“With the 17 months of salaries in arrears, employees are in a deplorable financial situation. They can hardly afford to provide daily meals to their families and can no longer keep their children in school,” he said.
“The factory has to stop every time a breakdown occurs, thereby occasioning tremendous losses. Sugar recovery has become poor, pushing the cost of production above the roof,” he said.
The six-year average cost of sugar production since 2013/14 financial year is Sh106,396 per tonne compared to the average ex-factory net sugar price per tonne of Sh68,880 over the same period.
Over the last six years, he said the company has experienced declining sugarcane supply, depressing ex-factory sugar price and high cost of production
The company has had to suspend milling operations for periods of between 5 to 7 consecutive months each financial year since 2016/17 financial year.
“The unavoidable results are accumulating operating losses, inadequate cash for operations and accumulating liabilities,” Nyangweso said.
The nucleus estate cane area is 65 percent of the cane able area of 2,273 hectors because of reduced investment. Fields with crop return very low yields because of inadequate maintenance.
The last run of milling operations ground to a halt in March 2019 after farmers withdrew supply of cane to the factory citing accumulated arrears.
Nyangweso said to keep operations running, they plan to pay farmers, Employees, and suppliers for supplies and services rendered.
He wants a restriction on sugar importation to the country’s sugar deficit as well as hastening the privatisation process, and gazette the “sugar regulations” to salvage the deteriorating industry performance
He noted that the cash generated from operations has been lower than the company’s payment demands, basically because of Low sales volumes and Negative sales margins.“More often than not, the company only manages to pay Net salaries while statutory deductions delays or remain outstanding,” Nyangweso said.
