Chemelil Sugar appeals to farmers to supply cane as shortage bites
By Kepher Otieno, March 2, 2023Chemelil Sugar Company has appealed to cane farmers to resume deliveries of raw materials to the factory to avoid plunging into an imminent production halt.
The appeal comes in the wake of an acute shortage of cane supplies to the factory, which has now forced the firm to accumulate fresh sugarcane daily.
The factory has to accumulate cane for at least three days to be able to mill sufficiently.
Terming the shortage as a serious crisis that could stall the factory’s operation, the management on Wednesday, March 1 called for an urgent meeting with stakeholders.
The meeting brought together farmers, contractors, and transporters to strike an agreement to work together.
Chemelil Sugar Factory Manager M Joseph Kiilu assured the suppliers including transporters that they will effect prompt payment of their dues in good time.
This is basically to avoid delayed payment protests to sustain their milling operations.
The management pleaded with its suppliers of raw materials down to the line production value chains to resume constant cane supplies even in small quantities.
“We want to assure you that when we mill cane, we shall continue to pay you in good time to avoid protests and withdrawal of key supply services to us,” Kiilu said.
Chemelil Sugar debt
Currently, the firm owes both cane farmers and transporters and cane contractors, cumulatively Ksh106 million in arrears.
This is for the deliveries made in November last year to 2022/2023 January this year.
“We are remaining with about Ksh124 million arrears, which are now servicing to clear,” said Kiilu.
But this is only the latest debt.
Chemelil is indebted to the tune of Ksh700 million, debts accrued over the years.
Kiilu spoke as cane transporters decried delayed payments as the reason that they had to withdraw their tractors from hauling cane to the factory a fortnight ago.
The transporters led by Onyango Ogwang, said they had reached an agreement with the miller that they be paid two weeks after service to avoid stalling the firm’s milling.
Currently, the Chemelil transport fleet is seriously affected.
The firm only had three tractors to supply its over 50,000 contracted cane farmers in Muhoroni and parts of the Nyando sugar belt.
The firm has only three service tractors and most of their tractors are either obsolete or broken down due to lack of cash for maintenance.
So they have to rely on external transport services to bring the raw material to the factory.
This means, if the transporters down tools, the effect is enormous because nearly all the production value chains are affected.
The crisis is augmented by operation below the factory’s installed milling capacity, which Kiilu admitted had drastically dropped in the past three months.
Today, the firm is only able to mill about 700 tonnes of cane per day as opposed to 2500 tonnes they were milling last year.
This is due to an acute shortage of cane that has also been witnessed across the sugar belt after some of the infuriated farmers abandoned cane growing for other cereal crops.
They cited delayed harvests and payments as the reason. Now the miller is paying the price.
Kiilu said they have to adjust to the situation, which is not easy because suppliers and farmers are also promptly on their necks demanding payments after delivery.
“We are now reduced to production for survival. We are not making any profit. We are just sustaining the business and our products available in the market,” he claimed.
This is because most of the wrecked revenue returns go into servicing the debt of the factory running accrued over the years into millions of shillings.
“So the situation is tough. We have to work hard to overcome the challenges. Even workers are not spared. We are owed millions of shillings in salary arrears,” Kiilu said
Kenya National Sugarcane Growers Association officials from Chemelil sugar belt led by Noah Cheruiyot asked farmers to resume active growing of cane.
“Unless we return to massive cane farming, the survival of our factory in the near future is slim. I plead with farmers that we return to growing more cane,” he said.
Sugar plantations
Cheruiyot was concerned that most of the growers’ fields were depleted of the raw material with what used to be huge swaths of the sugarcane plantation.
But most of these cane fields are now turned into maize farms and other cereal crops.
This could spell doom for the survival of the sugarcane crop in the future and could result in serious nutritional insecurity, with sugar being a key to energy.
Nandi farmers’ representative Salim Baisiri, asked farmers to resume supplies of cane to the miller upon the assurance of prompt payment.
“Let us resume cane deliveries as long as the management will keep its word to pay us each fortnight for cane delivered and processed into a finished product,” Baisiri said.
Chemelil sugarcane contractors branch secretary Caleb Odhiambo said they will cooperate as long as the management keeps their payment word.
In the resolution read by the farmers’ representative Tom Okal from Lwala zone, Chemelil belt, the farmers issued the payment mode they want the firm to uphold.
“First, when cash is ready, start with farmers first, then transporters and contractors and last the workers,” Okal said.
They put farmers at the apex of the firm’s survival saying without their raw materials the factory would collapse.
Tom Choge from Soin backed the proposals as good.
The farmers demanded the immediate reinstatement of dismissed acting MD Gabriel Nyangwesso by the court.
Nyangwesso was ordered out of the firm by High Court and Jackqueline Kotonya was picked as the acting MD.
This was on the basis that he had acted beyond his term limit and made appointments of staff contrary to the law.
But they have since challenged the ruling and the matter is coming up at the Court of Appeal on March 6.
Okal said the farmers had dashed to court to challenge Nyangwesso’s removal saying that he had turned around the miller.
Chanting “we want Nyangwesso back”, the farmers vowed to push for legal redress to resolve the management woes amicably.