The entrance to Mumias Sugar Company.
As the two Rai brothers— Jaswant Singh Rai (West Kenya) and Sarbi Singh Rai (Sarrai Uganda)— bicker over Mumias, the biggest challenge to the revival of the ailing miller has always been political interference, lack of trust between the factory owners and local farmers, and shortage of raw materials, cane.
Politicians, as Kakamega Senator Dr Bonny Khalwale admits, have failed the farmers in the sugar belt.
“It is a fact we as politicians have failed our farmers,” said Khalwale in an interview with the Nation.
“The political solution is that all politicians, myself included, must submit ourselves to the rule of law, which is very clear on property rights, that’s all.”
Mumias, which was incorporated on June 29, 1971, was one of the largest and most lucrative sugar millers in East and Central Africa.
Trouble began when it was privatised through listing at the Nairobi Stock Exchange in 2001.
“The problems of Mumias are not technical, not engineering based. Mumias’ line managers, supervisors and skilled operatives know how to run the plant. Past problems arose from decisions made by senior executives who were appointed from outside the industry, lack of political support and a breakdown of trust between farmers and the Company,” said Dennis Driscoll, last expat CEO of Mumias (2001 March- Sept 2003) during his exit interview.
“The primary task of the new leaseholder must be to put that right. Choose a leaseholder on the basis of proven skills within the industry and a willingness to talk to the farmers, not the size of the cash bid.”
The secret of the Mumias’ success from the 1960s up to 2000 was a reliable cane supply that was adequately supplied by contracted farmers and a supportive nucleus estate that chipped in when yield from farmers were low.
Over the years, cane supply has remained a thorny issue.
Sugar Act 2024
During the debate that led to the current Sugar Act 2024, Chairperson of the Agriculture and Livestock Committee, John Mutunga pointed out, “No investor wants to invest in a sector if the raw material is not available. We are still using cane seed which takes 19 - 24 months instead of nine months. We have provided for propagation of varieties.”
This problem is still widespread in the sugar belt with no quick fix in sight.
Mumias Sugar Company has one of the largest nucleus estates at 4,000 hectares in the 1990s. But three years since Sarrai stepped foot in Mumias, their nucleus is not fully developed with canes.
“Questions are being raised that if he can’t even plant the nucleus in three years, how can he develop enough farmers for the sugar mill, let alone ethanol and Co-Gen,” posed David Ndakwa Leader of Minority, Kakamega County Assembly.
“We believe that all plants can run independently. Rao Receiver was running the distillery and Co-gen boiler before Sarrai came.”
Both the Ethanol and Co-gen rely on the supply of bagasse as a raw material for the two plants. According to senior managers, Mumias relies on other millers for bagasse and molasses. They do not have enough bagasse and molasses, both critical to running the distillery and Co-gen.
There is also a lack of trust between farmers and the management over pay. At its inception in the 1980s, the Company supplied agricultural inputs on credit to contracted farmers in the Mumias zone.
The services included mechanised land preparation, seed cane supply, fertiliser, harvesting and cane transport.
This motivated local farmers who then nurtured their crops by applying the fertiliser provided by the company and regular weeding.
The factory, on its part, made sure mature cane was harvested on schedule, through a company-managed programme and transported to the waiting mill within 24 hours of cutting.
Once the harvested cane was delivered to the factory, the farmer was promptly paid for his delivered cane.
He or she received the value of cane delivered, less the cost of services and inputs provided by the company during the growing period and the good circle of supply of cane and milling went uninterrupted then the animal privatisation came onto the scene.
Long-lasting solution
Today, farmers have not been supported to grow sugarcane as the receivership is interested more in paying back its debt rather than seeking a long-lasting solution for the local Mumias farmer.
The uncontrolled importation of sugar by scrupulous businesses interested in making a killing at the expense of the local sugar prices has condemned Mumias and other sugar millers to oblivion.
Despite the new Sugar Act 2024 having mandated the Kenya Sugar Board to ensure that all regional and international trade agreements to which Kenya is a party and all sugar imports into the country are subject to all the prevailing import duties, taxes and other tariffs, and sugar shall be imported in the country only when there is sugar deficit and for a specific tonnage, Kenya imports sugar without this consideration.
The domestic price of sugar is geared to the landed cost of imports rather than the production costs of the Kenyan millers.
Reduced margins and eventual losses resulting in cash flow problems have strained the Kenyan milling companies, making them struggle under the burden of debt.
The miller’s response to the market forces has resorted to delaying payments to their contracted farmers.
The recently enacted Sugar Act 2024 spearheaded by Hon Emmanuel Wangwe, Chairperson of the Mediation Committee on the Sugar Bill introduces comprehensive reforms, including the establishment of the Kenya Sugar Board, designed to regulate, develop, and promote the industry.
It also defines sugar catchment areas.
