Enhancing Compl...

By Sheela Tumaini

The sugar industry relies on collaborative efforts among farmers, sugar factories or mills, farmer associations, unions, and cooperatives, which, together with the Kenya Sugar Board (KSB) as the industry regulator, form the core of its quality, efficiency, and overall functionality. The KSB, through its Regulations and Compliance (R&C) department, ensures nationwide adherence to laws, regulations and standards by developing and enforcing industry regulations, issuing licenses, registering industry players and conducting compliance audits and inspections. As the KSB and the government aim to restore the sugar industry, strengthening compliance to regulations and industry laws in the sector is essential.

Current Regulation Challenges

According to the 2023 Policy on Revitalization of the Sugar Industry by the State Department for Crop Development, some of the regulatory challenges highlighted include:

1. Inadequate human resources to monitor and conduct regular inspections in the sugar industry chain from planting to milling to distribution in the market.
2. There is a fragmentation in coordination among different government agencies, such as NEMA, KEBS, KRA and the OSH department, which are supposed to work together to ensure regulatory compliance alongside the industry regulator. This has led to issues like violations of labor rights through poor working conditions, delayed or insufficient payments and lack of proper protective gear.
3. The organization and management of outgrower institutions suffer from poor governance, which results in inadequate handling of farmer issues,  hampering the dissemination of industry regulations. Additionally, the absence of an apex body to supervise these institutions contributes to subpar industry performance.
4. Contractors typically work independently without a governing organization or formal associations, making it difficult to establish a structured regulatory framework.
5. The industry shows a lack of overall integrity in cane harvesting and transportation, cane weighing at the weighbridge, honoring contracts and prompt payment, which raises compliance issues and impacts the performance of the sugar industry.

Additionally, the lack of strict penalties for non-compliance leads some industry players to ignore regulations without facing serious consequences that enforce compliance.

Lessons from Global Players

1. South Africa’s sugar industry regularly conducts training sessions with farmers and millers to educate them on best practices in farming, contract awareness, and environmental laws, which improves compliance.
2. The Brazilian sugar industry works with farmer cooperatives and mills to develop industry policies, which improves compliance because there is a better understanding of the policies, which can then be easily communicated to farmers.
3. India utilizes applications and digitally traceable systems that ensure real-time monitoring of industry compliance at various institutional levels, such as the farm and mill. Additionally, some platforms facilitate whistleblowing in cases of non-compliance.
4. In Australia, strict regulations are in place regarding labor and environmental non-compliance, supported by hefty fines and greater pressure for compliance through naming and shaming.
5. The European Union usually conducts regular and surprise audits, a practice that keeps industry players constantly vigilant about staying compliant.

How KSB Can Enforce and Aid Stakeholders Towards Compliance

Alluding to relevant clauses in the Sugar (General) Regulations, 2025, in addition to consideration of aforementioned lessons from global players, KSB can enforce compliance while supporting stakeholders by:

1. Formalizing contacts between millers and farmers by increasing transparency with monitored smart contracts. This will improve traceability, reduce breaches of agreements, and prevent cane poaching by mills. Inter-miller agreements should be made with field agents present to ensure transparency and efficiency in the case of mill interruptions.
2. KSB can promote the empowerment and development of standardized and more organized out-grower institutions through policy formulations that ensure uniformity in structure. This will help them not only effectively represent farmers’ interests but also ensure compliance.
3. The proposal to appoint KSB inspectors will be helpful in conducting inspections and audits at sugarcane facilities such as mills, nurseries, farms, and sugar warehouses to ensure ongoing compliance.
4. When a non-compliance case is identified and reported, a non-compliance notice should be issued along with either corrective actions or license revocation, accompanied by steep penalties. The chosen route depends on the severity of the non-compliance.
5. KSB should gain more momentum in providing training and programs that educate various stakeholders on contract agreements, obligations, and general legal and regulatory requirements as per policy agreements.
6. Investing in digital monitoring systems also enhances compliance through transparency, as all stakeholders can access real-time data via platforms that track contracts and licensing agreements. Furthermore, these platforms can be tailored to provide public reports on compliance and support whistleblowing on violations to improve industry accountability.

The success and revival of the sugar industry to its former glory is contingent on the proactive enforcement of the sugar laws and regulations that govern the industry across the value chain. KSB, as a regulatory body of the sugar industry, can achieve this by ensuring it takes steps such as inclusion in policy-making, education and training on the requirements for industry players and ensuring a tighter hand on non-conformity, among other necessary steps. These adaptations will be paramount in ensuring greater sector efficiency, equity and sustainability; and a competitive edge in the global market.