Tough choices for cane farmers in new rules

In a move that goes against the spirit of liberalisation, sugarcane farmers will have little choice on where to sell their cane — once the government enacts the proposed Crops (sugar) Regulations 2018.

The new rules will assign some farmers to, in some cases, moribund factories that only exist on paper. The rules also seek to protect the millers from competition.

In the new proposal, which is being pushed for gazetting by some millers, the cane growing areas will be divided into five zones and farmers in those zones will have to only supply cane to the assigned millers — whether the factories pay on time or not.

40-KILOMETRE RADIUS

Previously, millers were assigned a 40-kilometre radius and the Kenya Sugar Board would not license a competitor within that radius — which left thousands of farmers at the mercy of millers that either harvested cane on time; or simply didn’t pay.

The new rules seek to protect the millers from any competition and states that “new sugar project shall not be allowed within the assigned zone of an authorised sugar miller” — meaning that the millers will have perpetual control of the farmers in their jurisdiction.

NEW REGULATIONS

Sources say that a meeting to finalise this position has been called for October 11 at the Vic Hotel in Kisumu where some millers and some members of the Kenya National Federation of Sugarcane Farmers will sit to discuss the new regulations “and harmonise the joint sugar millers and sugarcane producers’ proposals.”

Free market

Until some politicians and Kenya Sugar Board officials, pushed for the licensing of Butali Sugar within the radius occupied by West Kenya Sugar, millers were strictly assigned zones where they harvested cane from.

But in 2010, Justice Martha Koome while ruling in a case filed by West Kenya against Butali said that Kenya is a free-market economy and that to restrict Butali “apart from the fact that it would amount to unfair restraint in trade, it would also be counter-productive as it would kill competition and bring complacency in the industry of development of cane production.”

CANE POACHING

It is this order which threw the cane market open and allowed the private and public millers to compete on the basis of a free market.

While the court order allowed the millers to buy cane from areas they could not previously harvest, without being accused of “cane poaching”, it also gave farmers freedom to sell their produce to the best buyer.

At a recent meeting organised between the cane growers and millers at Nairobi’s Windsor Hotel, the millers and farmers agreed that the industry is facing a crisis that include low cane supply, cane poaching, obsolete technology and farmers’ arrears. Other issues include high debts and lack of regulations.

POWERFUL MILLERS

The farmers have also raised concern about the inadequate financial support, high cost of inputs and high transport costs that take up to 30 per cent of their earnings.

They have also been complaining of excessive taxation and continued harvesting of premature cane.

While the millers cite inadequate supply of cane and the delay in the gazettement of the sugar regulations, some farmers feel that the reintroduction of the zones will end up hurting farmers.

“It is some powerful millers who are pushing for the zoning of the industry,” claims Stephen ole Narupa, an official of the umbrella -- Kenya National Federation of Sugarcane Farmers (KNFSF) while reached for comment.

LIBERALISED ECONOMY

KNFS has already written to Cabinet Secretary for Agriculture, Mwangi Kiunjuri, saying that “the “command zone is counter to the liberalised economy (and that) any zoning by millers should be contractual between a farmer and a miller.”

Minutes of KNFSF meeting held in Kericho on August 16, indicate that the farmers complained that no consultations had taken place between the farmers and the county governments which are supposed to come up with the zoning.

KENYA SUGAR BOARD

“We recommend the reinstatement of the disbanded Kenya Sugar Board to streamline and regulate the industry,” the minutes read.

Although farmers will be at liberty to choose from four millers in a zone, the reality is that some of those listed in some zones are already dead.

Reached for comment yesterday, the chairman of Kenya Sugar Millers Association Mr Jayanti Patel promised to call back. By the time of going to press, he had not given the millers position on the matter.

In new proposals, the cluster of central region which includes Siaya, Kisumu, Nandi and Kericho farmers will have to choose between Kibos Sugar, the collapsed Miwani, and the under-receivership Chemelil and Muhoroni.