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Sugar factories have been oppressing growers for too long; free the industry

Tuesday October 9 2012

 

By JAINDI KISERO

The scramble for sugar-cane between millers is getting messier by the day.

I don’t understand why the government has allowed so much anarchy to prevail in the sugar industry.

Cash crop farming cannot prosper in a context of disorder and disruptive competition. Many years ago, tobacco growing was a strictly controlled affair.

You could not grow the crop even if you had the land and the money. Farmers had to apply to the only tobacco manufacturer in town at that time — BAT Ltd — to be registered as tobacco growers.

At the beginning of every crop season, crowds of farmers would queue in front of BAT’s field offices to plead to be allowed to join this exclusive club. 

For the registered farmer, BAT financed the crop. It gave you fertiliser and other inputs to be deducted from your dues. Inevitably, this oppressive regime spawned a parallel market of farmers operating under the BAT system.

In the South Nyanza region, these ‘illegal’ farmers became known by the nickname “agok” — loosely translated to mean “shoulder”, because they often carried sackfuls of tobacco leaves on their shoulders hawking it to registered farmers.

This oppressive regime was not lifted until the proprietor of Mastermind Tobacco, one Wilfred Murungi, came into the scene to offer the farmer an alternative market outlet.

As expected, the first group of farmers to flock to Mastermind Tobacco Ltd were the so-called ‘illegals’.

The registered farmers also embraced the new entrant, as this was an opportunity to circumvent having to pay for the inputs provided by BAT.

The situation presented an opportunity to riot against the oppressive incumbent. As a business reporter, I sympathised with BAT, whose business model was threatened by the disorderly and unpredictable market conditions.

On the other hand, having for many years seen my own relatives queuing all night in front of BAT field offices waiting to be registered as tobacco farmers, I could not help but treat BAT’s predicament with a sense of glee.

To restore order in the industry, Mr Simeon Nyachae, who was then Minister for Agriculture, introduced a new zoning system, restricting the two wrangling companies to specific regions.

Today, we have the same confusion in the sugar industry. In Western Province, West Kenya Sugar Factory and Mumias Sugar are engaged in a bruising battle over control of sugar-cane zones.

In the Rift Valley, you have West Kenya and Nzoia Sugar at each other’s throats. In South Nyanza, the Awendo-based sugar company is facing a twin offensive from two young and nimbler players — Sukkari Factory Ltd, and Transmara Factory Ltd, both of which are paying the farmer higher prices for cane.

In the Nyando belt, Muhoroni and Chemelil have to fight it out with Kibos Sugar. Several questions arise. What are the rights and obligations of a company that sponsors a contracted farmer? Should such a company have a first right to the crop it has financed?

Or, shall we treat any money a farmer owes to the factory as an ordinary civil debt, which can be paid back either in the form of cane or in cash? I don’t have the answer. When we decide to introduce new regulations, we must make sure that they come with specific obligations for the sugar-cane factory.

Sugar factories have been oppressing farmers for far too long. I know of a farmer who waited for more than 18 months before the factory could harvest his cane.

Yet when the new players offered to buy the cane, the factory started complaining that his contracted cane was about to be poached by a competitor.

We need a law that gives a contracted farmer the leeway to sell his crop to a willing buyer, especially where the factory which contracted him takes too long to harvest the crop.

In recent years, we have seen the entry into the market of seven new private sugar mills. This is at a time when government sugar firms are all struggling. The notion that sugarcane cannot be farmed profitably in Kenya is a big myth.