The grass-thatched houses that dot the terrain are the best signatures of poverty in the sugarcane belts of Kenya. Apart from the cane they grow, there is nothing sweet that comes out of this cashless cash-crop.
For Richard Wakhisi, sugar farming has turned to be a thankless hobby.

Like thousands of his age-mates, Mr Wakhisi’s poverty exhibits the kind of economic havoc and helplessness that a new generation of sugarcane growers is inheriting by growing a cash crop that has zero-returns – but which has puzzlingly created multi-millionaires within the chain.

That smallholder sugarcane farming is an experiment that went wrong is the untold story of Western Kenya and Nyanza and which few technocrats and politicians want to admit. As a result, the government has continued to pour billions of shillings into the sector – trapping more farmers in a poverty cycle while still hoping that a solution would be around the corner.

“We completely got it wrong in our model of cane production,” says Prof Peter Anyang’ Nyong’o, an academic and politician who has studied the problems of smallholder agriculture in a previous interview with a Kenyan daily.

Some 50 years  ago,  the late President Jomo Kenyatta government, with aid from bilateral donors, lured hundreds of thousands of farmers in Western Kenya and Nyanza to grow sugarcane under contract – and on small-scale – hoping to give the regions’ peasant farmers a cash crop that could uplift them from incessant poverty.

But technocrats – in a hurry to implement a government policy- did not realize that if the experiment fails, they would trap thousands of farmers into poverty.

Mr Wakhisi inherited his eight acre plot from his father but – like his father – he doesn’t see light at the end of the tunnel.

“We always hope that things would change,” he tells us.

When sugar settlement schemes were mooted in the 1960s and 70s, they were supposed to alleviate poverty in the regions by turning the peasant farmers into stakeholders of the multi-billion sugar industry. Instead, victims of this senseless cycle of poverty – brought about by years of waste and political ineptitude – pass the poverty baton to their children.

Today, farmers like Mr Wakhisi are a sad reminder of a collapsed dream – a smallholder experiment that went wrong. With large-scale production all but gone, the voiceless small-scale producers have been left at the mercy of unorthodox policies and whistle-start-whistle-stop formulas.

Although experts warned on the dangers of starting a sugar industry based on out-grower farmers’ cane, technocrats at the ministry of Agriculture decided to go ahead because the experiment made political sense, according to secret documents.

While other sugarcane growing countries retained the colonial era sugar plantations, Kenya went for the more politically-correct, more expensive, smallholder schemes as bureaucrats struggled to settle the landless and allow the peasant farmers grow new cash crops.

It has now emerged from these secret letters from the ministry of Agriculture that consultants warned early enough that this model of cane production would not work.

“… It is not sufficient to merely produce the total quantity of cane required annually. It has to be grown, harvested and delivered with almost split second timing so that exactly the right amount of cane goes on arriving at the mill round the clock, day after day and week after week,” warned Commonwealth Development Corporation sugar farming consultant, Mr B.C.J. Warnes in a declassified letter dated August 5, 1971.

Mr Warnes, was one of the tens of consultants who had arrived in Nairobi to advise the government on the future of the experiment with smallholder cane farming – which had not succeeded anywhere in a sugar scheme.

His worry was that it would be impossible to maintain the military-styled discipline that was required in sugarcane farming and that the government would have little say on how an outgrower tended his crop.

“The outgrower is an individual. He can’t be hired and fired even if it were politically acceptable to do so, which it is not. And yet the collective fortunes of the entire body of outgrowers, and the milling company itself, depend absolutely on the willingness and ability of each and every grower,” he wrote in a letter to senior officials at the ministry. “High throughputs call for some very exact timing and co-ordination on the cane growing side.”

At the moment Mumias, so far the largest miller in Kenya with about 66,000 registered outgrowers, is only doing 20 per cent of its total capacity as it struggles with a biting cane shortage. Although the company produces approximately 50 per cent of the domestic sugar output in the country it continues to run up losses booking a net loss of Sh1.58 billion in the six months to December 2015 up from Sh1.4 billion during a similar period in 2014. It also survives on government bailouts.

The poor road networks in the sugar belt

At that time when these sugar schemes were designed, secret documents indicate, that government bureaucrats were privately feuding on how to organise farmers, whose smallholder plots were supposed to mimic large plantations in South Africa, Malawi, Uganda and Zambia.

Today, Kenya imports sugar from these nations – thanks to its heavy reliance on small-holder production and ageing factories. Presently, according to the Sugar Directorate, Kenya produces sugar at Sh95, 000 per tonne on average, meaning that sugar from its mills is more expensive than its equivalent from Sudan, Egypt, Swaziland, Zambia, Malawi, Tanzania and Uganda. Malawi’s average production cost is Sh35, 000 per tonne.

Cartels have mushroomed in the chain taking advantage of the general collapse of the industry as pilfering and cane poaching continues unabated. As a result, farmers keep on grappling with low economic returns, high costs of inputs, poor road infrastructure and delayed payments.

