Sony Sugar Company? Lack of annual maintenance of the factory crushing mill is one of the problems.

While the factory is supposed to do annual maintenance to replace worn out parts and boost its operation efficiency, it has not done so for the last five years.

The last time Sony carried out annual maintenance was in 2014, hence the constant break downs of its milling machine resulting in massive losses.

Again, the factory is still operating a steel mill, when new competitors like Sukari Industries run an electric mill.

Whereas Sony produces 1,000 tons of cane per day or less, other firms produce almost triple helped by new technologies, making them more efficient.

“Today, most of the machinery used in Sony Sugar crushing mill is over 30 years old. They are obsolete and need rehabilitation,” notes Likowa.

Bank loans

Sources disclosed to Weekend Business that insufficient raw material and low mill extraction of juice has hampered the factory’s production.

According to the firm’s management accountant Edward Odhiambo, they are sourcing for money from banks and the county government to do maintenance.

When the factory breaks down, it forces the miller to shut down for hours or days as they carry out mini repairs.

But even when they resume, a lot of sugar under processing is lost during fermentation and extraction as it ends up producing more molasses than sucrose. “For instance, 10 tonnes of cane milled, the conversion of cane to sugar is very low, because the machine often breaks down and in the process, we lose 6 tonnes,’’ Mr Odhiambo says.

At the moment the firm pays farmers Sh4,300 per tonne.

But if the factory operates at its maximum, it can do up to 3,500 tonnes of cane and make Sh15,085,000 per day and about Sh452,550,000 million a month. The State holds 98 per cent stake in Sony but it is yet to provide funds for annual maintenance.

“If we can repair and fix the obsolete parts of the crushing machine. Then the factory will be up and running more efficiently. We will be back on profits making,’’ Likowa says.

Today, if the miller is given about Sh400 million it needs for annual maintenance, Likowa disclosed that they will be back on a strong financial footing.

Sony acting MD Mr James Oluoch said the firm is now seeking for solutions, including bank loans and Migori Governor Okoth Obado’s help.

Odhiambo said they are negotiating with commercial banks to ease financial pressure, do repairs and pay farmers’ dues.  Sony owes cane farmers Sh400 million for deliveries made in the months of November last year.

“Today, instead of crushing 90 tonnes an hour they do only 30 tonnes. This is not cost-effective if we do the cost-benefit analysis,’’ said Likowa

Recently, the Board’s Finance Committee Chair Mwita Nyangi told the Senate Committee on agriculture that the factory needs Sh400 million to be back on its feet. The committee chaired by Njeru Ndwiga promised to address their concerns.

Cane poaching is another threat to Sony Sugar. ‘’Rival companies are also poaching our cane, making recoveries of loans advanced on standing cane a problem,” he said.

Kenya Union of Sugarcane Plantation and Allied Workers deputy Secretary-General John Ogutu said they are planning another strike to press for workers’ payments.