Secret letters warned Kenya against sugar farms years ago

Kenya was warned decades ago on the dangers of starting a sugar industry based on outgrower farmers’ cane — but officials at the ministry of Agriculture decided to go ahead because it made political sense.

At that time, secret documents indicate, government bureaucrats were privately feuding on how to organise farmers, whose smallholder plots were supposed to mimic large plantations in South Africa, Malawi, Uganda and Zambia.

The bureaucrats, eager to implement Jomo Kenyatta’s promise of settling the landless and allowing rural peasant farmers to grow new cash crops, made numerous mistakes despite the warnings.

One such cautionary note is contained in a declassified letter dated August 5, 1971 and written by a Commonwealth Development Corporation sugar farming consultant, B.C.J. Warnes.

Mr Warnes had arrived in Nairobi to consult for the government on the future of the experiment with smallholder cane farming which had not succeeded anywhere in a sugar scheme.

“The outgrower is an individual. He can’t be hired and fired even if it were politically acceptable to do so, which it is not. And yet the collective fortunes of the entire body of outgrowers, and the milling company itself, depend absolutely on the willingness and ability of each and every grower,” he wrote in a letter to senior officials at the ministry.

As the crisis in the sugar industry continues today unabated, this warning still haunts many government officials and sugar managers struggling in a difficult market.

Presently, according to the Sugar Directorate, Kenya produces sugar at Sh95,000 per tonne on average, meaning sugar from its mills is more expensive than produce from Sudan, Egypt, Swaziland, Zambia, Malawi, Tanzania and Uganda.

This is due to Kenya’s heavy reliance on small-holder production and ageing factories. Malawi’s average production cost is Sh35,000 per tonne.

Mr Warnes’ letter, written to then Agriculture Deputy Secretary G. Musembi and later sent to the Commissioner of Cooperatives, Mr Joshua Muthama, had warned that producing enough cane — which seemed to be the sole objective of the government — was not enough for the smooth running of a sugar enterprise.

“High throughputs call for some very exact timing and co-ordination on the cane growing side ... it is not sufficient to merely produce the total quantity of cane required annually. It has to be grown, harvested and delivered with almost split second timing so that exactly the right amount of cane goes on arriving at the mill round the clock, day after day and week after week,” he said.

Today, this lack of timing has left all the sugar factories grappling with the problem of either lack of cane, spoilt cane or overgrown cane.

MYRIAD PROBLEMS

For instance, Muhoroni, now in receivership, receives 90 per cent of its cane from smallholder farms who are always grappling with transport problems, overgrown and poor quality cane. The same story is repeated in Mumias, Chemelil, Sony, Nzoia, and Miwani, which is also under receivership.

In 2014, these five premier factories produced 321,000 tonnes compared with Malawi’s sole sugar producer Illovo Sugar (Malawi) Ltd, formerly owned by Lonhro, whose two factories at Nchalo and Dwangwa produced 289,000 tons despite breakdowns.

Zambia’s single factory from its sugarcane estate in Nakambala produced 450,000 tons compared with Kenya’s 11 factories which produced 592,668 tons last year.

The figures are a good indicator of the economics of sugar production and how they favour larger farms. While Kenyan factories do not process refined sugar, both Zambia and Malawi are net exporters.

Some 44 years ago, sugar development experts had foreseen the development of a crisis if cane discipline among the smallholders was not maintained.

“It would not be difficult to get things right for a few hours or a few days”, Mr Warnes wrote but warned that to achieve that requires “high level of discipline” which he thought would not be achievable in an outgrower-run scheme. “While discipline could be achieved at the commercial farm owned by the factory, this would not be the case at the individual plots.”

He told Mr Musembi: “Look at the records of all existing mills in Kenya, and their cane suppliers, and you will see how formidable that goal is and how very difficult it is to achieve in practice ... No sugar mill in Kenya or Uganda receiving less than 1,000 tonnes of cane per day, for at least 250 days of the year, will avoid making losses.”

By then Muhoroni Sugar was only managing to receive 700 tons against the projected 1,000 tonnes. Today, Muhoroni has an installed capacity of 2,200 tons of cane per day and, according to a report prepared last year by Kenya Sugar Board, the company is projected to have a surplus cane supply of 189,116 tons this year.

That means it has no capacity to process all the cane in its zone, meaning that farmers will make more losses.

It now appears that this situation was also foreseen as far back as 1971, even before farmers were enticed to grow cane.

“Without collective discipline, the cane supply will be sporadic: Either too little, resulting in idle time at the mill and therefore high production costs, or too much (where) the mill will not be able to handle it (leading to) cane spoils, high costs and recurring losses,” Mr Warnes had said.

To deal with this problem, the expert suggested that an organisation be formed that can have “dictatorial” powers to enforce discipline on the more than 3,000 outgrowers, which he warned would be a “highly sophisticated, technical and political operation.”

In Africa, big sugar plantations had emerged in South Africa when Sir Charles George Smith established what was to become Africa’s biggest sugar producer — Illovo Sugar Ltd — in Natal province. It is this plantation’s success that served as a model for the sugar industries in Zambia, Malawi, Swaziland and Tanzania, where the company has invested in mega-plantations.

FIRST EXPERIMENT

Chemelil was the first experiment on smallholder sugar production in Kenya and had begun operations in 1965.

But, after only six years, officials knew it was a failure. The proposed sugar co-operatives had failed to work and this triggered a war of words between Cabinet ministers Jeremiah Nyagah and Masinde Muliro in 1971.

Also, the early failure of sugar co-operatives in Chemelil had made agricultural officials in Nairobi more cautious on how to organise farmers in the sugar belt. The co-operatives were to be used in the chain of production. But some government officials had other ideas.

“If we are to avoid problems, which, I understand, disrupted the progress of Chemelil sugar production co-operatives, expert advice is imperative,” wrote S.M. Muchoki, the provincial co-operative officer for Western Province, in a June 1971 letter to Commissioner of Co-operatives Joshua Kimote Muthama.

That expert advice came later and was barely heeded.