Rules that were set to maintain discipline within the smallholder 10-acre farms are no longer followed and extension services have been abandoned. Nobody seems to care.

With no sense of discipline within the farms, the out-grower run schemes have become fields of wrath – at times at the mercy of extortionist gangs who torch cane fields in order to get cane-cutting contracts.

In Kisumu County, the sugar cane bribes is christened ‘Chuth ber’ meaning ‘beforehand’ since it demanded before harvesting  is undertaken. We found that this bribe, paid by the farmer, is a mandatory requirement during harvesting in Muhoroni, Chemelil and Miwani zones. It is often given to factory managers, contracted harvesters, loaders and transporters and farmers with mature cane are forced to pay this bribe before their cane is harvested.

Chemelil was the first experiment on smallholder sugar production in Kenya and had begun operations in 1965. Records show that after only six years, officials knew it was a failure. The proposed sugar co-operatives had failed to work and this triggered a war of words between Cabinet ministers Jeremiah Nyagah and Masinde Muliro in 1971.

Also, the early failure of sugar co-operatives in Chemelil made agricultural officials in Nairobi more cautious on how to organise farmers in the sugar belt. The co-operatives that were to be used in the chain of production were abandoned leading to chaos from the start.

With the disorganization in the fields, farmers lose either by oversupplying factories or undersupplying. The entry of sugar barons has not helped either.

“It is a complete mess and farmers have constantly found themselves between the two odds of oversupply and under supply. They lose either way because when there is undersupply, the factories don’t make much and can’t pay them and when there is an oversupply, harvesting is not done in time and they are delivered when the cane have no value, sometimes they are harvested and left to dry losing weight and earning less,” says Prof Nyong’o who has a sugar plantation.

Institutions which had been set up as the link between farmers and the millers have collapsed. The once giant, Mumias Outgrowers Company (Moco) collapsed in 2008 leaving the farmers with no voice at the factory level.

What is never known was that Moco was a result of a bitter war between the ministry of Co-operatives and that of Agriculture on the kind of institution required for the sugar sector. Officials at the Treasury under Phillip Ndegwa favoured the establishment of a limited company owned by the government, the farmers, and the factory. They had support from Agriculture which was opposed to formation of Co-operatives similar to those in the coffee sector. The proposed sugar co-operatives  in Chemelil had failed to work and this triggered a war of words between Cabinet ministers Jeremiah Nyagah and Masinde Muliro in 1971 – at about the time Mumias was being mooted.

The late Jeremiah Nyagah – then Agriculture minister in Kenyatta government

In July 1972, the government made a decision that Mumias Outgrowers Company would be formed owned by the government, the Outgrowers and Mumias Sugar Company Limited.

When Moco was there, it was a great way of communicating with the farmers. Today, nobody speaks to farmers.

Its work, like the Kenya Tea Development Authority, was to offer farmers inputs at subsidized rates and organize the cane harvesting and planting.

“It would not be difficult to get things right for a few hours or a few days,” consultant Mr Warnes wrote but warned that to achieve that requires “high level of discipline” which he thought would not be achievable in an outgrower-run scheme. “While discipline could be achieved at the commercial farm owned by the factory, this would not be the case at the individual plots.”

Today, this lack of timing has left all the sugar factories grappling with the problem of either lack of cane, spoilt cane or overgrown cane.

For instance, Muhoroni, now in receivership, receives 90 per cent of its cane from smallholder farms who are always grappling with transport problems, overgrown and poor quality cane. The same story is repeated in Mumias, Chemelil, Sony, Nzoia, and Miwani, which is also under receivership.

In 2014, these five premier factories produced 321,000 tonnes compared with Malawi’s sole sugar producer Illovo Sugar (Malawi) Ltd, formerly owned by Lonhro, whose two factories at Nchalo and Dwangwa produced 289,000 tons despite breakdowns. Zambia’s single factory from its sugarcane estate in Nakambala produced 450,000 tons compared with Kenya’s 11 factories which produced 592,668 tons last year.

The ageing Chemelil sugar

The figures are a good indicator of the economics of sugar production and how they favour larger farms. While Kenyan factories do not process refined sugar, both Zambia and Malawi are net exporters.

It now appears that this chaotic situation was foreseen as far back as 1971, even before farmers were enticed to grow cane.

“Without collective discipline, the cane supply will be sporadic: Either too little, resulting in idle time at the mill and therefore high production costs, or too much (where) the mill will not be able to handle it (leading to) cane spoils, high costs and recurring losses,” Mr Warnes had warned.

To deal with this problem, the expert suggested that an organisation be formed that can have “dictatorial” powers to enforce discipline on the more than 3,000 outgrowers, which he warned would be a “highly sophisticated, technical and political operation.”

But five decades later, despite growing sugar cane, both Nyanza and Western Kenya sugar belts have high levels of poverty that are above the national average.

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