On Wednesday, the Sugar Campaign for Change (Sucam) declared that the sugar zoning proposed in Kenya’s draft Sugar Regulations, 2018 is an illegal and anti-competitive constraint that would require an express waiver by the Competition Authority.
“Forcing farmers to sell to a single buyer, who will be the only miller they can sell to, offers no remaining scope for market forces,” said Michael Arum, SUCAM Coordinator.
The draft regulations, now under review by the Agriculture Ministry’s Sugar Industry Taskforce, propose that sugar cane farmers be obliged to sell their produce to specific sugar mills, with a single buyer for each area dictated by regulation.
Under the zoning regime, sugar millers are required to be constructed at a radius of 25 kilometres from the other, a move that has been criticised by stakeholders.
“For farmers in areas with poorly performing mills, any mill mismanagement will mean that their own livelihoods are ruined. They cannot seek other sellers, or better prices. In effect, they will simply work for a single mill, and without ever having signed a contract to do so, but by regulatory dictate,”
The zoning law also is a breach of COMESA rules that prohibit the introduction of a contract, agreement or understanding that is anti-competitive or substantially lessens competition within the common market, said SUCAM.
“Imposing a single buyer contract on farmers will, in fact, drive many Kenyan farmers away from sugar production. It means farmers must produce without any possibility of selling their produce freely, versus switching to producing other crops entirely,” said Hon Saulo Busolo SUCAM Chairman.
Sucam chairman Saulo Busolo said the lobby will from next week start seeking opinion from farmers in regard to what ails the sugar sector in the country, in what appears to be a parallel exercise that is being conducted currently by the sugar taskforce.
“The current taskforce lacks the representation of farmers and so we want to conduct our own survey that will bring together all the stakeholders,” said Mr Busolo.