MASINDE MULIRO UNIVERSITY OF SCIENCE AND TECHNOLOGY

CHALLENGES FACING OUTGROWERS SUGARCANE FARMERS IN SOUTH NYANZA REGION, A CASE OF MIGORI COUNTY, KENYA

A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELORS OF SCIENCE DEGREE IN

AGRICULTURAL ECONOMICS AND RESOURCE MANAGEMENT OF THE MASINDE MULIRO UNIVERSITY OF SCIENCE AND TECHNOLOGY.

FACULTY; SCHOOL OF AGRICULTURE VETENARY SCIENCE AND TECHNOLOGY

DEPARTMENT; SUGAR TECHNOLOGY

NAME; MOSES OWUOR OKELLO

REG/NO; SAR/0033/12

TASK; PROJECT

DATE OF SUBMISSION; 1st MARCH, 2016.

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DECLARATION

This research project is my original work and has not been submitted for any award in any university.

Signature……………………………… Date …………………………………...

MOSES OWUOR OKELLO

SAR/0033/12

This research project has been submitted for examination with my approval as the University Supervisor.

Signature……………………………….. Date……………………………………..

DR. NDIEMA

Lecturer, MASINDE MULIRO UNIVERSITY

DEDICATION

This work is dedicated to my dear brother Eng. Nimrod Ochieng’ Owuor and his wife Mrs. Marceline Adhiambo for their tireless efforts in my studies.

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ACKNOWLEDGEMENT

I would like to acknowledge the support, guidance and advice given to me by my supervisor Dr. Ndiema, Lecturer in the Department of Sugar Technology, School of Agriculture Vetenary Sciences and Technology in Masinde Muliro University of Science and Technology, Kakamega campus.

I would also like to acknowledge the administration of Masinde Muliro University for providing me with the chance to pursue my Degree in B.Sc. in Agricultural Economics and Resource Management in this institution. I also appreciate the conducive environment the institution provided me with to enable me pursue my studies.

Much acknowledgement goes to all my lecturers for this course for their tireless efforts to impart the necessary knowledge in me that has been of much importance in this study. They have really been a source of inspiration to me.

I also acknowledge my colleagues, especially Dorine Ondiwa Jane Wakabu, Benard Mwangi, Kigen Gilbert and Cherop Winnie of Masinde Muliro University for their support and advice that has kept me going during my studies. They have uplifted me much when I felt low and have been a source of new knowledge in my life.

I would like, in a special way, to acknowledge the moral, financial and social support I received from my brother Mr. and Mrs. Nimrod Owuor together with my brothers and sisters, Nick, David, Steve, Job, Ruth and Lydia in this academic journey. They have been of much assistance in this academic work.

Lastly, I would like to acknowledge all the contributions from my friends who gave much support in my studies and finances.

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TABLE OF CONTENT

ITEM PAGE

DECLARATION………………………………………………………………………………2

DEDICATION……………………………………………………………………………...….2

ACKNOWLEDGEMENTS………………………………………………………….….……..3

TABLE OF CONTENT…………………………………………………………………4, 5& 6

ABSTRACT……………………………………………………………………….………7 &8

CHAPTER ONE: INTRODUCTION……………………………………………………….….9

1.1 Background of the study………………………………………………………………..9&10

1.2 Statement of the problem………………………………………………………………10&11

1.3 Purpose of the study………………………………………………………………….…….11

1.4 Research objectives ……………………………………………………..............................11

1.5 Research questions…………………………………………………………………….…...12

1.6 Significance of the study……………………………………………………………….......12

1.7 Limitation of the study ………………………………………………………….…….…...12

1.8 Basic assumptions of the study.……………………………………………………..…......13

1.9 Delimitation of the study …………………………………………………………….….…13

2.0 Organization of the study……………………………………………………………..........13

CHAPTER TWO: LITERATURE REVIEW……………………….………………….…...…14

2.1 Introduction……………………………………………………………………………14&15

2.2 Sugar’s mulfunctional role in the country..…………………..……………………….15&16

2.3 Challenges facing sugarcane farmers in South Nyanza region ….…..17, 18, 19, 20, 21,& 22

2.4 Theoretical framework ……………………………………………………………………23

2.5 Conceptual framework ………………………………………………………….……23&24

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CHAPTER THREE: RESEARCH METHODOLOGY………………………………….…....25

3.1 Introduction………………………………………………………………………….…..…25

3.2 Research design………………………………………………………………….……........25

3.3 Target population ………………………………………………………………….………25

3.4 Sample size and Sampling procedure……………………………………………….…...…25

3.4.1 Sample size…………………………………………………………………………….…26

3.4.2 Sampling procedure………………………………………………………………………26

3.5 Data Collection Instruments………………………………………………………………..26

3.5.1 Validity of the instruments…………………………………………………………….…26

3.5.2 Reliability of the instruments……………………………………………………….…….27

3.6 Data Collection Procedure ………………………………………………………….…..….27

3.7 Data Analysis Techniques ………………………………………………………….….…...27

3.8 Ethical Considerations ………………………….………………………………….….27& 28

3.9 Operational definition of variables …………………………..…………………….….…28

CHAPTER FOUR: DATA ANALYSIS, PRESENTATIONS, INTERPRETATIONS AND DISCUSSIONS……………………………………………………………………………...…29

4.1Introduction…………………………………………………………………………………29

4.2 Questionnaire return rate…...………………………………………………………………29

4.3 Target population ………………………………………………………………………….29

4.4 Demographic characteristics of the respondents…………………………………………...30

4.4.1 Respondents by gender……………………………………………………………….….30

4.4.2 Respondents by age………………………………………………………………….…...31

4.4.3 Respondents by education level……………………………………………………..31&32

4.5 Liberalization of sugar market ……………………………………………………………32

4.6 Poor transport infrastructure …………………………………………………………32&33

4.7 Weak institutional structure and policy …………………………………………………..33

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4.8 Unpredictable harvesting schedules ………………………………………………33&34

4.9 Delayed payment of farmers ………………………………………………………..…34

4.9.1 Period within the time of payment of farmers ………………………………………34

4.9.2 After how long does the company pay you ...............................................................34

4.9.3 The cause of delay in payments……………………………………………………...35

4.9.4 Mode of payment ……………………………………………………………….35&36

CHAPTER FIVE: SUMMARY OF THE FINDINGS, CONCLUSION AND RECOMMENDATIONS…………………………………………………………………37

5.1 Introduction…………………………………………………………………………...37

5.2 Summary of the findings…………………………………………………………37&38

5.3 Conclusions…………………………………………………………..…………….…38

5.4 Recommendations…………………………………………………………………….39

5.5 Suggested areas for further study……………………………………………………..40

REFERENCES………………………….……………………………………………41&42

APPENDIX 1 Number of farmers in South Nyanza Sugar Company…………………..43

APPENDIX 2 Determination of a sample size for research activities……………….44&45

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ABSTRACT

Sugarcane farming is an essential activity in the whole world because of the major product it provides, that is, sugar. Sugar, which is got from processing of sugarcane plants, is planted by mainly by Outgrowers sugarcane farmers in Migori County, Kisii County and some parts of Homa-Bay County who deliver it to the factory for processing. The sugar industry in Kenya, is both strategic and political; it provides food security, improves rural lives, and provides sustainable livelihoods for millions of Kenyans. It also suffers a lot of challenges i.e. government intervention. According to the Institute of Economic Affairs, ` the industry is under constant threat of collapsing due to perennial challenges.’ The major crisis the sub-sector is currently experiencing include market liberalization, and increasing competition from the cheap sugar imports into the country, poor industries polies and structures that fail to address basic problems that would assist in recovery and continued government intervention that has resulted in mismanagement of the sugar industry.

Most of the sugarcane farmers in South Nyanza region are reported to be pulling or not willing to continue with farming of sugarcane due to a number factors or reasons, and this proposal is aimed at coming up with a proposed research to find out what the reasons are and how best to reduce the number of farmers pulling out of this industry. In order to reduce the effects of some of these challenges which Outgrowers sugarcane farmers, factors like input costs, availability of incentives, proper policy development and enforcement, proper management of the factory, time of payment of farmers and a good understanding of cooperative movement, should be of a major concern. These together with others not mentioned, helped the researcher have a clear picture of what farmers are going through and help come up with necessary suggestions to curb the situation.

