Unless you zone and say these framers supply to such and such processor, you will have chaos in the industry as it happened a few years ago
By Moses Byaruhanga
Recently, I read in the papers that the sugarcane outgrowers from Busoga region were seeking government approval to sell sugarcane to Kenya.
There has been debate on the zoning of the sugar industry with some people opposing it and others in favour. Those against zoning have been saying that we are in a liberalised market so the out-growers should be free to sell their cane to whoever they want.
This sounds good on the surface, but the sugar industry needs certainty. The other issue raised by those against zoning has been that when the new processors came onto the scene, without developing their own out-growers, the price of cane shot up to sh170,000 a tonne. So the argument was that allowing the outgrowers to sell to whoever they want led to an increase in the price of sugarcane, hence, more returns to the farmer. These arguments sound good, but the question we should ask is that if the new players on the scene led to the price increase, how come the price has now collapsed?
The current price per tonne of cane is between sh110,000-sh120,000. Where are the new players that led to the price increase? How come they no longer buy at sh170,000 or if they are buying at that good price how come there is excess sugarcane to sell to Kenya? Even if the outgrowers were allowed to sell their cane to Kenya as the Government agreed, when the outgrowers met the President recently, how sustainable is the Kenyan market? What if tomorrow Kenya has its enough sugarcane of its own? Where will the excess cane in Uganda be sold?
The answers to the above questions lies in zoning although some people don’t want to hear anything about it. The President has preached about the advantages of zoning. When the framers were happy selling to whoever they wanted to, little did they know that the big processors; the Madhvani Group and the Metha Group were not sleeping.
They bought land mainly in Bbaale sub-county in Kayunga district and planted their own cane. I am reliably informed that between themselves they have over 10,000 acres of sugarcane in Kayunga district alone. This cane was planted after the confusion brought about by farmers selling to whoever they wanted to sell to. As pointed out above, the sugar industry needs certainty, first, on the part of the processors that they will get enough cane and the farmer that he/she will get a processor to buy the cane. For instance, if a processor processes 4,000 tonnes of cane a day, using the formula that you can harvest 30 tonnes of cane from an acre, to get 4,000 tonnes of cane a day, there must be about 133 acres of land to harvest that cane from daily. So the processor must have a plan that in this week or month, I am going to get cane from either their nucleus plantation or from outgrowers. You cannot sit and wait to see which farmer will supply you. What if they don’t come?
You should have a prior arrangement with the farmers you are going to harvest from or those who will bring their cane by themselves on a specific day. From the example above, a processor processing 4,000 tonnes of cane daily, would need 133 acres of cane to harvest from daily and for 11 months, the processor would need 43,890 acres to harvest from.
Remember when you harvest cane this month, it takes a year to harvest from that same garden. So there must be a plan that the processor will get cane from known farmers on a particular day. Without that it would be chaos in the industry and this had better be known by all, especially the MPs to whom the President returned the Bill.
Unless you zone and say these framers supply to such and such processor, you will have chaos in the industry as it happened a few years ago. So with the known production capacities of all the processors, we can then know how much land should be for cane growing so that each processor gets enough supply. So you cannot avoid zoning that these particular farmers supply a particular processor. Leaving the sector free for all will only lead to disaster.
Back to the processors, buying land in Kayunga. The processors are now harvesting their own cane, hence, some of the outgrowers have nowhere to sell their cane too and the new players cannot buy all the cane available. This has led to “excess” cane on the market and the collapse of prices. So after so much talk about the sugar Bill, we need to listen to the President who has been advocating for zoning. I planted cane in excess of 100 acres when the big processors came to Kayunga.
I need certainty that I will sell my cane to a particular processor otherwise, if my cane is not bought at the right time, what will I do with it? I cannot take it to Owino market and the processor must know that I will supply them on a particular date and put me in his programme.
On the issue of price, that is addressed by the Bill in a formula that was set up, so lack of zoning cannot be used as an excuse that the new players who have no outgrowers of their own will buy at a better price. In any case why have prices collapsed with the new players in existence?
The writer is a Senior Presidential Adviser on Political Affairs