Millers must unite to fight or perish

Monday November 13 2017

sugar industry

Farmers sort out dry sugarcane at a farm in Yiro village, Siaya County, on February 10, 2016. A vibrant sugar industry would be welcome news to the millers. PHOTO | TONNY OMONDI | NATION MEDIA GROUP 

By AG AWINO
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The Crops Act, 2013 was enacted to, among other objectives, accelerate the growth and development of agriculture and enhance productivity and the incomes of farmers and the rural population, many thought the troubles that have bedevilled the sugar sector would be over.

Far from it! The Act has turned out to be the Achilles heel, the source of agony for the farmers and millers.

Zoning is the elephant in the room.

While the Crops Act is silent on this, the Sugar Act, which preceded that legislation, clearly defines a zone as an area within a radius of up to a maximum of 40 kilometres of a sugar mill.

CROPS ACT

It is this omission that has contributed to a lot of the problems the millers are experiencing and the diminishing quality of cane in the sugar growing zones.

While the regulator, the Agriculture and Food Authority (AFA), and the Agriculture ministry have argued that the Crops Act came as a real cure from the death knell that the farmer was facing, the reasoning is only good on paper because the unfavourable business environment faced by the millers definitely affects the farmers as well.

The Act ignores the fact that all the players are a crucial ingredient to the overall growth of the sugar industry in the country.

The saddest thing, however, is that even when small windows of opportunity present themselves for the government to attempt to redress the situation, it has looked the other way.

SUGAR IMPORTS

For example, the government recently allowed the importation of duty-free sugar to fill up the deficit in the country.

This was good news to the consumers, but it was a temporary solution to the problems facing the sugar sector.

In my view, millers sell sugar to traders. They have invested in marketing and distribution channels that guarantee returns for every person involved.

Allowing traders who sell directly to the consumers disrupts the chain and denies revenue to a number of business interests along the distribution channel.

DEVELOPMENT
Traders are in business to make profits, while the millers’ profits reach the farmer directly or indirectly through projects such as road construction, talent development as well as the provision of education opportunities.

Nzoia, Sony and West Kenya sugar companies spend millions of shillings annually on talent development and recognition.

The government seemed to have realised its mistake by issuing another gazette notice that allowed millers only to import sugar, but this was soon rescinded, leaving the millers at the mercy of some unscrupulous importers out to make a kill at the expense of the farmer.

REVENUE
By looking at the average monthly price of a 50kg bag of sugar, it is impossible to pay the farmer anything above Sh4,000 per tonne, negating the spirit of the AFA directive last year.

The regulator had decreed that farmers be paid more per tonne every time the millers record higher figures and vice versa.

Traditionally, farmers benefit from high market prices in December.

As the domestic market enjoys an abundance of cheap imports, farmers continue to get peanuts.

Millers are struggling to recoup production costs, and have accrued more debts due to low profit margins.

CANE POACHING

It shouldn’t surprise anybody when millers ask for bailouts.

It is the most prudent thing to do to stay afloat in an environment riddled with regulations that diminish the tenets and international best practices regarding the sugar miller.

The abolishment of zones by the new Act opened a can of worms among the millers with traditional millers claiming that it has led to rampant poaching by sugar millers who do not have cane while new millers have had to fight a litany of legal and physical battles for cane.

The end result has been the harvesting of immature cane with very little sucrose content.

In the end, there will be no cane to crush if there’s no zoning.

ZONING
The millers must, therefore, work together for posterity and, petition the government to reverse the current scenario.

A vibrant sugar industry would be welcome news to the millers as it also, among other things, builds a human resource base from which they all stand to benefit.

They must also fight to have more representation on National Cane Pricing Committee than the two that millers now have.

They must also work together to fight the misconception that the new Act builds the farmer.

The converse is true, as the farmer is in a much worse state than he was when zoning was in place.

Mr Awino is a member of Public Relations Society of Kenya and a sugar communications expert based in western Kenya. [email protected]