The target population in this project was 31,326 sugarcane farmers and 10 Agricultural Extension Officers (AEOs) in Migori County who had prior experience about sugarcane farming constituted the target population. The research used questionnaires to get information from these 31,326 individuals. The questionnaires for the AEOs was primarily employed to give a deeper understanding of what farmers are actually going through. A sample size of 370 was used in the study. The questionnaires was first tested in the pilot study, then moderated before the actual collection of data so as to ensure correct information. Findings from this study was used to provide recommendations to the stakeholders in the agricultural industry so that necessary control measures are taken.

The findings was of great importance to all farmers in Migori, kisii and Homa- Bay counties at large in setting benchmark with what other farmers are doing, aimed at achieving their objectives and goals in life. Descriptive survey method was used in the study owing to the fact that this research project allowed for attempts to collect data from members of a given population, so as to determine the current status of that particular population with respect to one or more variables in the study. The element of reliability of the measuring instruments using the test-retest method.

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Statistical Package of Social Sciences (SPSS), was used to analyze and classify data that was collected.

According to the institute of Economic Affairs, 5th May 2004, the beleaguered sugar sub-sector by then Mr. A. O. Otieno (Kenya Sugar Board), Mr. Shem Ochola (Sugar Campaign for Change) and Mr. Paul Gamba (Tegemeo Institute) shared their views on the perennially troubled sugar sector.

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CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Sony Sugar’s farmers are the key business partners in the raw material supply chain. A key challenge in the sugar sector is absence of strong farmers’ institutions to provide pooled services to farmers. Sony Sugar has in the interim, filled this void and has in the last 5years, invested over ksh. 774M in the provision of services and inputs to farmers. To complement farmers’ effort in sugar cane production and to ensure adequate supply of milling cane, the company offers an array of services to farmers; Extension services, recruitment for sugarcane farming, land development, supply of seed cane, supply of farm inputs, training, harvesting and transport, farmers’ loan and improved access. Farmers also face a lot of challenges in producing sugar, some of which include; Poor transport infrastructure, unpredictable harvesting schedules, and unstable cane prices, liberalization of sugar market and weak institutional structures and policy governing the sugar industry among others.

Sugar is produced in more than 100 countries around the world. It is one of the most traded commodities with exports accounting for a quarter of global production. But it also has one of the most distorted global markets such that there is no level playing field. Sixty-five percent of world sugar trade comes from four countries, namely Brazil, Australia, Cuba and Thailand while the biggest importer is Russia. All major producer and consumer countries protect their markets from the lower priced sugar available in the world market. Therefore this market may not represent the benchmark of ascertaining a fair price for sugar. Sugar as a product can be derived economically from two products, sugar beet and sugar cane. The latter is cultivated in the tropics and the former in temperate areas. Seventy percent of world production comes from sugar cane and the three big producers are; Brazil, which produced 20.3 million metric tonnes (MT) in 2003, India 19.9 million MT and the European Union (EU) 15.5 million MT.

Sugarcane farming is a worldwide activity, practiced in most countries in the world. According to SASA (2009), an estimated 2% of the South African population depends on the sugar cane industry for a living. However, this activity has its own challenges as far as the whole process of sugar production from planting the canes to the processing, and finally the payment of farmers is concerned. Most of sugarcane farmers usually expect high returns especially when they have invested much in the activity and following the required procedures in sugarcane farming (SASA, 2009).

According to Wanyande, (2001), the current state of sugar industry is primarily as a result of destructive political economy that has seen corruption, mismanagement, lack of political goodwill, ruin the sector. Apart from Mumias Outgrowers Company (MOCO) which the Kenya Sugar Authority (KSA) acknowledged as the only Outgrowers organization to have succeeded in offering the farmers good services despite the insurmountable problems in the sub-sector, the other Outgrowers organizations have not performed to the expectations of farmers. The result has

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been a systematic increase in poverty amongst farmers and subsequent decline in the sustainability and efficient growth of the sub-sector. The situation has been exacerbated more by non-sequenced trade liberalization trade policies, leading to unchecked influx of imported (often dumped) sugar into the local market. Kenya Sugar sector is expected to have undertaken key reforms in various areas to build competitiveness and introduce efficient management in the sugar supply chain. Consequently, the institutional and legislative framework governing the sugar sub-sector must be urgently overhauled in order to respond to imminent threat affecting the sector.

According to Odenya, (2007), despite the effort made to multiply and distribute the treated seed cane with agronomic packages, there is still low adoption of the technologies by the farmers which has led to reduced acreage of sugarcane leading to reduced household income and livelihood status in Nyando sugar zone. This is almost the same case in Migori County, where the farmers experience the same challenges and many of them have been withdrawing from sugarcane farming and mainly getting involved in maize farming. This move has really affected the sugar industry in Kenya owing to the fact that western part of Kenya is the leading producer of sugar, and in particular, Migori area where the major sugar processing factory is situated. Harb and Columba (2010) identified fertilizer, weed control, soil sampling, replanting with treated seed cane, and the use of herbicides as critical to producing above-average sugarcane yields. Harb and Columba (2010) also emphasized that the harvesting operation affects farm profitability. Rates of return on debt above the interest rate will increase profits, while rates of return below the interest rate will reduce profits.

Though Kenya has excellent cane growing weather conditions, local sugar producers are only able to meet about two-thirds of consumption needs i.e. 450,000 MT. Production is concentrated in Western Kenya with mainly mill white sugar being produced. It is also produced in Rift Valley and Coast provinces. Commercial production of sugar in Kenya began in 1902 with Miwani being the first cane factory to be set up. This was followed by the setting up of Ramisi Sugar factory in 1927, Muhoroni in 1966, Chemelil in 1968, Mumias in 1973, Nzoia in 1978 and South Nyanza Sugar Company (Sony) in 1979.Since then, there has been a socioeconomic improvement in the lives of the rural population through job and wealth creation.

According to the institute of Economic Affairs, 5th May 2004, the beleaguered sugar sub-sector by then Mr. A. O. Otieno (Kenya Sugar Board), Mr. Shem Ochola (Sugar Campaign for Change) and Mr. Paul Gamba (Tegemeo Institute) shared their views on the perennially troubled sugar sector.

1.2 Statement of the Problem

The study according to Waswa, et al., (2012), was about contract sugarcane farming whereby more land is put into agriculture than the rest. Their study shows that while it was hoped that

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sugarcane farming would raise farmers’ incomes and somehow help reduce poverty, Western and Nyanza provinces are still among the poorest regions in Kenya. Further, the additional labour demands for cash crop production may reduce the amount of time women have for subsistence farming and or alternative income generation options. Waswa, et al., (2012) adds that an equitable approach to labour specialization at the farm between men and women could help address this dilemma. Whilst the revenues from high value cash crops like sugarcane should be more than sufficient to meet the household’s basic needs and nutritional requirements, this does not always happen.

The study by Girei and Giroh (2012) in “Analysis of the factors affecting sugarcane (saccharum officinarum) production under the out growers scheme in Numen local government area Adamawa state, Nigeria” identified inadequate and late allocation of farms and inadequate credit as the major constraints of sugarcane production. This links to the Kenyan and in particular, Mumias situation in terms of the input costs and the payment of farmers by the processing factory.

According to the study of Tarimo and Takamura (1998), the total current sugarcane production in Tanzania is below the country’s annual demand for the commodity. The study found out that research carried out in the country during the past ten years shows that the country has the potential to become a net exporter of the commodity if the current constraints limiting production at the farm level were removed.

In South Nyanza region, Outgrowers sugarcane farmers have suffered huge losses due to a number of challenges that they encounter both in the field and within the Industry itself. According to the records from Sony Sugar Company Limited, it shows that in Kombok, S/K/Gwala, Kanga and Kokuro sub-locations, farmers are making huge losses thus forcing them to pull out of sugarcane farming in the region.

