Reports Leo Odera Omolo In Awendo Town

The cold war of words over the disputed raw cane supplies to the two sugar mills based in Migori and Homa-Bay Counties.

The situation is rapidly growing from bad to worse and now call for the government intervention to have the supplies of raw cane to the Awendo based South Nyanza Sugar Company Limited and Sugari Industries Company Limited based in Ndhiwa based within the County of Homa-Bay.

The distance between the two facilities is moderately estimated to be between 15 and 20 kilometers apart. The new factory is located at Wachara Markat in a pace previously reserved by the surrounding communities for common cattle grazing known as Paw Otange. It has been on the running test for sometime, but went into full blast production early last week with a prime rice of Kshs 5,093 per ton of raw cane and not charging any transport cost.

On hearing of the frightening prices being offered by the new Mill, he SONYSUGAR managing director Paul Odolla unilaterally without consulting other stakeholder announced that Sony Sugar would now pay Kshs 4,500 per ton, but still charges other expenses such as harvesting and transportation fees on farmer’s cane.

Both the planners within the government and the investors stands equally blamed for having failed to strictly observed the rule set by the Kenya Sugar Board, which is the regulating authority in the sugar industry that require anyone intending to establish a new sugar factory must ensure that the new facility is located 40 kilometers away from the existing facility in order to avoid the scrambling over the raw cane, hence the existing pathetic situation.

Furthermore, the Sukari Industries should have been prevailed upon to identify and developed its own cane firm twenty months before the completion of the construction work and installation of the factory, though it has no nucleus estate farm of its own for the steady supplies of raw cane, it could have contracted its own farmers within its can growing zones.

The Sonysugar management blames the new Mill for targeting its own cane, which it had advanced the fa contracted farmers a colossal of money on credit facilities. Such facilities restrict the farmers to deliver the cane to the Sonysugar shat the company could recover the money it had advanced he can farmers for cane development and husbandry.

But within the same cane is delivered to another factory, SonySugar books of account and records remained and the company stand to incur loses running into millions of shillings.

The Sukari Industries ltd, however, countered this line of argument by saying that it has only targeted non-contracted cane farmers, though such farmers are located within the Sonysugar cane growing zones. But Sonysugar insists that even in the case of non-contracted farmers, it had supplied its own cane seedlings to the farmer for planting, therefore it has the monopoly rights to harvest such can farms.

The on-going war has come about due to sharp differences in what is believed to be the cut-throat-prices per tonnage for cane. For a long time SonySugar Company has been accused of poor plan of can harvisting programme, which has led to thousands of tons of mature rotting in the field un-harvested.

The company manager with total impunity were involved in corruptive harvesting practices common called “Helicopter Harvesting” in which they were only harvesting cane selectively on farms where the owner had paid out ”Kick-Backs” or bribe money and jumping hose which belonged to unknown poor farmers. They completely ignored the plight of poor rural peasants who depended on their small scale farms for their livelihood.

Thousand of small scale and contracted cane farmers become disillusioned and frustrated when their crops got rotten in the field un-harvested and go into the waste. Some of the farmers abandoned cane rowing for other cash crop such as tobacco, maize and others.

The situation is also aggravated by payment of cane bills. Whereas the Sukari Industries Limited of Ndhiwa pays promptly on cane delivery, whereas Sonysugar of Awendo pays after two months of cane delivery. In the past payment from SonySugar were not forthcoming even after six months, sometime even one year.

Other accusation and claims against SonySugar is its poor public relations between its top managers and the ordinary cane farmers.

Immediately after getting wind of the impending scramble for can, Sonysugar went into can harvesting spree, clearing nearly all mature cane in Sakwa South area, but some of the cane which were harvested in hasty remained rotting and drying in the filed due to shortage of transportation fleet.

SonySugar then moved to the Trans-Mara district in Narok County in Maasailand where most of the cane belonging to its top manager and sent the fleet of transporting tractors. The move has also elicited anger and criticism.

The woe of SonySugar could even be worse when another sugar factory slated to go into production in the first week of December began crushing cane. The Trans-Mara Sugar Company is currently on the running test and would soon start the actual cane crushing work.

Sonysugar company has also began panicking that he new mill, which like the one in Ndhiwa has no nucleus estates of its own for steady supplies of raw cane for crushing. The new Mill is also targeting the cane grown in Maasai land with the financial backing to individual farmers by SonySugar. And once it commences crushing, the two mill would push SonySugar to the wall.

In order to make its operation continue uninterrupted SonySugar will have to usher in some kind of radical reforms in its management in order to make it incentive to do business with.

