KENYA – Kenya’s South Nyanza Sugar Company (Sony Sugar) has cleared all outstanding arrears owed to farmers, following the disbursement of KES306 million (US$2.4M) to settle historical debts.
According to the firm’s Managing Director, Martine Dima, the government released KES181 million specifically to address these longstanding debts.
Additionally, Sony Sugar paid KES125 million (US$961,973.63) to farmers for cane delivered in June, thus eliminating the backlog of debts owed to growers.
“We are happy as a management of great efforts made to clear the farmer’s outstanding debts. We now want to make sure that we pay promptly after deliveries,’’ stated Dima.
The state had previously committed to clearing KES685 million (US$5.3M) in farmers’ arrears in two phases. With the recent disbursement, the remaining balance has now been settled.
Dima, along with the Sony Sugar Company Board of Directors led by Chairman Jared Kopiyo, revealed that the firm is now on a path to recovery after years of financial difficulties.
Over the past two years, Sony Sugar faced an acute shortage of cane supplies, leading to a significant decline in daily production output.
Delayed payments had caused some farmers to reduce their cane acreage, forcing the company to mill less cane per ton than its installed capacity.
However, Dima reported that the company is now receiving a steady supply of cane, enabling an increase in production from 1,500 to 2,300 tons of cane per day.
The development comes as Kenya recently approved a budget of KES654 million (US$51.3 million) for the 2023/2024 fiscal year to aid struggling sugar millers in clearing debts owed to farmers and workers.
Agriculture Principal Secretary Paul Rono announced this allocation as part of the government’s efforts to reform the sugar sector.
Out of the total funds, KES354 million (US$2.8 million) will be dedicated to settling debts owed to farmers at Nzoia, Muhoroni, Chemelil, and Sony millers.
The financial support responds to recent calls from sugarcane farmers in Western Kenya, urging the President to address the debts owed by state mills to farmers.
At the beginning of the year, five state-owned sugar companies had outstanding debts totaling KES128.07 billion (US$1 billion).
In June, President William Ruto announced the cancellation of KES110 billion (US$841.36 million) in debts owed by sugar factories.
The President introduced a new leasing model to ensure prompt payments for cane deliveries, timely wages for factory workers, and annual bonuses for sugarcane farmers.
He also called on relevant agencies to expedite the review process and include proceeds from by-products in the industry. An initial KES600 million (US$4.6M) has been approved for seed cane development, part of a larger KES2 billion (US$15.3 million) investment plan.
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