Although the above studies have been done in different places of the world and show that there are a number of challenges that face sugarcane farmers, there is a need to establish whether there are factors influencing sugarcane farmers from sugarcane farming in Migori, parts Kisii and some parts of Homa-Bay counties.

1.3 Purpose of the study

The purpose of this study was to investigate the factors that hinder sugarcane farming by farmers from South Nyanza region of Kenya.

1.4 Research Objectives

The following are the objectives that were used in this study;

1. To evaluate the extent to which sugarcane farming is affected by a number of factors in South Nyanza.

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2. To find out what factors has actually caused low productivity in the sugar zone of South Nyanza.

3. To establish ways of improving sugar sector especially in Southern Nyanza region.

1.5 Research Questions

1. What are the factors that affect Outgrowers sugarcane farmers in South Nyanza region?

2. How do the challenges that influence sugarcane farming in South Nyanza, affect farming activity in the region?

3. How is sugarcane farming affected in South Nyanza region?

1.6 Significance of the Study

It was hoped that this proposal will assist the management of Sony Sugar company Limited in coming up with solutions to curb the problem of sugarcane shortage for processing, which has of late led to reduced sugar production by the factory. It is also believed that Outgrowers sugarcane farmers will also immensely benefit from this study by giving them the way forward in adopting new methods of sugarcane farming.

The researcher will also benefit from the research in that he will be able to have first-hand information on the outcome of the research and it will enable him have experience in the research work.

It was hoped that the study would assist the government of Kenya in coming up with long term solutions to the issue of sugar shortage, which was becoming a major problem in the country and which led to importation of large amount of sugar from outside the country. This was reduced by the increase in the production of sugar locally by the local sugar factories in Kenya.

1.7 Limitation of the Study

The study will likely be constrained by the availability of the respondents who cannot offer reliable data required by researcher. This constraint will be mitigated by the researcher’s assurance of the confidentiality of the information that the respondents provided.

The study might also be limited by the low literacy level of the farmers. It will be mitigated by the researcher having to administer the questionnaire personally by reading for them the questions in the questionnaire.

It might also be limited by the respondents’ failure to return the questionnaires for analysis on time. This might be mitigated by the researcher having to collect the questionnaires personally.

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1.8 Delimitation of the Study

The study was carried out in Migori County, South Nyanza in Kenya. This particular location was chosen because according to the reports from Sony Sugar Company, Agriculture Section, it was the area with the highest number of farmers who experienced challenges in farming in the region resulting to low productivity.

1.9 Basic Assumptions of the Study

In conducting this study, it will be assumed that the respondents will be open and sincere to provide the necessary information for the study. Also that the respondents has a prior experience or information about challenges influencing sugarcane farming in South Nyanza region.

2.0 Organization of the Project

The study was organized in such a way that Chapter One (Introduction) included background of the study, the statement of the problem, the purpose of the study, the research objectives, research questions, significant of the study and limitations of the study.

Chapter Two (Literature review) helped the researcher in understanding the existing body of knowledge better. It included challenges that are expected to have contributed to low productivity in the sugar industry.

Chapter Three (Research methodology) included research design, the target population, sample size and sampling procedure, data collection instruments, data collection procedure, validity of instruments, reliability of the instruments, data analysis techniques, ethical considerations and operational definition of variables.

Chapter Four (Data analysis, presentations and interpretations) involved Questionnaire Return Rate, Demographic Characteristics of the Respondents, Respondents by Gender, Respondents by age and Respondents by education level.

Chapter Five (Summary of the findings, conclusion, recommendation and discussions) included Summary of the findings, Conclusions, Recommendations and Suggested areas for further study.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Background of the Industry

Due to the strategic nature of the commodity, the government decided immediately after independence to invest heavily in the sugar industry to achieve self-sufficiency and earn foreign exchange through exports. In 1966, Kenya was importing 70 percent of her sugar requirements but by 1976, domestic production stood at 296,000 MT while consumption demand stood at 253,000 MT. However, in later years this changed and Kenya is now a net importer of sugar. Table 1 shows that local demand for sugar supply has consistently outstripped local supply in recent times. The figures show that while production has slowed, amounts being imported are increasing. Early attempts to streamline the sugar industry were unsuccessful and only brought about a lot of confusion. In 1994 for example, the government released a paper called the Sugar Sub-sector Restructuring Study (SSRS). The study proposed among other matters, selling shares (Chemilil), hiring technical consultants and introducing performance-based contracts (Sony, Muhoroni and Nzoia) and privatization (Nzoia and Muhoroni).

The proposals did not go down well with the farmers who claimed they were not consulted. Furthermore, during that period, the government began liberalizing various markets and privatizing some parastatals. But this was done without any legal or policy framework in place. Trade liberalization for the sugar sub-sector removed barriers restricting the flow of trade and eliminated price controls. This resulted in an increase in trade rather than in productivity and competitiveness in the local industry. The import figures of the period 1994- 1997 in Table 1 have no relationship to the shortfall in consumption figures against local production. It was assumed that consumption figures were either exaggerated or that substantial imports were not recorded. However, reports indicated that there was a glut in the local sugar market occasioned by the supply of cheap imported sugar during that period.

This oversupply was detrimental to local producers who were unable to dispose of their higher priced supplies. Thus trade liberalization at that time had adverse results as the local industry had not been given time to develop sufficiently to meet its challenges. Following this unparalleled crisis that led to the near collapse of the industry, the Sugar Act (2001) was enacted to bring order to the industry. The Act came into being in 2002. It empowered the newly created Kenya Sugar Board (KSB) to develop the industry and its regulations. KSB replaced the Kenya Sugar Authority (KSA), which had been set up in March 1973 to try and promote the development of the industry but failed. In addition, a Task Force was appointed by the Ministry of Agriculture in March 2003 to look into the problems of the industry. Poor management, lack of a proper marketing and poor infrastructure were but a few of the challenges named in the report. A team of stakeholders from the sector in conjunction with the Ministry of Agriculture developed the Kenya Sugar Industry Strategic Plan (5-10 years) from the recommendations of the Task Force. The Plan’s aim is to revive the industry and to make it profitable and competitive.

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Some of the proposals have been implemented. The government attempted to ensure that there was good management at the factories. Some sugar companies such as South Nyanza Sugar Co. have recorded profits in recent months with management changes being effected. Also the Sugar Development Fund (SDF) rates were lowered by 50 percent to facilitate the development of cane, infrastructure and factory rehabilitation. Despite these efforts, the industry is still undergoing a crisis. The main beneficiaries seem to be sugar importers and the factories. The main losers are farmers who are impoverished and consumers who have to pay higher prices for the commodity as Table 2 illustrates.

2.2 Sugar’s Multifunctional Role in the Country

According to Institute of Economic Affairs, the sugar sub-sector plays a major role in the Kenyan economy and is a source of livelihood for millions. The national annual consumption of sugar has been increasing and is about 700,000 MT yet the annual production stands at less than 500,000 MT. As can be seen in Table 1, in 2003, local consumption increased by 1.6% while output of sugar declined by 9% from 2002 levels. The decline came about through a lull in the amounts supplied by farmers. Meanwhile, sugar imports increased by 40% in 2003 from the previous year ostensibly to cover that deficit.

The sugar sub-sector is labour intensive providing direct and regular employment for 35,000 workers. Small-scale producers dominate the sub-sector. As at beginning of 2000, 88% of a total area of 108,793 hectares belonged to small-scale growers. It is also of great importance to women. It is the main source of income to over 200,000 more people in the agro processing, distribution and other related services. The sub-sector supports an estimated 2.6 million people representing 7-8% of the population. Its share of the agriculture GDP is 7% or KShs.9.1 billion.

However, the sugar industry has been marked by gross mismanagement, constant government interference and insufficient incentives resulting in a drastic decline in production levels and poor returns for farmers. The dismal performance is not unique. There have been similar setbacks in other industries of the agriculture sector. This is partially due to Kenya inadequate adjustment to liberalization and globalization forces, which have greatly affected the competitiveness of the sector.

