Industry caught in elaborate network of cartels, says Nyong’o

A crane offloads sugarcane from a tractor at Kibos Weighbridge in Kisumu Count on September 12, 2016. Senator Nyong'o has said that cartels have ruined the sugar industry. PHOTO | TONNY OMONDI | NATION MEDIA GROUP

What you need to know:

  • The country risks being caught off-guard with cheaper sugar flooding the market from the Common Market for East and Southern Africa (Comesa).
  • The county government must be part of the deal because you are disposing of a national asset of a value that farmers have played a part in building.

The once-lucrative sugarcane farming, introduced in Kenya in the 1900s, has lost its allure.

The country risks being caught off-guard with cheaper sugar flooding the market from the Common Market for East and Southern Africa (Comesa).

The safeguards periodically requested by Kenya will lapse in close to six months.

Millers are bogged down in debt and high cost of production, while farmers are slowly abandoning the crop.

There is a planned privatisation of State-run millers. A sugarcane farmer and political leader in a sugar-growing county, Kisumu Senator Peter Anyang’ Nyong’o, spoke to the Nation. Excerpts:

Question: We have seen farms go fallow as farmers seek alternatives and millers hustle for sugarcane. Where did we get it wrong?

Prof Nyong’o: Our model of cane production. It is a complete mess and farmers have constantly found themselves between the two odds of oversupply and under supply. They lose either way. When there is undersupply, the factories don’t make much and can’t pay them. When there is an oversupply, harvesting is not done in time and they are delivered when they have no value; sometimes they are left to dry, losing weight and earning less. We have had crops harvested after 24 months.

What should be done?

Prof Nyong’o: What happens in other countries is what is called ‘bloc farming’. Farmers retain their small farms but agree on specific timings. Factories can plan for the harvesting, making the cycle organised, and constant cane supply is ensured. What we have in the Kenyan sugar belt is just chaos leading to low productivity, high cost of production and farmers who are hardly given value for their produce. That can be corrected by proper planning because many farmers still hold 10-acre blocs that only can be surveyed and blocs of 100 acres created in liaison with factories. But the farmers are a discouraged lot, stuck in historical debts, can’t find support and practise old-style production, including centenary-old cane varieties….What the government should do about those loans from the 1970s is exactly what they did to coffee: Write them off. There are a few mistakes that equally need correction. For example, abolishing the Sugar Development Levy was a huge mistake.

Why is it so hard to make the chain for cheaper sugar?

Prof Nyong’o: There has been a lot of corruption in the mills and farmers have borne the brunt of it. They just lower the price of sugarcane and the factories make more money, which is never declared. The cartel — from the sugar board, importers and factories — is one big sweetheart arrangement; that is why they want to privatise the factories in a way that the network remains. Production has been deliberately made expensive so that barons can keep importing sugar.

Are we ready for privatisation? You went to court to challenge the process, why?

Prof Nyong’o: Privatisation by itself is not a bad idea; what matters is how you do it. What we are doing is like textbook cases, where somebody takes a World Bank manual on privatisation and applies it lock, stock and barrel. Privatisation needs to be based on three things: first is modernisation for efficiency. Second is capital injection, and you don’t have to reinvest in all the three factories - Muhoroni, Chemelil and Miwani. Thirdly, you must think about the farmer as a part of the major entities involved with the county governments.

Where do the counties come into this and how do we ensure farmers’ interests?

Prof Nyong’o: Under the Constitution, agriculture is a devolved function. The county government must be part of the deal because you are disposing of a national asset of a value that farmers have played a part in building.

What you are proposing is valid but we have Comesa safeguards ending soon.

Prof Nyong’o: What we want is a long-term solution. We just need to produce our sugar competitively. If we can sell at, say, Sh50 per kilo, why should we worry about Comesa? Improve productivity by reducing the cost of production and the price falls.

We heard that local leaders don’t want sugar mills improved because Jubilee government will take credit for it.

Prof Nyong’o: That is not true. In fact, that would be silly. All we want is that we do this properly. I recommended so many things while in government and those are the things being implemented now.