Sugar millers will be penalised for delaying payments for sugar cane deliveries if Parliament adopts proposed changes to the law, in a bid to protect farmers.
Parliament last week approved changes to the Sugar Bill, 2019 that will require millers to pay farmers within a given period for cane delivered, failure to which they shall pay fines.
Lawmakers voted by acclamation to include the penalty in the Bill that was passed and now awaits presidential assent.
The changes are aimed at protecting farmers who have taken a huge hit from the struggles of the once-lucrative sector.
Cash-strapped sugar millers owe farmers billions of shillings in delayed payment, amid cash flow struggles that have seen the State opt to lease them in a bid to revive the industry.
“Clause 33 of the Bill be amended inserting the following new paragraph, maximum period within which farmers are to be paid for sugar crop delivered and penalties for delayed payments,” reads the changes.
Ailing factories like Mumias, Miwani, Chemelil, Nzoia, Muhoroni, and Sony owed farmers and lenders Sh38.5 billion as of last year and the State has since been pushing to write off the debts and pave the way for privatisation of the millers.
Besides delayed payments, farmers are paid based weight of the sugar cane delivered as opposed to the quality, a system that continues to deny them higher earnings from the cane.
Agriculture Cabinet Secretary Peter Munya in April directed Agriculture and Food Authority to ensure that the millers sign new deals with farmers, with a clause for the penalty to be charged for delayed payment.
The millers were to pay an interest of 1.5 percent of the value of the products delivered by farmers in case of delayed payment for their cane, as the government moves to protect growers through enforcement of new contracts.
The State is banking on the Sugar Bill, 2019 in addition to leasing of debt-hit public millers to revive the battered sugar industry.
The Bill will also divide the country’s sugar belt into three zones namely the Upper region, Lower region, and Coastal region and require sugar dealers to present proof of shortage in the domestic market before importing sugar.