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Table 2.1; Sugar production, imports, consumptions and exports in Kenya; 1999-2003 (‘000 tonnes)

YEAR PRODUCTION

IMPORTS CONSUMPTION EXPORTS

1994 303.29 174.05 560.00 NIL

1995 384.17 24.44 560.00 17.22

1996 389.14 65.83 570.00 24.48

1997 401.61 57.31 580.00 25.05

1998 449.13 186.52 581.13 NIL

1999 470.79 57.70 609.43 NIL

2000 401.98 118.08 631.20 2.09

2001 377.44 249.34 644.50 3.60

2002 494.24 129.97 680.49 12.05

2003 448.49 182.23 691.56 11.30

Table 2.2; Comparative Internal Prices in various regimes

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MARKET PRICE/TON (US $)

EU 530

SPS* 448.67

US 430

WORLD MARKET 125

KENYAN DOMESTIC MARKET

600

SUDAN 345

*EU Special Preferential Sugar, Source;

SUCAM

2.3 CHALLENGES FACING SUGARCANE FARMERS

1. LIBERALIZATION OF THE SUGAR MARKET; INTERNATIONAL TRADE REGIME OF SUGAR

Trade liberalisation for the sugar sub-sector removed barriers restricting the flow of trade and eliminated price controls. This resulted in an increase in trade rather than in productivity and

competitiveness in the local industry. The international sugar trade regime is affected by

considerations other than supply and demand. Due to the political nature of the commodity, various markets for sugar exist. There are four regimes under which sugar is traded and this play a key role in determining sugar prices. First,

A preferential and quota regimes offered by developed countries, notably the USA and the EU. In Kenya’s case, the latter is the EU Special Preferential Sugar Arrangement where supply needs are met through the African Caribbean and Pacific (ACP) countries Sugar Protocol.

Second, there are numerous international sugar agreements providing frameworks for the protection and trading in the commodity.

Third, free trade arrangements in regional trading blocs like EAC, SADC and COMESA. Finally, the residual free market trading under the World Trade Organisation’s (WTO)

most favoured nation obligation or bilateral commitments of individual countries.

(i) COMESA-FTA Agreement

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Trade liberalisation is another major challenge facing the local industry. This has not only resulted in the importation of cheaper sugar, but has spawned corruption in the industry that is hurting farmers and consumers alike. Kenya is a member of the COMESA Free Trade Area (COMESA-FTA). The FTA obliges the country to allow duty and quota free access for products including sugar from the other FTA member countries into her market. But it also provides for the imposition of safeguard measures in order to reduce the quantities of commodity imported for a stipulated period of time to allow a particular industry to recover.

Kenya’s sugar industry is not competitive hence cheaper imports could probably inflict irreparable damage to the industry in its present state. Kenya requested for and was granted a four-year safeguard period to maintain tariff protection beyond a certain imported quota. During that period (2004-2007), the industry should be able to increase its competitiveness. This was an extension of the one year safeguard previously given, which the government felt was inadequate. Under the current arrangement, up to 2007 Kenya can import a maximum of 200,000 MT from the COMESA-FTA duty free to cover the national deficit. Any quantity above that amount or from non-COMESA –FTA countries invites the application of full tariff (Tables 3.1

And 3.2).

Table 3.1: Prevailing Tariff Structures: Imports from

COMESA-FTA (within the quota)

MILL WHITE SUGAR

BROWN SUGAR

RAW SUGAR INDUSTRIAL SUGAR

Customs duty 0% 0% 0% 0%

Value added tax 16% 16% 16% 16%

SDL 7% 7% 7% 7%

Total 23% 23% 23% 23%

Source; SonySugar Company (Kenya Sugar Boarder)

Table 3.2: Prevailing Tariff Structures: Non-COMESA-FTA

Countries and imports exceeding quotas

MILL WHITE SUGAR

BROWN SUGAR

RAW SUGAR INDUSTRIAL SUGAR

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Customs duty 100% 100% 100% 100%

Value added tax 16% 16% 16% 16%

SDL 7% 7% 7% 7%

Total 123% 123% 123% 123%

Source; SonySugar Company (Kenya Sugar Board)

(ii) EU-ACP Agreement

Within the framework of the EU-ACP Cotonou Agreement, Kenya exports sugar despite the national shortfall as Table 1 shows. The country (along with 16 of the 77 ACP members) under the EU-ACP Sugar Protocol has been allocated a 10,000MT quota to export raw sugar at guaranteed high EU prices. The EU itself protects its sugar market and distorts the world market despite the preferential arrangements it has with some of the ACP countries. Through heavily subsidising the industry, it restricts market access for cheaper sugar producers into the EU; undercuts export opportunities for them in other markets; undermines value-added processing even for the ACP chosen few; as well as depressing and destabilizing world prices.

This protection and its deleterious effects are replicated in other regional blocs around the world including MERCOSUR and NAFTA. Reforms are underway for the EU agriculture sector and sugar specifically to make it compatible with the WTO Agriculture Agreement. If eventually that happens, this would mean that either Kenya would have its quota reduced or would experience a fall in the price the sugar exports currently enjoy. (iii) International Agreement & Tariff Regimes

There are no major prospects for global sugar price recovery unless substantial trade liberalisation is undertaken. This seems unlikely in the foreseeable future given the fact that the agriculture negotiations in the Doha Round have stalled. The global market is full of high tariff structures and other forms of protections such as quota systems. Sugar protocols and special preferential sugar arrangements prevail.

Most members of the WTO including Kenya maintain high barriers in the sub-sector though the country’s protection levels are minatory in comparison (see Table 4). Kenya’s WTO bound rates for sugar is 100 percent Table 3.2).

EFFECTS

Free trade of sugar products and there is no imposition of quota and tariffs hence importation of cheap sugar into the local market.

Cheap sugar prices thus killing the local industry.

.

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2. WEAK INSTITUTIONAL STRUCTURES AND POLICY GOVERNING THE SUGAR INDUSTRY.

Inconsistencies in policy, weak institutional and marketing structures have been contributing factors to the industry woes. Moreover, the key stakeholders have not been fully involved in the creation of the industry policies. Instead, the government through excessive control of the sector may have been over-regulated.

EFFECTS

There is no effective representation of farmers as the main stakeholders in decision-making bodies of the sub-sector. Though the Sugar Act 2001 is meant to address the poor performance of the sugar industry, it has a lot of weaknesses that fail to tackle the problems.

The Act grants the government immense control in the sector particularly in the management structure. The primary stakeholders, the farmers and farmers’ Organisations, do not have sufficient control the Kenya Sugar Board (KSB) the key institution of the industry.

Regulatory Organs

The main industry organ is the Kenya Sugar Board. KSB was established to regulate, develop and promote the sugar industry; coordinate the activities of individuals and organisations in the industry and; facilitate equitable access to the benefits and resources of the industry by all interested parties. KSB has 12 members and renewable tenure of three years (Box 2).

Another key player is the Minister of Agriculture who imposes levies on domestic and imported sugar, Special Development Levy (SDL), makes the regulations and appoints the SAT members in consultation with the Attorney General.

The stakeholders in the industry include farmers, the government, sugar factories, and out-grower institutions like the Kenya Sugarcane Growers Association (KESGA), Kenya Sugar Research Foundation (KESREF), importers, financial institutions, transporters, consumers and lobby groups like Sugar

Campaign for Change (SUCAM). Unfortunately, not all of them have been involved in the due processes and most of them have not been represented. This has resulted in a small group making decisions that affect the entire industry. This is occasioned by political interference.

Most of the industry actors want a stakeholder-based system benefiting all. The farmers should be given more powers to manage the industry without unnecessary interference. The government should divest from many industry activities.

Box 1: The Key Industry Organs

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_ Kenya Sugar Board

_ Minister of Agriculture

_ Sugar Development Levy

_ Zonal Committees – Farmers voice

_ Marketing Agency (Imports & Exports)

_ Sugar Arbitration Tribunal (SAT) SS instrumental in the industry decline. There is thus the need for a proper policy and legislative framework to be put in place or the need for existing ones restructured and implemented effectively.

