SUGAR CANE GROWERS ARE INSISTING THAT THEY SHOULD HAVE THE LION’S SHARE OF 51 PER CENT IN THE SUGAR FACTORIES PRIVATISATION PROCESS.

Business Report By Leo Odera Omolo

WHILE sugar cane farmers in the Nyanza sugar-belt and in all cane growing regions in Western Kenya have welcome the recent announcement by the Agriculture Minister William Ruto that the government would soon off-load its shares in all the sugar factories in a privatization crush programme,the farmers have a general feeling that 36% shareholding allocated to them is too small and insufficient.

The cane growers wants the shareholding allocation be worked out at 51 per cent in favor of the farmers with investors retaining 49 per cent.

This, they said, would give them a total control over the sugar sub-sector of the economy. It will also empower them to have a total control of the factories, with the authority to sideline any non-compliance investors.

The farmers are complaining vehemently that giving them only 36 per cent stake, with the majority shares going to private investors would provide the investors with enough powers to frustrate the locals.

A prominent sugar cane farmer in Uriri district, which is part of the sugar cane growing zones for the Awendo Town-based SONYSUGAR, Mr John Bob Awiti-Otange, has faulted the Minister’s decision and urged the government to hand over these factories to the farmers.

Mr. Awiti-Otange, while speaking to this writer at Awendo, said the farmers were also in favor that the government sell the shares in the five sugar factories in the same fashion like the Safaricom’a IPO.

“It should be taken into account that most of the cane farmers are poor, and could not raise the money required for the purchase of shares in the sugar companies. The government should work in collaboration with commercial banks in order to facilitate them to  buy shares in the companies. The offer for funding must be on long term financing facilities to the cane farmers, while at the same time taking it into account that the dwindling internal marketing system has contributed a great deal to the abject poverty, and financial constraints among many farmers”, said Mr. Otange.

“Investors”, added Mr. Awiti-0Otange, “should only confine themselves in managing sugar millers, while the farming side of it must be left in the hands of the cane growers, and a clear- cut kind of policy guideline be put in place in the ‘ millers-farmers relationship’”.

According to Mr. Ruto, the following sugar companies are due be put on sale for privatisation; Nzoia, Miwani, Chemelil, Muhoroni and SONYSUGAR factories. All these factories are parastatal public companies, but for Kenya sugar to be  competitive in the COMESA region, the government must hand over the management of these companies to the farming communities.

Mr. Awiti-Otange, who is himself a chartered accountant by profession, believes that if the privatization is properly organized, and the new investors confined only to operate the mills, cane farming could be one of the most lucrative crops in this country.

He suggested that the privatization must be carried out in three phases and categories. Cane transporters should be part of the new shareholders. Those transporters already on the grounds with fleets of tractors, hauling harvested cane to the factories, should be included in the purchase exercises involving the privatization of sugar mills. Secondly the most efficient internal system must be launched so that the warehouses are cleared and left empty, unlike at present, when at times, the selling of cane sometime becomes difficult due to the arrival of smuggled or licensed sugar from foreign countries. Thirdly, the participation methods must be worked out in such a away that the farmer would incur no more losses due to poor management of the sugar mills, as it has happened before.

The privatization exercises must be  water tight, so as to keep at bay the cartel of wealthy business tycoons, who in the past have been milking the sugar industry down to its knees. And the only way to effect this is giving the farmers a total control over the industry. This is because the small, medium and large scale farmers are the ones contributing close to 85 per cent of the raw materials that enables these factories to be operational.

Mr Awiti-Otange is convinced that if the cane growers were allowed to control the industry, even the selection of senior management and personnel in all sections would be highly competitive, and only the right people will be on the jobs, as opposed the current system of nepotism and discrimination. It has put many unqualified workers into top position of trust, but the same people are not qualified for the jobs they are holding.

Many farmers interviewed in the Nyanza sugar-belt have urged the government to increase the proposed shareholding of 36 per cent to 51 per cent, so that investors can harvest the remaining 49. All agreed that the investors should not get involved in cane farming, but exclusively confine themselves to milling and marketing of the made sugar.

A vibrant sugar industry would contribute a lot towards the government declared policy of poverty eradication. At the moment cane farmers are the poorest lots owing to unrealistic deals by those managing the mills. Farmers are losing millions of shillings through weighbridges, which are tampered with at the factories, unrealistic deductions, exorbitant transport cost and delayed payment for the delivered cane bills. The privatization would eliminate all these loopholes.

Mr. Awiti-Otange was also full of praise for the Ndhiwa MP, Joshua Orua Ojode for his concerted and persuasive ability, which has resulted in a white sugar factory being constructed in his constituency. Other MPs, he said should emulate Ojode, who is  also an Assistant Minister for Internal Security.

Ends
leooderaomolo@yahoo.com