The planned retrenchment of 500 workers at the Nzoia Sugar Company in staff rationalisation to cut a huge wage bill has been put on hold due to costly send-off packages.
The shelved lay-offs come as a relief to the 500 out of the 1,237 workers who were to be sent home as from late last year.
Acting managing director Godfrey Wanyonyi on Thursday disclosed that about Sh3 billion was required in retrenchment packages which the firm is unable to raise.
“Apart from financial constraints, the exercise is against Vision 2030 which requires locals are empowered through creation of employment,” he explained.
The company, he said, had instead frozen hiring of new staff to tame the rising wage bill.
“Fresh employment will only be made in critical areas where the company cannot operate without specialised personnel. Workers who have attained retirement age will not be replaced as part of the long term process of cutting down on the huge workforce,” said Mr Wanyonyi.
He said the company had cleared Sh320 million out of the Sh500 million debt for cane deliveries in the last four months and assured farmers of prompt payment once the sugar market stabilises.
“The delayed payment of the balance Sh180 million is due to the closure of the plant for maintenance in September, but arrangements have been put in place to facilitate prompt payments,” said Mr Wanyonyi.
He said the company had installed two weighbridges at a cost of Sh90 million to reduce losses farmers incur due to spillage while transporting cane to the factory.
“These machines have GPRS connection will not only give accurate data but also ensure farmers get value of money from their produce,” said the managing director.
He said the company plans to expand its sugar cane cultivation to the Mount Elgon, Teso North and Malakisi regions.
The strategy is to contain cane poaching by rival firms that buy the produce at farm gate level, making the company that invested in the cultivation of the crop to incur losses.
“We give farmers input to cultivate the crop but some fail to deliver the produce to our factory after selling it to middlemen,” said Mr Wanyonyi adding that land fragmentation due to population pressure had also contributed to low cane production in the region.
However, the company plans to pilot irrigated sugar cane farming that is expected to reduce maturity period of the crop and help attain regular supply of raw material.
“Plans are on to put five hectares of the crop under irrigation on trial basis using purified water from the factory and other sources,” said Mr Wanyonyi.
He added the success of the project would see the duration for sugar cane production reduce from 18 months to less than 12 months.