3. UNPREDICTABLE HARVESTING SCHEDULE

Different varieties matures at different ages i.e. between 12 months for the D84 varieties to 18 months to most varieties of cane N14, CO 945. However, during glut factory is unable to absorb all the cane developed by farmers as in the schedule. This has led to cutting of the cane even at the age of 96 months old and some farms go un-harvested at all. Non-harvesting of cane on schedule leads to poor ratooning and sometimes conflicts with the land records for farmers who develop canes on leased lands. Over maturity of cane crops on the fields also contributes to over yields in certain varieties of sugarcane. When farms experience over yields factory delays harvesting as the issue is resolved.

CAUSES

(i) Glut effects at the factory

During glut, factory is unable to absorb all the canes developed by farmers as in the schedule. Normally, after maintenance of company which usually takes up-to about one or 1.5 months, the company usually experiences over-supply of sugarcane. During this period, demand for sugarcanes is lower than supply of canes and preference is given to factory developed canes. At the same time, usually during this period as from 4pm in the evening every day, nucleus estate canes are given first priority in terms of weighing of the cane at the weigh bridge. Farmers remain frustrated and end up selling their cane to small sugar factories like Trans Mara sugar company, Ndhiwa Sugar Company, who end-up in exploiting them. This has led to changes in scheduling of cane harvesting.

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(ii) Introduction of early maturing varieties

Different sugarcane varieties are supplied to farmers by the company’s agronomy department after they have undergone treatment and testing for their quality. In this case, some varieties mature faster than the rest depending on the prevailing weather and soil conditions available for their growth and maturity. Farmers will go for these newly introduced varieties without making any consultation with the right persons in the factory so that necessary changes or adjustments can be made on the harvesting schedules. Hence the records in the factory may tend to defer with what was actually planned for earlier on thus leading to over maturity of these canes.

EFFECTSa) Over maturity of canes in the fields hence reduced sucrose content in the cane

subsequently, the tonnage reduces. b) Delayed harvesting and transportation of sugarcane.c) Farmers who are planning for land development and planting for the next season, also

end up that their plans are impaired.d) Farmers pulling out of sugarcane farming hence low supply of sugarcane to the factory.

4. POOR TRANSPORT INFRASTRUCTURE

Most sugar roads are either gravel or earth roads that degrade very easily under the influence of heavy rains. This means that any effort by the sugar company to maintain sugar roads can never satisfy the full needs for proper roads and infrastructures. These too leads to bad roads that leads to spillage of cane on trans-sit and high cost of transportation by farmers. Lack of the adequate connection of the feeder roads by bridges means farmers have to transport canes over longer distances increasing transport costs.

CAUSES

(i) Increased cases of corruption both at the farm level up-to the factory level.

The resources allocated for the purchase of farm inputs such as the machines, for road maintenance is usually squandered by the authority in charge. This has led to shortage of machines need for the maintenance of these roads. The result is a poorly maintained feeder roads.

(ii) Poor maintenance of machines.

The machines used in maintaining roads in South Nyanza sugar belt are poorly maintained, this has been linked with carelessness of machine operators in this region. They never take good care of these machines leading to their break down especially at time of operations leaving roads uncompleted. Thus, during heavy downpours marrums and gravels on these roads are washed

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away by floods. Some operators even go to an extent of not taking the machines for check-up in the workshops.

EFFECTS

(i) Delayed harvesting and transport due to lack of access, roads are poor and therefore, canes cannot be transported immediately after their maturity period.

(ii) Reduction in sugarcane yields in the fields. Delayed harvesting and late transport of sugarcane leads to reduction in the sucrose content, as a result the average tonnage of sucrose content in sugar reduces all the same. Hence low returns to farmers. Some farmers will feel discouraged and eventually think of pulling out of sugarcane farming and opting for other cash crops.

(iii) Increased cost of transporting canes. Poor roads connecting sugarcane fields with the industry as forced farmers to seek for different alternatives. This means that farmers will use long routes. The effect of this will be increased fuel consumption by the tractor, the farmer will in return incur additional charges on the extra fuel consumed during cane transportation. Eventually farmers will make less or no profit at all.

2.4 Theoretical Framework

This study was based on Skinner’s Operant Conditioning which has it that a desired response is reinforced or rewarded to increase the probability of the repetition of the same response when the stimulus occurs. Skinner, in operant conditioning, the animal operated in the environment and received a reward for it. Eventually, the bond between the operation (pressing of the lever) and the reward stimulus (food) was established. When the reinforcement was affected, the rat’s behavior changed. Skinner then concluded that the operant response undergoes extinction with non-reinforcement.

This theory showed that the subject had to operate on the environment for the result to be seen, the sugarcane farmers too had to be given incentives, have access to low costs of farm inputs, assured of a well maintained transport system, reduced importation of cheap sugar, assured of a well-structured organization and policy of the industry and given prompt payment so as to continue producing more sugarcane.

2.5 Conceptual Framework

In this study, the conceptual framework was guided by the research objectives. The objectives included;

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Firstly, to evaluate the extent to which sugarcane farming is affected by a number of factors in South Nyanza. Secondly, to find out what factors has actually caused low productivity in the sugar zone of South Nyanza. Thirdly, to establish ways of improving sugar sector especially in Southern Nyanza region.

Fig. 2.1 conceptual framework

INDEPENDENT VARIABLES

DEPENDENT

VARIABLE

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Liberalization of the sugar market

Free trade of sugar products and there is no imposition of quota and tariffs hence importation of cheap sugar into the local market.

Cheap sugar prices thus killing the local industry.

Poor institutional structures and policy governing the sugar industry

Immense control of the sugar sector by the government.

Lack of representation of farmers as the main stakeholders in decision making bodies of the sector.

Poor transport infrastructure

Poorly maintained machines Port holes on sugar roads Carelessness and laziness of

operators Corruption among the officers in

charge.

Unpredictable harvesting schedules

Delayed harvesting Reduced sucrose content Low tonnage of sugarcane

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter covered the methodology of study that included the research design, the area of study, the target population, the sampling procedure, the sampling techniques, the research instruments, validity and reliability of the research instruments, and the procedure of data analysis.

3.2 Research Design

According to Kothari (2004), a research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. Descriptive research studies, also known as Ex post facto research, are those studies which are concerned with describing the characteristics of a particular individual, or of a group. Descriptive survey design was used in this study. This is because as Kothari (2004) says, the descriptive research design assists the researcher in collecting data from a relatively larger number of cases at a particular time.

Mugenda and Mugenda (1999) add that a descriptive survey is an attempt to collect data from members of a given population so as to determine the current status of that particular population with respect to one or more variables. Therefore this descriptive research design assisted in collecting data so as to answer the questions concerning the current situation of the subject.

The descriptive survey assisted in establishing more on the factors influencing farmer withdrawal from sugarcane farming.

3.3 Target Population

Brenda, (2009) says that the target population for a survey is the entire set of units for which the survey data are to be used to make inferences. Thus, the target population defines those units for which the findings of the survey are meant to generalize.

According to the SonySugar Company register, South Nyanza has seven sectors recognized by the company. It had 31,326 sugarcane farmers by the year 2016. This, with 10 Agricultural Extension Officers, constituted the target population. But for the case of our project, our target population will be 6895 farmers and 6 extension officers.

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CHALLENGES FACING OUTGROWERS SUGARCANE FARMERS.

3.4 Sample size and Sampling Procedure

According to Intel, (2012) a sample is a part of an entire population that possesses attitudes, opinions, habits, or characteristics that you wish to study. The appropriate sample size is influenced by your purpose in conducting the research.

3.4.1 Sample size

According to Wambiri and Muthee, 2010 a sample is a small group of persons or items selected from the population that will be subjected to the study, and is usually a representation of the entire population. For this study, the researcher having a population of 6,895 people, used a sample of 370 respondents. The researcher used Krejcie, and Morgan, (1970) table to determine the sample size. Since the population of 6,895 is nearer to 10,000 than 15,000 from the table, the sample size was 370 respondents as shown in appendix 5.

3.4.2 Sampling Procedure

Sampling, according to Orotho and Kombo, 2002, is the process of selecting the required individuals for the study whereby a number of individuals are selected from a population such that the selected group has elements representative of the characteristics found in the entire population.

The researcher used stratified sampling on the six sub-locations to select the farmers, simple random sampling was carried out on the sugarcane farmers to select the required sample. For the AEOs, purposive sampling was performed to get the intended sample. The researcher got the list of sugarcane farmers in Migori County from the Agriculture Section, SSC.

3.5 Data Collection Instruments

According to Design, (2005) data collection instruments are the tools that assist the researcher in the process of gathering and measuring information on variables of interest, in an established systematic fashion that enables one to answer stated research questions, test hypotheses, and evaluate outcomes. For this study, the researcher used questionnaires.

In order to collect data for the study, the researcher used questionnaires to get information from the selected farmers in Migori County. The questionnaires were both open-ended and closed-ended.

3.5.1 Validity of the instruments

According to Best and Kahn (2003), an instrument is valid when it measures what it claims to measure. Kothari, 2004 opines that validity can also be thought of as utility. In other words, validity is the extent to which differences found with a measuring instrument reflect true differences among those being tested. Anastancia (1982) says that validity is the quality that a

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procedure or instrument or tool used in the research is accurate, correct, true, meaningful and right. For this study, the researcher used content validity. The validity of the instruments was determined by the researcher’s supervisor.

3.5.2 Reliability of the instruments

According to Grinnell (1993), it is observed that reliability measures the degree of accuracy in the measurement that an instrument provides. According to Donald, 2006, Mugenda and Mugenda, 2003, research instruments are expected to yield the same results with repeated trials under similar conditions. For them, the instrument returns the same measurements when it is used at different times. Therefore, in order to determine the consistency of the measuring instrument to return the same measurement when used at different times, the researcher used Test-Retest method to determine the reliability of the instrument. This happened during the pilot study, before the actual research was done. Kombo and Tromp (2009) add that reliability is a measure of how consistent the results from a given test are.

3.6 Data Collection Procedure

Madhu, (2005) says that data collection procedure is the plan for the activities that are involved in a given study. For this study, the researcher had to follow the necessary procedure in obtaining the relevant documents for the study.

The researcher received permit from the Managing Director of SonySugar Company. On acquisition of the permit, the researcher proceeded to the study area for appointments with farmers and AEOs for data collection which followed accordingly. There was a covering letter attached to the questionnaire to request the respondents to participate in the study. The AEOs were informed beforehand about the purpose of the study. A total of 370 farmers and AEOs participated in the study and were given the questionnaires.

The farmers had to fill the questionnaires and the researcher collected the completed questionnaires after the distribution and also on the same day for those who had filled it. The AEOs sampled were given questionnaires to give more information on the factors influencing farmer withdrawal from sugarcane farming. The information that was collected was used for analysis.

3.7 Data Analysis Techniques

This study employed descriptive statistical methods in order to analyze the data that was collected. There was cross checking of the questionnaires to ensure that the questions were answered well. Coding of the answered questions was done, and organization of the whole information done before the analysis of the data. Qualitative data was first divided into themes and sub-themes before being analysed.

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In the analysis of the collected data, Statistical Package for Social Sciences (SPSS) was used. Frequency and percentages were used in the analysis and presented in a tabular form to enhance interpretation of the data. The frequencies and percentages were used to determine the challenges affecting sugarcane.

3.8 Ethical Considerations

The researcher assured the respondents of the confidentiality of the information they provided, including their own personal information. The respondents were informed of the purpose of the study, that is, for academic purposes. This enabled them provide the required information without any suspicions.

3.9 Operational definition of variables

There are two variables that were considered in this study, independent and dependent variables. The independent variables were: liberalization of sugar market, poor institutional structures, poor transport system and unpredictable harvesting schedules. The dependent variable was sugarcane farming. The information is shown in the Table 3.2

Table 3.2 showing challenges, variables, indicators and measurement scale.

CHALLENGES VARIABLES INDICATORS MEASUREMENT SCALE

Liberalization of sugar market

Independent v.Liberalisation of sugar market.Dependent v.Sugarcane farming

Both SonySugar Company Records & Kenya Sugar Board records

Nominal

Ordinal

Poor transport infrastructure

Independent v.Poor transport infrastructure.Dependent v.Sugarcane farming.

Field records Nominal

Ordinal

Weak institutional structures and policy

Independent v.Weak institutional structures and policy.Dependent v.Sugarcane farming.

SonySugar Company records

Nominal

Ordinal

Unpredictable harvesting schedules

Independent v.Unpredictable harvesting schedules.

Field records Nominal

Ordinal

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Dependent v.Sugarcane farming.

CHAPTER FOUR

DATA ANALYSIS, PRESENTATIONS AND INTERPRETATIONS

4.1 Introduction

This chapter covers the findings, presentations and discussions of the results for the study on ‘Challenges facing Outgrowers sugarcane farmers in South Nyanza region; a case of Migori County, Kenya’. The main sub headings include questionnaire return rate, target population, demographic characteristics of the respondents; respondents by gender and by age, liberalization of the market, weak institutional structure and policy, poor transport infrastructure and unpredictable harvesting schedule.

4.2 Questionnaire Return Rate

This study targeted sugarcane farmers from the seven sectors of Migori County namely; sector I, sector II, sector III, sector IV, sector V, sector VI and sector VII and agricultural extension officers from the County.

4.3 Target population

Table 4.1

Target category Number targeted

Number responded

Return rate (%)

Farmers 360 266 71.89

Field Extension officers 10 7 70.0

Total 370 273 73.78

Out of 370 questionnaires administered to the farmers, 266 were filled and returned representing a return rate of 71.89% (266/378x100).

Out of the ten agricultural extension officers in the targeted, only seven were available for the interviews representing 70% of respondents targeted for this category (7/10x100).

Therefore the overall questionnaire return rate is

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273/370x100= 73.78 %

Some farmers were not available for participation due to various engagements, some out of their homes attending to various family matters while others out rightly refused to participate. Some of the agricultural extension officers were held up despite booking appointments with them in advance.

4.4. Demographic Characteristics of the Respondents

This section presents the demographic characteristics of the respondent with the aim of establishing the general background of the respondents that participated in the study. The areas that are to be discussed include gender, age and the sub-locations where the farmers reside or do farming.

4.4.1 Respondents by Gender

An item was included in the questionnaire which sought information on the gender of the farmers.

Table 4.2

GENDER FARMERS EXTENSION OFFICERS

FREQUENCY PERCENT FREQUENCY PERCENT

MALE 191 71.8 5 71.4

FEMALE 75 28.2 2 28.6

TOTAL 266 100 7 100

From the table above, out of the 191 which represents 71.8% were male and 75 which represents 28.2% were female. From the study, it was revealed that majority of the farmers are men.

The societal norms around the area of study favour men where men are known to own the means of production. Even though most of the labour in the sugarcane farms is provided by women, they do not nor have no express rights to own the farms or have contracts with the sugar company. A few of the women who have contracts with the company have either inherited from their late spouses or have no sons.

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4.4.2 Respondents by age

The study also sought to estimate the range of age of the cane farmers.

Table 4.3; Age

Farmers Extension Officers

Frequency Percent Frequency Percent

21-30 6 2.3 - -

31-40 52 19.5 3 42.9

41-50 101 38.0 4 57.1

51-60 64 24.1 - -

61-70 43 16.2 - -

Total 266 100 7 100

It was found that 2.3% were between 21-30 years old, 19.5% were between 31-40 years old, 38.0% were between 41-50 years old, 24.1% were between 51-60 years old and 16.2% were between 61-70 years old.

The majority of the farmers were between 31 to 60 years of age and have not been in cane farming for a long time.