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Reports Leo Odera Omolo In Awendo Town

A bitter dispute has erupted between the Awendo based SONYSUGAR Company an the newly established Sukari Millers Ltd over supplies of raw cane for processing.

On Friday last week a fleet of tractors carrying a gang of cane harvesters from the newly established Sukari Millers Limited based in Ndhiwa district and agents of the Awendo-based SONYSUGAR had confronted each other at a farm which is located near Ranen market in Kogelo Sub-Location of Sakwa East Location in Awendo district within Migori County.

The agents, purporting to have been sent by sonysugar company management to stop any outsider from harvesting and transporting raw cane out of its exclusive cane growing zones, provoked the villagers to quickly arm themselves with crude weapons ready for a bloody fight.

A gang of people confronted the tractors and had a plan to puncture their tyres on claims that they were encroaching on SonySugar Company cane growing zones. The youth suspected to have been sent to the scene by agents of SonySugar menacingly threatened to burn the tractors and beat up he drivers, cane cutters and loaders on claims they were trespassing on an area which is within the sugar cane growing zone of SonySugar.

The confrontation almost turned bloody, spurred on by the villagers sympathetic to the owner of the cane farm. It was later established that the farm was contracted not to SonySugar, but an out grower outlet.

As the situation threatened to turn into violence, the police were called. After this, the owner of the cane farm put up his argument that the reason why he wanted his cane to be harvested by Sukari Millers Limited was due to several factors including the price of raw cane per ton. The Ndhiwa based firm is paying out to farmers at Kshs 5,093 whereas SONYSUGAR is still paying the old prices of Kshs 3,500 per ton.

Cane farmers in Awendo cane growing zones also alleged that SonySugar for years has been harvesting cane selectively and corruptively, at time leaving some farmers to go up three or four years without their cane being harvested until the crop become overgrown.

The next incident occurred at Pi Kwar area also within the same location when a farmer Oluoch Okongo’ Gumo who claimed to have invited the SONYSUGAR management to harvest his mature crop for close to one year in vain. He then contacted and invited the management of the Sukari Millers Limited who responded promptly and sent a gang of workers ready to harvest the cane followed by a fleet of tractors ready to have the cane transported to their mill in Ndhiwa.

For the second time within two days people who claimed to be agents of Sony Sugar Company tried in vain to stop the harvesting of Mr Okong’o’s farm. A bitter argument ensued as the police were invited to maintain law and order and peace After documents related to contracting cane farmers in the area were perused it was established that the cane was grown under the non-contracted cane farm program commonly know as out growers. And in pursuit of the existing liberalization the farmer was allowed to have his cane harvested and taken to the Ndhiwa based mill.

The farmer In question had successfully argued his case that he had on many occasions approached the management of SONYSUGAR with the request to have his mature cane harvested in vain, but then needed the money to pay some family overhead.

Residents of the areas, especially the out growers cane farmers from the areas previously classified as SonySugar company cane growing zones, moved in with speed and harmonized the cane harvesting system that would make the two facilities run smoothly without any hitches.

The cut-throat competition which is being witnessed between the two facilities,. They have expressed fear that this would hamper the sugar production in the region. Moreover the newly established Sukari Mills Ltd, is located within only 15 kilometers apart from the existing SonySugar factory.

Ever since its inception in 1977, the multimillion shillings Sony Sugar has had the monopoly of cane growing and harvesting in close to seven administrative districts stretching from Migori, Homa-Bay, Southern Kisii and Narok Counties. This caused laxity and poor planning of cane supplies system due to the fact that farmers who grow cane in most of the areas mentioned above, those unlucky ones have had their cane lost in the field without being harvest.

Due to the excessive arrogance exhibited by SonySugar for not harvesting he cane from the farmers within reasonable time after cane maturity, many farmers became disillusioned and abandoned cane growing for other cash crops with the quick return like tobacco and maize.

On other occasions cane farmers were being subjected to harsh treatment of going for many months, even over a year, without having their cane delivery bill paid in time, thereby contributing to their abject poverty instead of improving their standard of living.

Other complaints raised were that weighbridges in some mills were technically adjusted to be faulty for the purpose of cheating the farmers on the tonnage of their deliveries.

The Awendo-based SonySugar is facing stiffest cut-throat competition from two prong which is threatening to jeopardize its raw cane supplies. Another new white sugar factory, though a medium size, has gone into production at a place called Lang’ata within Trans-Mara district, but only 30 kilometers from Awendo Town.

