Business Daily
Date: 09.06.2015
Page 3
Article size: 499 cm2
ColumnCM: 110.88
AVE: 0.0
Cane rush stirs trouble as sugar sector totters
Industry
wracked by many
challenges, putting
many firms and
livelihoods at risk
Kenya's sugar industry is unde­
niably reeling from a myriad of
problems that are nowthreat­
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
Business Daily
Date: 09.06.2015
Page 3
Article size: 499 cm2
ColumnCM: 110.88
AVE: 0.0
ening it with total collapse.
Most ofthe problems are deliber­
ately plotted and executed by a sec­
tion ofthe industry stakeholders, in­
cluding managers and owners. At the
centre of this gloom is rampant and
gross abuse ofthe regulations that are
tion of cane on a daily to annual basis
far outstrips that of any sugar miller
or all of them combined, has been
the biggest victim. Mumias is the
only miller with high­
tech, modern diffuser
technology capable of
meant to streamline the sub­sector's efficiently processing
operations.
large chunks of cane.
Yet in the recent
The end result is the sorry state of
the entire sub­sector even as a safe­ past, Mumias, which is
guards deadline by the Common Mar­ located in Kakamega,
ing Butali Sugar court battles ­ accus­
ing it of setting up within the legal limit
of 40 square kilometers. Like Mumias,
Butali and Nzoia in the same neigh­
bourhoods have not
been spared the cane
poaching menace.
At the centre of
these battles is the fact
that some of the new
players commenced
operations without
ket for Eastern and Southern Africa has been embroiled in
contracted cane farm­
(Comesa) rapidly approaches. Worse
still there is no clear end in sight forthe of its competitors, par­
sub­sector's many challenges, raising ticularly the Kabras­
the question as to whether the govern­ based West Kenya
ment will once again ask for another Sugar Company whose
activities have extended
extension ofthe safeguards.
Mumias Sugar, the country's larg­ to neighbouring Busia.
ers and have been
court battles with some
est miller, remains on the throes of an
existential threat, becoming the latest
epitome of what ails the sector. Keen
followers ofthe Mumias saga will by
now have realised although it had se­
rious management challenges, illegal
activities of some of its rivals bled the
operating purely on
ad­hoc cane supplies
­ a practice that is in
total contravention of
the law.
The Sugar Act clearly stipulates
Busia farmers have for the past that every miller must be in an opera­
three decades been contracted to Mu­ tional zone of 40 square kilometers
mias, which is located 25 kilometres in which it must contract sugarcane
away as opposed to West Kenya situ­ farmers to supply raw materials.
ated more than 100 kilometres away.
But on the contrary, a number of
West Kenya, which has no contract­ sugar millers have never contracted
ed farmers, has not spared neighbour­ farmers to supply them with cane
company of billions of shillings in the
last four years speeding up its down­
ward slide.
Yet these companies are continuing
with the illegal activities to the detri­
ment of competitors and putting the
entire sugar industry in peril. Take
the rampant poaching of cane from
contracted farmers, for instance. In
the past four years this illegal activity
has continued to growwith impunity,
throwing the operations of many es­
tablished millers up in the air.
Mumias Sugar, whose consump­
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
Business Daily
Date: 09.06.2015
Page 3
Article size: 499 cm2
ColumnCM: 110.88
AVE: 0.0
and are therefore totally dependent
on poached cane.
In Kabras area of Kakamega, for
instance, the chaotic state of affairs
saw the entry of Butali Sugar in the
neighbourhood of West Kenya, and
immediately contracted farmers to
supply it with sugarcane.
The entry of Butali also raised ques­
tions as it did not adhere to the 40­km
radius rule. But that did not prevent
frustrated farmers from signing up to
supply the new miller who gave them
hope and support in sugar cane de­
velopment.
One could ask where the former
Kenya Sugar Board [nowthe Sugar Di­
rectorate] was as all this happened.
This is because despite numerous
court orders that Mumias obtained
restraining West Kenya from buying
sugarcane from contracted farmers,
the activity continues with impunity.
Ironically, West Kenya went to the
same law courts that overturned the
earlier orders. The company then went
ahead to establish a sugarcane buying
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
Business Daily
Date: 09.06.2015
Page 3
Article size: 499 cm2
ColumnCM: 110.88
AVE: 0.0
centre at Olepito area on the Busia­Mu­
mias road and within Mumias' 40­km
operational zone.
That is not all. West Kenya is now
on course to constructing a sugar fac­
tory in the same location without a
license from the Agriculture, Fisher­
ies, and Food Authority ­ the sector's
regulatory body.
A letter from former interim head
ofthe Sugar Directorate Rose Mkok
dated April 8,2015 indicated that West
Kenya has not been licensed to build
a sugar mill in Olepito.
The letter addressed to West Kenya
Company managing director Taj veer
S. Rai states that the sugar miller does
not even have authorisation from the
National Environment Management
Authority (Nema) which is considered
an important legal threshold.
Ms Mkok says the statutory require­
ments for the establishment of a sugar
milling plant are well known to Mr Rai
as an existing player in the industry.
The letter says that the directorate has
not at anytime received an application
from the miller for construction of a
milling plant at the subject location
and neither is the directorate aware
of any approvals from Nema.
This state of affairs brings into
question the survival of sugar farm­
ing as a business in the entire west­
ern Kenya. Besides the turf wars,
other risks abound including traffic
accidents with the increased number
of heavy trucks, tractors and lorries
operating within the localities.
This state of affairs also brings to
the fore the incident in Owino Uhuru
slums in Changamwe, Mombasa,
where hundreds of residents sought
medical help as a result of lead factory
poisoning.
It goes without saying that the
Comesa safeguards will be coming
to an end soon, which brings into
question the viability of Kenya's
sugar sector.
Barasa is a journalist and a media
consultant
[email protected]
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
Business Daily
Date: 09.06.2015
Page 3
Article size: 499 cm2
ColumnCM: 110.88
AVE: 0.0
Tractors transport sugarcane at Kopere on the Eldoret­Chemelil Road in March. The sugar industry has been rocked by turf
wars as new companies lure contracted farmers away from established firms, file
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya