Rebirth of Mumias sets stage for Rai brothers’ cane battleWednesday July 27 2022
For the past four years, farmers in the sugar fields of Mumias have struggled with two hitches: where to sell their produce and the cost of ferrying the same to far-off mills, which eventually eats deep into their earnings.
Their concerns sprouted after the once-giant Mumias sugar closed shop under the choking weight of debts and mounting losses.
Juma Mulayi, a farmer who has grown sugarcane in central Mumias, however, sees light at the end of the tunnel after Mumias roared back to life last week after years of silence.
"Mumias has resumed buying our cane at an exciting price of Sh4,650 per tonne. This is a big boost to the majority of the farmers who have been selling their crop to the middlemen at throw-away prices for fear of their cane rotting on the farms should they insist on average prices from buyers," said Mr Mulayi.
But unknown to Mr Mulayi, the return of the additional sugarcane buyer has ignited a vicious fight for farmers pitting the feuding Rai brothers who both have a hand in the lucrative sweetener production industry.
The bulk of sugarcane grown in the region rolled into West Kenya and Olepito factories under the watch of billionaire Jaswant Rai, who now controls half of the sugar produced in Kenya,
But his brother, Sarbi Singh Rai, is behind the reopened Mumias sugar in a development that has opened a new battlefront between the warring siblings.
Besides the war for market share, the immediate fight will hinge on recruiting and retaining sugarcane farmers in the scramble for the crucial raw material.
“We have engaged extension staff and sending them to recruit farmers and identify available mature sugarcane for harvesting and crushing,” said Steven Kihumba, a representative of the Sarrai Group, adding that Mumias sugar will fight to reclaim its catchment area.
Sarrai Group, which is associated with Sarbi, secured the lease to run Mumias for 20 years, forcing his brother to sue in the fight to block the Ugandan firm from getting a piece of Kenya’s sugar market.
The High Court had earlier canceled the Sarrai lease, but the Uganda-based company went back to court and obtained temporary orders suspending Justice Alfred Mabeya’s order.
For Sarbi, the Mumias Sugar deal set the stage for market share war with his brother who is irked that his attempts to enter Uganda has been derailed. The Ugandan investor said he would pump in Sh1.1 billion to jump-start operations at the ailing miller.
Jaswant’s — West Kenya, Sukari Industries and Olepito — has taken the market previously occupied by Mumias with their Kabras Sugar brand.
At its peak, Mumias had more than 60 per cent market share.
The Treasury opposed West Kenya’s bid for lease of the miller on concerns that Jaswant would be keen to derail the revival of the ailing miller to protect his factories.
It warned that West Kenya would likely focus on protecting its market share and raw materials -- sugarcane – rather than reviving Mumias. But farmers are little bothered by the sibling rivalry, hoping the battle between the Rai’s will deliver prompt pay, a steady market for their produce and higher sugarcane prices.
"If Mumias Sugar Company is fully revived, we should be allowed to sell our cane where we wish. We don’t want to be attached to any particular miller," said Mr Mohammed Osore, a farmer from Matsakha zone in Mumias.
Mumias plant has a crushing capacity of 8,000 tonnes of sugar per day, it owns a water bottling plant, an ethanol facility and a cogeneration plant.
Its revival will bring back to life the once vibrant town and its environs, which are now a dusty shell of their former self with the collapse of the giant miller. Locals say when Mumias Sugar started, Mayoni a shopping centre in the sugar fields, was their Jinja in Uganda.
People from there and without would not need to go to Jinja for what they call soft life, which was a favourite destination for people with money from western Kenya.
“We simply went to Mayoni. It had lights, it looked like a city because people had a lot of money and spending power. Today, Mayoni is just a shell of itself,” said Mr Sakwa.
Eliud Wechuli, a farmer in Navakholo says he has been selling his cane to Nzoia Sugar Company, which is miles away from Mumias, which is just 15 kilometres where he was supplying before the giant miller collapsed. Apart from the high cost of transport, there has been cases of cane spillage that subjected him to huge losses.
“I have been recording losses on two fronts, the wastage from cane that falls along the road as it is being ferried to the factories miles away and high cost of transport involved,” said Mr Wechuli.
But even as the miller prepares to step-up crushing after test runs, the question on the availability of raw material still lingers.
In 2017, as Mumias was on the verge of closure, former chief executive officer Eroll Johnson admitted that the company had lost more than 15,000 hectares of land under sugarcane and was struggling to get the raw material from farmers. Growers had stopped supplying the raw material to Mumias while others abandoned producing the crop altogether after years of non-payment.
Producers are now betting on Sarbi and Jaswant for good tidings.
The two took different paths in the wake of family disagreements that have culminated in a vicious court fight for the control of the Rai family’s multibillion-shilling estate.
Sarbi’s two brothers teamed up with their mum to take on their brother Jaswant over the distribution of wealth left behind by their father.
At the centre of the dispute is a will dated December 17, 1999, allegedly left behind by Tarlochan Singh Rai, who died on December 28, 2010, in Mumbai, India. The widow, Sarjij Kaur Rai, together with her sons, Jasbir and Iqbal, have objected to the Will, saying the patriarch could have been coerced in crafting the document that distributed his assets among his eight beneficiaries.
Mumias sugar was in September 2019 placed under receivership by KCB Group to protect its assets and maintain its operations.
Its shares were then suspended from the Nairobi bourse, and the leasing deal will be keenly watched by shareholders, including the State with a 20 per cent stake, and creditors who are owed more than Sh11 billion.