The new facility s targeting cane grown in Trans-Mara, Southern Kisii and Kuria regions as well as those grown in Migori , Awendo and Rongo districts which were the exclusive monopoly of sonysugar’s cane growing zones. It had contracted close to 27,000 cane farmers.

The Trans-Mara Sugar Company has no nucleus estate farm of its own, but will depend on the out growers farmers. The same could be said of the Sukari Mill Limited in Ndhiwa, The two facilities simultaneously went into production last without proper plan involving the stable source of raw cane supplies. This made SonySugar to breathe fir when it discovered that the two new factories would be relying on canes grown in its exclusive zones.

For a reasonable white sugar to be sustained will require at leas 6,000 hectares of its on exclusive sugar cane growing farms with more than 10,000 hectares within its out growing zones.The KSB regulations and requirements were simply ignored by both investors and planners at the parent ministry.

Meanwhile unconfirmed reports making the round within Awendo and its environs says senior government officials, particularly from the Ministry of Agriculture are said to be involved in the sugar sales scam. The unnamed officials have been offered the sales brokerage altogether with some politicians thereby making it difficult for the local traders to get their supplies.

The names of the officials are used as rubber-stamp in the sales of the bulk of made sugar for which they enjoyed at percentage

The made sugar which is sold in bulk re taken away to far places like Kisii, Kericho Kisumu, and other towns for the local traders to get their supplies at an exorbitant prices, which they in turn sales to the retailers. This has contributed to the on going artificial and acute shortage of sugar in some parts of the country or making it unaffordable commodity by the rural poor population.

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Reports Leo Odera Omolo In Awendo Town.

The Awendo-based SONY SUGAR company has announced a 246 per cent increase in its pre-tax profits.

The company also announced that it has through its technicians has started producing power produsing biogas a by-product of sugar cane, but currently for its own use while discussion between the firm and the Kenya Power and Lightning Company is going on so that it could product more electric power and connect it to the national grid.

The company managing director Paul Odolla is currently involved in negotiation with the power producing and power distributing firms to see if we could produce more power and have it connected to the national grid, but for now we do produce very little, mainly or our own consumption.

Odolla said the company growth saw the company’s profit rise from Kshs 242 million last year to Kshs 595 for the last year ended Jun 30.

He said during the year under review, the company’s sale revenue grew by 43.1 to stand at Kshs 5.8 billion up from Khs 34.1 billion the previous year.

“This shows that our company is very resilient in its operations despite the challenges facing the sugar industry globally.”

Odolla disclosed that during the same period some 725,827 tones of raw cane was crushed. compared to 558,õ tones the previous financial year representing a 30.1 per cent increase .As a result, a total of 74,794 tones of made sugar was produced during the year compared 51,189 produced during the same period last year.

The Managing Director attributed the improve production to efficiency, total commitment by workers, cane farmers and all the stakeholders brought about by a heavy investment in the factory and improved cane quality..

Odolla said the company’s balance sheet has grown from Kshs 3.8 billion last yea to Kshs 5.8 billion this year leading to an improvement of net working capital from deficit Kshs 382 million last year to a surplus of Kshs 249 million in the last financial year.

SONY Sugar, which is the second largest sugar miller in the country attributes its growth to a sustained demand for sugar and molasses, increase sales of branded sugar and better pricing management which also resulted into an improve operating profit that rose from Ksh 280 million to Kshs 738 million.

“SONY-Sugar has crossed the technical insolvency line from where it has been operating for many year”,declared Odolla.

The Manager, however, said he was recently disappointed when he heard that a group of non-entities ha called for demonstration street protest in Awendo Town against the company recently increased of cane prices from Khs 3,200 per tone and Kshs 3,500 per tone, allegedly without consulting the so-called stakeholders.

The Awendo based firm has contracted close to 27,000 cane famers in its cane growing zones which spread widely into several administrative districts in he greater Southern Nyanza, These included Rongo, Awendo, Gucha, Homa-Bay, Migori,Kuria, Ndhiwa and Trans-Mara.

It has similar number of the out growers farmer in those districts, and its is the largest employing outlet in the region with close to 2400 labor force, making the government-owned facility to an important and integral part of the socio-economic of the region.

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Reports Leo Odera Omolo

Farmers around awendo sugar cane growing zone are up in arms against the SONYSUGR company fr what thy termed as gross discrimination on cane prices. They have blamed the company management for being adamant to increase cane prices.SONYSUGAR is still paying the old price of Kshs 3,128/- per ton.