4.4.3 Respondents by education level

This item was included to gauge the level of education the farmers have attained

Table 4.4; Education level

Farmers Extension Officers

Frequency Percent Frequency Percent

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Primary 147 55.3 - -

Secondary 90 33.8 - -

College 29 10.9 7 100

Total 266 100 7 100

The table shows 55.3% of the farmers have attained primary school education, 33.8 secondary education while 10.9% have attained college level education.

The study revealed that majority of the farmers have attained elementary or basic education. This is sufficient for farming since they can read and write, do simple farming techniques among other tasks.

4.5 Liberalization of sugar market

Table 4.5 shows who were for the idea that cheap importation of sugar into the country is threatening industry especially in Migori County.

Table 4.5; Shows the number of individuals who supported the idea.

FARMERS EXTENSION OFFICERS

RESPONSES FREQUENCY PERCENT FREQUENCY PERCENT

YES 236 88.7 7 100

NO 17 6.4 - -

NO RESPONSE 13 4.9

TOTAL 266 100 7 100

From table 4.5, the study revealed 236 which represent 88.7% of respondents were for the idea that cheap importation of sugar into the country is threatening industry especially in Migori County. Only 17 or 6.4% indicated to be having no clue on cheap sugar import into the country while 13 or 4.9% did not respond to this item.

4.6 Poor transport infrastructure

Table 4.6 Shows who were for the idea that weak institutional structure and policy governing sugar industry is threatening industry especially in Migori County.

The study sought to determine whether poor transport infrastructure affect sugarcane farming.

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FARMERS EXTENSION OFFICERS

RESPONSES FREQUENCY PERCENT FREQUENCY PERCENT

YES 243 71.8 7 100

NO 23 28.2 - -

TOTAL 266 100 7 100

The data above shows clearly that majority of the farmers were for the idea that poor transport infrastructure has caused low production of sugar cane in the region. The 71.8% spotted that out and supported the point while the remaining 28.2% were not for the idea of bad roads as one of the challenges. It also shows that all the extension officers took this as one of the challenges facing farmers’

4.7 Weak institutional structure and policy governing sugar industry

Table 4.7 shows who were for the idea that weak institutional structure and policy governing sugar industry is threatening industry especially in Migori County.

Table 4.7; Shows the number of individuals who supported the idea.

Farmers Extension Officers

Responses Frequency PERCENT Frequency

NO 16 6.3 0 0

YES 237 88.8 7 100

No response 13 4.9 - -

Total 266 100 7 100

From table 4.7, the study revealed 237 which represent 88.8% of respondents were for the idea that cheap importation of sugar into the country is threatening industry especially in Migori County. Only 16 or 6.3% indicated to be having no clue on cheap sugar import into the country while 13 or 4.9% did not respond to this item.

4.8 Unpredictable harvesting schedules

The study sought to determine whether unpredictable harvesting schedules affect sugarcane farming.

Table 4.8

FARMERS EXTENSION OFFICERS

RESPONSES FREQUENCY PERCENT FREQUENCY PERCENT

YES 214 80.5 7 100

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NO 28 10.5 - -

NO RESPONSE 24 9.0

TOTAL 266 100 7 100

The data above shows clearly that majority of the farmers were for the idea that unpredictable harvesting schedule has caused low production of sugar cane in the region. The 80.5% of farmers spotted that out and supported the point while 10.5% were not for the idea of bad roads as one of the challenges and lastly 9% of farmers failed to respond. It also shows that all the extension officers thought this was one of the challenges facing farmers.

4.9 Influence of payment of farmers on sugarcane farming

This section attempts to analyze the responses in relation to the payments for cane delivered made to the farmers by the company.

4.9.1 Period within the time of payment of farmers

This section presents the time taken for the factory to make the necessary payments to the farmers after delivery of sugarcane.

4.9.2 After how long does the company pay you?

FARMERS EXTENSION OFFICERS

RESPONSES FREQUENCY PERCENT FREQUENCY PERCENT

TWO MONTHS 1 4.4 7 100

ONE MONTH 68 25.6 - -

OTHER 183 68.8 - -

NO RESPONSE 14 5.2 - -

TOTAL 266 100 7 100

From the table 4.9.2, it is revealed that majority of farmers are paid after one month of deliver of their cane to the factory. 25. 6% reported to be paid after one month while 68.8% taking more than a month.

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4.9.3 The cause of delay in payment

This section sought to determine the cause of delayed payment of farmers by the SonySugar Company.

Table 4.9.3 In case of delay, what is usually the cause?

FARMERS EXTENSION OFFICERS

RESPONSES FREQUENCY PERCENT FREQUENCY PERCENT

LACK OF FINANCE BY THE COMPANY 19 7.1 1 14.2

SLOW PROCESSING OF RECORDS BY THE COMPANY WORKERS

120 45.1 6 85.8

I DON’T KNOW 39 14.7 - -

NO RESPONSE 41 15.4 - -

TOTAL 266 100 7 100

Table 4.33 summarizes the reasons for the delay in payments. Lack of finance by the company was reported at 7.1%, slow processing of records by company workers at 45.1%, mistakes found in the farmers records at 17.7%, those who did not know the reason for the delay were 14.7% while 15.4% did not respond to the item. An analysis of the responses by the extension officers does not disagree with the observation from the farmers responses.

4.9.4 Mode of payment

This section presents the mode of payment of the processing factory to the sugarcane farmers in Migori County.

Table 4.9.4; what is the mode of payment?

FARMERS EXTENSION OFFICERS

RESPONSES FREQUENCY PERCENT FREQUENCY PERCENT

FULL PAYMENTS 157 59.0 3 42.9

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PAYMENT BY INSTALMENTS 89 33.5 4 57.1

I DON’T KNOW 1 0.4 - -

NO RESPONSE 19 7.1 - -

TOTAL 266 100 7 100

On the mode of payment as shown in table 4.9.4, 59.0% of the respondents opt for full payment while 33.5% are paid in installments.

Majority of the farmers are paid after more than one month of cane harvesting. Some of the reasons revolve around slow processing of records by the company workers, mistakes found in farmers’ records, lack of finance by the company and still other farmers do not know the reasons. Most farmers opt for full payments so as to avoid bank charges and reduce on the cost of travelling to earn though other prefer payment by installments.

Some of those who earned less indicated that the reason was excess deduction by the company while others had borrowed loans yet their yields fell below as expected. Most of the respondent felt that the company was paying low rates per ton of cane harvested as compared to other companies in region. The price ratings were reported to be either very bad or bad according to the findings of this study.

When asked to propose what could be done to solve the price rates crisis, an overwhelming majority proposed a boycott or withdrawal from sugarcane growing, though a few still believe that discussions and negotiations with the management would yield fruit in terms of improving the price ratings.

From this study, cane payment was revealed to be a major factor that determines cane farming. Since the payment is no longer impressive, most farmers would consider a boycott or withdrawal from cane farming even though some have not yet done so. The emergence of other crops farming like horticulture and dairy cattle farming are now being preferred.

According to the study by Chandavarkar, R., (2012), as farmers waited for long (more than a month) for their pay, the result was hiking of procurement prices. In relation to this study, most farmers had to wait longer for their pay. This resulted in more farmers having to withdraw from farming sugarcane because they wanted to use the money for other duties, which were delayed.

The study by Northard, N.W., et. al.,(2005), which has it that both the contractors and the company itself suffered from the delayed payment of farmers. This, in comparison to this study, the processing factory has to squeeze itself in repaying the farmers at once after accumulating the pay, as opposed to when the pay could be done earlier.

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CHAPTER FIVE

SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter covers summary of the findings, conclusions drawn from the study as well as recommendations based on the study findings and suggestions for further studies.

5.2 Summary of the findings

The study sought to find out the challenges (factors) that affect South Nyanza Outgrowers sugarcane farmers from sugarcane farming in Migori County.

