Sugar firms pay staff, farmers arrears

The government has started the process of paying Sh6.94 billion owed to farmers and staff by four public sugar factories ahead of their leasing.

The Ministry of Agriculture and Livestock Development on Friday told farmers and staff who have worked with or for Muhoroni Sugar Company, Nzoia Sugar Company, South Nyanza Sugar Company and Chemelil Sugar Company factories to hand in their bank details to the firms.

“This is to request the farmers and staff to urgently confirm their bank details with the management of the sugar factories in readiness for disbursement of the verified arrears,” said Agriculture Principal Secretary Dr Kipronoh Ronoh.

This comes months after the National Assembly approved the leasing of publicly owned sugar factories on the conditions that farmers who supplied sugar cane to the factories as well as factory workers be paid their arrears.

The start of the payment process comes after the Ministry last week put up the four sugar millers as well as Miwani Sugar for leases of 20 years.

Farmers and staff who supplied to or worked for Miwani Sugar –which shut operations in March 2001– will be excluded from the payments.

Read: Making Kenya’s sugar competitive

“You are notified that the direction on Miwani Sugar Company will be provided once the pending court cases are determined,” said PS Ronoh.

Chemelil owes its staff and farmers Sh1.38 billion, Sony owes Sh2.05 billion, Nzoia owes Sh2.11 billion while Muhoroni owes Sh1.39 billion.

In total, the five public sugar mills have outstanding debts of Sh128.07 billion, according to revelations by Parliament, with the Cabinet approving the waiver of Sh117 billion.

The millers have been struggling under the weight of debts which have affected their ability to compete with well capitalized private factories.

They also have aging plants, machinery and obsolete technologies, which is made worse by lack of annual maintenance.

The leasing process will see successful bidders take over control of factories, office buildings, machinery, equipment, nucleus farms, staff and guest houses, schools, sports stadia and service contractor yards owned by the millers.

Kenya has been a net importer of sugar since the mid-1980s but the gap between production and demand has been widening over time, which has been made worse by the ineptitude of the public millers.

Read: State drops plan to privatise sugar companies

Kenya’s annual consumption of the sweetener stood at 1.11 million metric tonnes in 2022 against a production of 790,000 metric tonnes which led to the importation of 320,000 metric tonnes worth Sh28 billion to plug the deficit.

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