Other millers are now payment between Kshs 3,950 per ton or even as higher as Kshs 4,200 per ton.

According to a Nairobi based business mn wh is also a cane farmer in Uriri constituency John Bob Awiti-Otange this company is fleecing the cane farmer out of their sweats.

He said that while it is assumed, that management of the organization would be more concern about the prevailing conditions in the market in order to monitor the forces of demand and supply which dictates the commodity price per ton. It is because the company is operating under perfect market conditions where there are several participants with little or no influences on prices by one particular participant.

In this regard,Awiti-Otange stated,” continuity in business would only depend on good hospitality and healthy rates being offered to potential customers who are engaged in the supply of raw materials input to the factory for conversion to finished product.”

“Looking at the current market rates, assuming all factories operate under the same environment conversion cost per ton would be the same as sources of raw materials are same, supplied by nearby out growers next to factory location. All factories have similar fixed and incremental costs in converting raw material to finished product ready for sale.”

And in each factory, one ton of raw material yields 100 kilograms of sugar after processing it packaged in fifty (50) kilograms sold @ Kes, 5,600/-. Therefore, 100 Kilograms would fetch Kes, 11,200/- factory price. Whilst Sony Sugar Co. pays farmers only Kes, 3,128/-

Awiti-Otange said the Direct material cost per ton Kes, 3,128/-, Conversion cost per ton 50% of cost direct material Kes,1,564/-,absorption cost per unit (ABC) Kes, 1,500/- therefore total production cost per ton is roughly kES, 6,192/-Mark up is Kes, 5,008/- which is more than cost of material.

Participants in the market are Kibos Sugar, Chemelil Sugar, Miwani Sugar etc which operate under the same environment with similar market conditions and particularly Kibos Sugar pays farmers Kes, 4,200/- per ton whilst other millers have pegged their prices per ton in the region of Kes, 3,750/- and 3,800/-. But Sony Sugar Co. which is also expected to operate in the same environment and under the same market conditions only pays Kes, 3,128/-per ton. What is the rationale behind this big variation in price per ton paid by Sony Sugar.

While some farmers perceive it as punitive measure inflicted by management to get cost advantage, others perceive as inept management which do not bother to monitor the concept of market conditions to adjust prices to motivate farmers for continuity of supply of raw materials to maintain factory’s operational existence.

In view of the above,Awiti-Oange warned” farmers have given the management one (1) week within which to review rates per ton upwards to comply with the existing market rate, failure to which farmers will have no choice save to demand theirs rights by demonstrating along Migori / Kisii highway and finally match to the factory to dialogue with the management.”

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Writes Leo Odera Omolo In Kisumu City.

The ongoing scrambling for raw cane from the farmers by millers in the Nyanza Sugar-belt is a blessing in disguise to the growers who for many years have been subjected to a lot of suffering, delayed harvestings and other injustices.

Three sugar milling companies are currently engaged in the war of attrition over cane harvesting zones with claims of intensified poaching of raw materials and encroachment on each other’s cane growing scheduled zones.

The Millers involved in the cane harvesting war include the Chemelil Sugar Company, Muhoroni Sugar Mill and Kibos Sugar and Allied Industries based at Kibos in the outskirt of Kisumu City.As the result of competition, the prices of row can has gone up with Kibos paying Kshs 3300 per tone, while Chemelil is paying Khs 3200 whereas Muhoroni Sugar mill is paying Khs 3100 per tone.

The two factories Chemelil and Muhoroni are public owned enterprises, while Kibos Sugar and Allied Industries is privately owned by a family of entrepreneurs. The latter is much more aggressive to an extent that it has constructed and established cane yards in places previously considered as exclusively Chemelil Sugar Company’s vane growing zones.

Kibos Sugar and Allied Industries has established weighbridge and cane-yard near Awasi only a few kilometers from Chemelil Sugar Factory and another at Chepsweta on the main Kisumu-Miwani and Chemelil road also approximately about eight kilometers from Chemelil sugar factory, an action which observers viewed as aimed at encircling Chemelil and preventing the factory from receiving row cane from its cane growing zones.

But the management of Kibos Sugar and Allied Industries has responded with argument that they are acting within the law taking into account the recent liberalization process. The liberalization process now allows a cane farmer to sell his crops to whichever factory or whoever he wished to do business with.

But the crux of the matter is the competition over the prices and the mode of payment. Kibos sugar Factories pays the farmers promptly on delivery of the row cane. It takes less than three weeks for the farmer to collect his cheque once his delivery is confirmed.