From the study, it is seen that liberalization of the trade market has a lot of negative effects on the sugar cane economy of our nation. Therefore, liberalization allows for free trade among the member countries. The study confirmed that 88.7% of farmers and 100% of extension officers had admitted that liberalization of sugar market has in the recent years, resulted in cheaper importation of sugar in the country from Brazil via Uganda. This has brought about winding up of some of our major industries for instance Mumias Sugar Company in the near past up-to the time government came to its rescue by donating kshs. 1Billion and 500Million to SonySugar Company. The effects of cheap sugar into the country are; reduced rate for payment of sugarcane per tonnage weighed at the weigh bridge for instance at the South Nyanza Sugar Company reduced from kshs.3500 to kshs. 3000 per ton. Hence, reduced income to farmers.

The study confirmed that 71.8% of farmers and 100% of extension officers were in agreement that poor transport infrastructure has immensely contributed to a lot of frustrations that farmers are going through in South Nyanza Region. As been discussed earlier on, good road network system provides for a better way of transporting canes without risking losing some sugarcanes through bad roads that leads to falling out of these canes. In the mid-1980s and early 1990s, Sony Sugar Company was in forefront in providing a better transport system to farmers within the sugar-belt. These came in form of provision of better machines for maintenance of it’s road network, the firm ensured that its sugar roads were well maintained. During the planting, harvesting and transporting of sugarcanes, agricultural field shows, farmers’ education days, recognition and rewarding of best maintained roads is very important to any given community or country. Population increase has also stretched the ability of the farmers to access food and given that cane farming is no longer reliable, there is little to celebrate about cane farming hence withdrawal.

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Prompt payments facilitate proper planning and financial management. Cane growing takes a bit of time before the farmers deliver their harvests to the factory. The available cane varieties are known to take between 12 to 24 months to mature i.e. CO945, CO 617, N14 etc. Hence making it difficult for farmers to enjoy the benefits. This situation is worsened by the delay by the company in paying the farmers even after cane delivery. From the study, 94.4% of the farmers and 100% of extension officers indicated that the payment period takes more than one month. Coupled with low price rates per ton as indicated by 90.2% of the respondents and 100% of extension officers, the farmers’ pursuit of full benefits of cane farming is in jeopardy hence losing confidence in this once revered endeavor.

The study confirmed that 80.5% of farmers and 100% of extension officers indicated that unpredictable harvesting schedules has led to great frustrations by the farmers from South Nyanza Sugar belt. Proper planning is a key to plenty of harvest of produce and this is the joy of every farmer. Therefore, failure by the company to have their records updated, can result to huge losses incurred by farmers due to late harvesting has demonstrated in the data above.

5.3 Conclusions

From the findings, It can be concluded that most of the farmers cannot afford to transport sugarcane from their farms to the factory on their own, therefore the company transports it and charges them for that. This leads, then, to increased cost of input as the farmer’s pay is reduced. The cost of cane transport has been raised by poorly maintained roads connecting the company with various farms.

It can also be concluded that liberalization of sugar market is the biggest mistake a nation can ever make. The consequences of doing so is seen in collapsing of sugarcane firms due cheap importation of sugar into the domestic market without controlling their prices through quota imposition, and imposition of tariffs on those imported sugar.

According to farmers and the extension officers unpredictable harvesting schedules has led to great frustrations by the farmers from South Nyanza Sugar belt. Proper planning is a key to plenty of harvest of produce and this is the joy of every farmer. Therefore, failure by the company to have their records updated, can result to huge losses incurred by farmers due to late harvesting has demonstrated in the data above.

Lastly, Prompt payments facilitate proper planning and financial management. Cane growing takes a bit of time before the farmers deliver their harvests to the factory. The available cane varieties are known to take between 12 to 24 months to mature i.e. CO945, CO 617, N14 etc. Hence making it difficult for farmers to enjoy the benefits. This situation is worsened by the delay by the company in paying the farmers even after cane delivery. From the study, 94.4% of the farmers and 100% of extension officers indicated that the payment period takes more than one month.

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5.4 Recommendations

1. Policy and Structures

a) The board should have greater representation from farmers including all farmer organizations, the coffee and tea sub-sectors. The government should only facilitate the operating environment.

b) The need to privatize the industry to restrict government interference and inject some professionalism in the management. This will increase efficiency and boost productivity. Mumias

Sugar Company has been a shining example of what private orientation can do to the industry.

c) Adoption of a single desk marketing system for all sugar sales to monitor and coordinate effectively imports, exports and domestic sales to rid the industry of the exploitative middlemen.

d) The sugar companies should be allowed to utilize the cess fund paid to local authorities to improve the road infrastructure in cane growing areas. Currently, local authorities in cane growing areas do not utilize funds obtained from sugar factories to maintain access roads. 2. Designate sugar as a sensitive commoditySugar could be classified and treated as a special and sensitive commodity due to its multifunctional role as most countries do. Additionally, it should also be considered a basic food and be zero-rated in terms of VAT in order to reduce consumer prices. Currently, the farmer has to pay: 16 percent VAT and 7 percent SDL. Incentives should support framers to sell without burdening consumers. Further, to reducing deductions from farmer proceeds, government levies and taxes on sugar inputs (fuel, fertilizers, implements) should be reduced to lower the costs associated with growing cane and make Kenyan sugar more competitive vis-à-vis imported sugar.

3. Sugar companies should consider newly introduced varieties in their schedules as this is going to assist in updating their programs to accommodate all the available cane varieties. By so doing, records on cane maturity dates and harvesting dates shall easily be available for timely harvesting and transport of sugarcane.

4. Industry Safeguards

Measures to safeguard the sub-sector from the negative effects of liberalization need to be considered and should include utilization of safeguards, application of anti-dumping legislation and strict monitoring

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of the COMESA zero tariff sugar importation. This should cushion local producers until they become competitive. Current world production of 129.1 million MT in excess of annual consumption of 124.6 MT creates an avenue for dumping which should be curbed.

5.5 Suggested areas for further study

1. The researcher suggests that more needs to be done on the issues affecting the farmers that make them either pull out completely from sugarcane farming, or having to take their cane to other processing factories around.

2. To what extent has private cane farming affected cane farming on contractual basis with SonySugar Company?

3. Factors that led to the demise of South Nyanza Sugar Company Outgrowers Association that championed the farmers’ plights.

4. The influence of the rising cost of energy on sugarcane farming.

5. Alternative modern farming methods that would integrate cane farming and food production to ensure food security.

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REFERENCES

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Arnold, C.A and Baiyegunhi L.J.S (2001) Economics of sugarcane production on large scale farms in the Eshowe/Entumeni areas of KwaZulu-Natal, South Africa

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Donald, C., (2006) synthesizing Research; A guide for literature review (3rd Ed.) Sage: Thousand Oaks.

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APPENDIX 1

NUMBER OF FARMERS IN SOUTH NYANZA SUGAR COMPANY PER SECTOR

S/NO SECTOR AREA (HA) NO. OF FARMERS1 I 3,297.10 65942 II 2,752.69 55053 III 3,696.58 73934 IV 3,106.74 62135 V 855.91 17126 VI 1,364.11 27287 VII 589.81 1180

TOTAL 15,662.94 31,326

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APPENDIX 2

DETERMINING SAMPLE SIZE FOR RESEARCH ACTIVITIES

N S N S N S

10 10 220 140 1200 291

15 14 230 140 1300 297

20 19 240 148 1400 302

25 24 250 152 1500 306

30 28 260 155 1600 310

35 32 270 159 1700 313

40 36 280 162 1800 317

45 40 290 165 1900 320

50 44 300 169 2000 322

55 48 320 175 2200 327

60 52 340 181 2400 331

65 56 360 186 2600 335

70 59 380 191 2800 338

75 63 400 196 3000 341

80 66 420 201 3500 346

85 70 440 205 4000 351

90 73 460 210 4500 354

95 76 480 214 5000 357

100 80 500 217 6000 361

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110 86 550 226 7000 364

120 92 600 234 8000 367

130 97 650 242 9000 368

140 103 700 248 10000 370

150 108 750 254 15000 375

160 113 800 260 20000 377

170 118 850 265 30000 379

180 123 900 269 40000 380

190 127 950 274 50000 381

200 132 1000 278 75000 382

210 136 1100 285 1000000 384

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