Farmers oppose Sony Sugar leasing over Sh560 million arrears

A loaded tractor arrives at Chemelil Sugar Company. Chemelil, along with South Nyanza, Muhoroni, Miwani and Nzoia sugar companies are to be privatised. The public millers are saddled with huge debts.

Photo credit: File | Nation Media Group

What you need to know:

  • Sony Sugar/South  is one of the five State-owned millers already marked for leasing by the government. The others are Chemelil, Miwani (under receivership), Muhoroni (under receivership) and Nzoia.
  • Farmers' representatives said the lease will leave them battling numerous court cases over cane delivered to Sony Sugar if the process goes on before they are  paid.
  • Sony Sugar Managing Director Peter Ligawa said the company can only make the payments when it resumes operations.

Farmers at the cash-strapped Sony Sugar Company have piled pressure on the government to pay their dues before considering leasing the mill to a private entity.

Those who spoke to the Nation said the company already earmarked for leasing owes them over Sh560 million, which they risk losing should the government carry on with its plans.

Sony Sugar/South  is one of the five State-owned millers already marked for leasing by the government. The others are Chemelil, Miwani (under receivership), Muhoroni (under receivership) and Nzoia.

The Kenya Union of Sugarcane Plantation and Allied Workers moved to court last week seeking to halt the process over Sh5 billion salary arrears owed to workers at the five companies.

Following the move, Orange Democratic Movement (ODM) leader Raila Odinga urged the workers to withdraw the case before the Employment and Labour Relations Court to allow the leasing process to proceed.

Mr Odinga described the workers’ move as being “in bad taste” and warned of serious consequences if the leasing is blocked as thousands of people depend on cane farming for income.

Court battles

In the Sony Sugar case, Kenya National Federation of Sugarcane Farmers Secretary-General Ezra Olodi and Awendo branch Secretary Argwings Odongo said the lease will leave them battling numerous court cases over cane delivered to the miller if the process goes on before they are  paid.

“We are not against the leasing of this factory. All we want is its prosperity as it has been an economic powerbase in this region. However, leasing it without offsetting farmers’ dues spells doom for those who have outlived their patience,” Mr Olodi said in Awendo town.

“The leasing will subject us to legal tussles. Let the Agriculture Cabinet secretary intervene and compel the management to offset the payment in bits as this will enable us to overcome the financial crisis we are undergoing in the wake of the Covid-19 pandemic.”

Mr Adongo noted that the miller’s delay to pay farmers forced some to move to neighbouring private factories, which he said pay promptly but exploit them.

“While the neighboring Sukari Industries (Homa Bay) and Trans Mara (Narok) pay within two weeks, we are aware that farmers are being exploited since they have limited options,” he claimed without giving details.

Despite Sony’s offer of a better price of Sh4, 310 per tonne of cane, compared to the Sh2,800 and Sh2,600 by Transmara and Sukari, respectively, farmers are still opting to deliver their cane to private millers due to prompt payments.

Sony’s suppliers are also demanding Sh300 million for goods and services delivered to sustain its daily operations while workers are yet to be paid Sh 1 billion accrued over the past 13 months.

Payment condition

Managing Director Peter Ligawa said the company can only make the payments when it resumes operations.

The company closed down for maintenance in May and is expected to re-open in the course of August.

“Apart from the farmers, our workers are also claiming up to Sh1 billion in unpaid wages since our production and financial performance declined. We will sort out the issues once we resume operations,” Mr Ligawa told the Nation.

He added that they have been facing production challenges, leading to massive losses that do not merit continued cane crushing.

According to the MD, the factory’s labour costs are about Sh110 million a month, including statutory deductions for social security and health insurance as well as pension and sacco contributions.

“We were literally being phased-out of the market. Our production had gone down to about 3,000 to 4,000 tonnes of cane, milled after a week’s collection and way below the expected 10,000 tonnes. Coupled with the other deductions, we risked losing it if urgent measures were not taken,” Mr Ligawa said.

He added that the cost of fuel to run the turbines of the factory’s steam engine were consuming almost all the money made in weekly sales, prompting urgent maintenance.