In Chemelil and Muhoroni the payments now takes up to one month. In the old days, this could take as many as six months long after the delivery is made, cane crushed into made sugar and sold to the consumers before the farmer received his money.

The situation is made difficult by the fact that Kibos sugar factory has got no nucleus estate farm of its own, and depends entirely on out-growers in other factories growing and harvesting zones in the outlaying districts prompting the outcry of “cane poaching”.

During its construction, the investors ignored the laid down rule and regulations, which require explicitly spelt out that a new sugar processing factory must be established in distant of 40 kilometers from the existing facility. This is the rule set out by the Kenya Sugar Board and well entrenched in the Sugar Act an article of Parliament.

The flagrant defiance of this particular clause of the Sugar Act is also the main source of the prolonged court battle between the Western Kenya Sugar Factory and the newly established Butali Sugar factory in Kakamega in Western Province which has seen a protracted legal battle through courts.

The other source of the ongoing discontent is the hurdles facing Muhuroni and Chemelil sugar companies. The firms had advanced the farmers in their harvesting zones with cane development loans for cultivations, land preparation planting, seedling and weeding in the form of loans, which are only recovered after the farmers had their cane harvested by the loaning company and delivered their row cane to the particular factory.

The same cane crop if harvested and delivered, crushed in another factory, the sugar company which had funded the cane development in the field loses its money as it cannot have the right of deduction of the same.

This has been the contentious issue, which required the government to move in with speed before the issue developed from bad to worse. The government, particularly the Ministry of Agriculture must come out with a clear-cut-policy on cane harvesting and delivery.

Concerted effort by the stakeholders to have the issue sorted out and harmonized has hit the rock. A hastily called meeting of the stakeholder recently held at Soliat in Belgut constituency and chaired by the Kricho District Commissioner turned chaotic and near violence. The meeting was also attended by the outgoing KSB board member from Chemelil/Nandi Zone, Muhoroni

The Kericho DC Samuel Njora was menacingly confronted by of rowdy and angrily farmers of Zoin zone in his district when he tried to impress it upon them to take their canes to the government-owned millers, Chemelil and Muoroni factories.

The administrator had convened the meeting to bring harmony, following a recent standoff pitting security agents and farmers who were defiantly ferrying their canes to other favorite millers instead of making delivery to the government-owned factories of Chemelil and Muhoroni.

It took political magnanimity and quick action and intervention of the former cabinet Minister Eng Kipng’eno Arap Ng’eny and local civic leaders to cool down the flaring tempers before the meeting could proceed.

But after two and half hours of the standoff the meeting kicked off with speaker after speaker castigating the DC and accusing him of being partisan in resolving the ragging zonal dispute bedeviling the rival millers Kibos, Chemelil and Muhoroni.

The two millers Chemelil and Muhoroni have been castigating Kibos Sugar and Allied Industries Ltd for encroaching into their cane growing zones causing superficial an artificial cane shortage.

The two outgoing Kenya Sugar Board directors Nicholas Oricho and David Kadongo whose areas zonal are dogged by zonal dispute also attended the meeting and took issue of liberalization of cane with the DC for allegedly being partisan in solving the prevailing wrangles.

Observers, however, maintains that the only sensible course of resolving the ongoing zonal war in the Nyanza sugar-belt is to allow the factories which had loaned or advanced the farmers with cane development cash loan recover their money before the liberalization take its effect. In the absence of a well defined rule, the factories like Chemelil and Muhoroni stand to lose millions.

The Kibos sugar mill has installed another weighbridge at Chepsweta and also near Awasi to save cane farmer from the Nandi zone with rigorous of transport and also to avert spillage in Awasi Township.

The scrambling over row canes has of late become incentive to the growers and made sugar cane as one of the highly valued cash crops. And the competition could even be worse once the currently out of production Miwani Sugar Mills in its zone is revived.

But farmers say they were happy, because they can now expect a visit by agents of the millers at their own step exploring the possibility of having their cane harvested. They are everywhere even looking for premature cane crops. They come with a couple of kilos and a few shillings in hand for the purpose of persuading the cane farmers to allow them to harvest his field unlike in the old days when they millers were asking for bribe money before any talking of harvesting cane from a famer’ field is initiated.

It is now the turn of the Millers to bribe their way in order to get immature cane to harvest for their factories which are reported to b running at half their daily turn out and crushing capacities.

The Awendo-based SONYSUGAR would soon find itself to a similar situated when the new factories currently being established in Ndhiwa and in Trans-Mara district goes into production next year.

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