Business News Analysis By leo Odera Omolo
There are disturbing actions and events in the current debate in parliament that point to a business as usual approach to formulating Sugar Industry policy and reviewing policy gaps which have constrained the industry.
For a start, one hopes that the debate is informed by the provisions in the new constitution that transferred responsibility for Agricultural production, processing and marketing to county governments.
Secondly, the current review and consolidation of agricultural sector agencies in research, marketing and regulation as approved by cabinet and pending in parliament should inform the debate on the bill.
The recent events and performance of the industry exemplified by violence in Western sugar belt is a testimony to the failure of the privatization model in the sugar sector. Indeed Mumias the test case for privatization of a public owned sugar is barely surviving, devoting too much energy fighting off leeches stealing its cane investment in name of private sugar mills.
The industry is now in private hands with 6 private mills of Butali, Mumias, West Kenya, Kibos, Sukari and Transmara against 3 public owned mills of Nzoia, Chemelil and Sonysugar yet industry insiders and Kenya sugar board(KSB) statistics depict the public owned mills as more efficient and only units having invested in sugarcane growing.
New private mills are of economically un sustainable sizes of below are all rated below 2000 tons per day. The government was duped in allowing second hand equipment from shut down mills dismantled and relocated to Kenya yet exploiting the tax credit on investments.
This explains the reason behind the engagement of private mills such as Kibos, Sukari, Transmara, Butali in cane poaching as a survival strategy yet calling themselves investors! West Kenya mill never invested in sugar cane hence its resorting to cane poaching on entry of Butali!
The industry institutional framework is weak and support for R & D is poor. KSB spends over 33% of levy on sugar on administration and gives a mealy sum to KESREF for R & D. The institutions KESMA and KESGA representing millers and farmers respectively are moribund! Its a fallacy to assume all is well with respect to farmer representation in KSB.
The present duplicity in farmer representation in KSB through KESGA in sugarcane pricing and by directly elected farmer directors has caused governance accountability challenges and has been exploited by politicians. Farmers lack cooperatives to mobilize resources and collectively bargain in the market with millers.
All out grower companies formed on instigation of previous KSB management under Mr Chahonyo have all collapsed or are in receivership with hugh debts owed to KSB.
From the foregoing one can see that the debate in parliament is largely uninformed and has no input from a wider stake holder framework.
Its therefore logical to conclude that the outcome by way of a revised Sugar act will not solve the myriad industry challenges. Its a pity the farmers lack an impartial voice hence their interests will be auctioned by partisan interests!
Ends