Kenya’s sugarcane stakeholders form pricing committee to resolve payment dispute 

KENYA- Kenyan sugarcane stakeholders have initiated talks to establish a pricing committee to set fair rates for the produce delivered by farmers to millers.  

This move follows a prolonged deadlock between millers and farmers over pricing, with some millers delaying payments to farmers for up to three weeks. 

Farmers demanded Kes5,900 (US$44.36)per ton of cane as ordered by the court, while millers advocated for Kes5,100 (US$38.35).  

To resolve the dispute, a meeting convened by the Sugar Directorate head and chaired by the Agriculture Principal Secretary led to the establishment of a pricing committee. 

A statement from the resolution meeting read: “In line with the provisions of the Constitution of Kenya 2010, the process of policy review of the sugarcane pricing formula involving all stakeholders will be initiated. The timeline for this process of policy review is projected to take six months from the date of this meeting.” 

Stakeholders emphasized the need for necessary requisitions under the 2024/25 budget estimates to facilitate the discussions. Currently, sugarcane prices are decided unilaterally based on a formula considering cane weight, net ex-factory sugar price, and farmer-sharing ratio.  

Farmers argue that this pricing formula neglects other byproducts like molasses and co-generated electricity. Additionally, farmers criticized the interim Sugarcane Pricing Committee (SPC) for being biased towards millers. 

Millers had threatened to shut down operations on May 10, 2024, following a court ruling that mandated a payment of Sh5,900 (US$44.36) per ton of cane. They argued that the responsibility of setting prices should lie with the SPC within the Agriculture Ministry, not the courts. 

Charles Atiang, a representative for the farmers who filed the case, cited concerns about the price reduction from Kes6,020 (US$45.26) to Kes5,100 (US$38.35 )per ton as stipulated by a circular issued by the interim SPC.  

He noted that the decision did not adequately consider factors such as inflation, the influx of imported duty-free sugar, and rising production costs for farmers. 

Kakamega Deputy Governor Ayub Savula praised the ongoing talks, emphasizing the need for loyal farmers and county representatives to be part of the new SPC.  

“The sugar sub-sector needs reforms, and I am happy that the stalemate is coming to an end. Let the millers in the meantime pay farmers for the cane they delivered as the courts ordered,” he said. 

Savula also welcomed the decision by the National Assembly and the Senate to pass the Sugar Bill 2023. This bill seeks to reintroduce the Kenya Sugar Board (KSB), which used to extend credit to farmers for cane development.  

In 2013, the KSB and several other agricultural boards were merged into directorates under the Agriculture and Food Authority (AFA) following the enactment of the Crops Act, 2013. 

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