By Beatrice Awuor
The Kenya sugar industry is transitioning to the Quality Based Cane Payment System (QBCPS). This transition is intended to create a fairer, more transparent, and accountable structure to benefit all stakeholders, and to promote both quality and efficiency, which will eventually contribute to the long-term viability and sustainability of the industry. Farmers will be paid based on the actual quality of their harvest. The sucrose content will be incorporated into a formula to determine the price per tonne for each farmer, after which the price will be multiplied by the number of tonnes a farmer delivers. In contrast to a weight-based payment system, where farmers are paid a flat rate regardless of the quality of cane delivered, QBCPS provides a more equitable and sustainable approach for both farmers and millers. The shift is expected to increase productivity across the sugar industry, from the farm to the factory.
Before full implementation, QBCPS will be run in parallel with the traditional payment-by-weight. This modelling and simulation will considerably increase awareness and enable farmers to examine and compare the two outcomes. Running the two systems together will give farmers time to work towards improving their yields by upgrading husbandry practices or even changing the varieties of cane that they are planting. Farmers will also be fully sensitised to have information and knowledge, and it will be upon them to make the necessary adjustments.
Surprisingly, in Kenya, we are often resistant to change, even before an examination of its outcomes. Farmers should be cognisant of the fact that some millers started imposing the quality aspect on cane payment years ago. They have been deducting a certain percentage to cater for extraneous matter and young cane. Even though this practice is ongoing, there is no clear criterion that warrants a specific amount to be deducted for what quantity of extraneous matter or age. Farmers should also note that when quantity is prioritised over quality, the chances of inefficiencies along the production chain increase. This has been vividly witnessed in the industry and has significantly increased the cost of sugar production and reduced returns. The QBCPS is expected to abolish improper practices like premature and delayed harvesting, poor crop management, poor husbandry and variety selection, poor seed cane preparation, poor harvesting, postharvest wastages, factory inefficiencies, among others.
Here are the key reasons why farmers should embrace QBCPS:
1. Transparency and Accuracy in Measurement
QBCPS provides a transparent system for measuring the quality of sugarcane. Its draft regulations set out clear guidelines for calculating the price of cane, ensuring that farmers are paid based on the quality and quantity of the cane delivered. The system is completely automated and is uniform across the country. It is also expected that after the integration of all weighbridges with the Cane Testing Units (CTUs), there will be no interference from the mills. This has been a serious complaint by farmers. Most farmers have claimed that some of the weighbridges are always tampered with, reducing their resultant sugarcane weights. According to the regulations, the millers will not have any influence on quality determination and weighing of sugarcane.
2. Reduced Exploitation
The system aims to reduce exploitation by millers and ensure farmers are compensated fairly for their efforts. The QBCPS is a positive step towards addressing one of the most significant challenges faced by farmers in Kenya’s sugar industry: delayed payments. By setting clear timelines for payment and penalising delayed payments, this system will help to level the playing field between farmers and millers, reducing exploitation, enhancing collaborative and sustainable relationships, and eventually encouraging greater investment in the sugar sector. The government hopes that these regulations will not only protect farmers but also bring more accountability to millers, who have often been accused of exploiting their monopolistic power over cane farmers. The new rules provide hope for a more stable and predictable income stream, allowing farmers to reinvest in their farms and plan and manage their finances more effectively.
3. Introduction of GIS Contracting
Contract farming is being advanced through a central database and GIS mapping of sugarcane fields to facilitate smart and transparent contracting. This will create a more equitable relationship between farmers and millers. Farmers will now have a better understanding of how their payments are calculated. They will be able to track services offered by millers. Millers will be mandated to provide inputs and services to farmers at the right times to maximise their output. Proper contracting will suppress common issues like delayed permit issuance, corrupt harvesting agents, delayed transportation, extraneous matter penalties and delayed harvesting. This will ultimately eliminate brokerage, which farmers sometimes resort to due to the above unfair practices. Millers will now be compelled to give detailed payment statements to farmers, outlining any deductions made. This is intended to ensure that farmers have a clear understanding of how their payments are calculated.
4. Maximising Land Potential and Yields
When payment is tied to quality, it motivates better performance, leading to more positive results. QBCPS incentivises farmers to produce higher-quality sugarcane, which can lead to higher sugar recovery rates and better profits. The system encourages farmers to adopt better agricultural practices, such as using high-yielding varieties, proper fertilisation and pest and disease control, and timely harvesting, all of which contribute to higher sucrose content. It also motivates farmers to adopt sustainable farming practices that improve soil health, resulting in long-term yields and reduced environmental impact. By focusing on sugar content (sucrose), farmers are rewarded for growing and delivering high-quality cane.
5. Increased Earnings
High recovery and transparency in factory throughput: Higher quality cane with higher sucrose content and low impurities leads to better sugar recovery rates at the mill, which translates to higher payments for farmers, while ensuring the sugar industry remains sustainable. By improving cane quality, the entire sugar industry benefits from higher sugar recovery rates and increased efficiency. QBCPS is also going to enable the prediction of expected output, providing a fair share of the profits made. It has been noted that some millers do not share the actual data of their outputs.
Byproducts: QBCPS aims at sharing proceeds from sugarcane products among stakeholders through product diversification e.g. bio-ethanol, organic fertilisers, and cogeneration. The government is ensuring that farmers are fairly compensated for their hard work. This is essential for restoring confidence in the industry and motivating farmers to continue growing sugarcane. Some sugar industries outside Kenya aim at sharing the annual revenue results from the sale of sugar and all sugarcane by-products, such as molasses and bagasse, between farmers and millers. However, like most revenue-sharing agreements, there tends to be a contentious issue. To avoid such conflicts, QBCPS accounts for the farmers’ share of revenue from byproducts in the formula.
6. Reduced Waste
By focusing on quality, this system reduces waste and improves overall efficiency in the sugar production process. The penalties subjected to delayed harvesting and transportation, which usually facilitate losses, will stimulate efficiency. Incentivising the timely harvesting and delivery of high-quality cane will help minimise losses that occur due to deterioration during storage and transportation. Paying based on sucrose content will ensure that millers recover as much sucrose as possible, and hence increase their output, resulting in more profit for both millers and farmers.
Conclusion
Even though some farmers may have initial concerns about the implementation and enforcement of the Quality Based Cane Payment System, the long-term benefits for both farmers and the sugar industry are significant. Embracing this system will contribute to a more sustainable, transparent, and profitable future for the sugar industry. Payment based on quality is generally superior to weight-based payment. The weight-based method encourages quantity over quality, potentially compromising the final output. If implemented effectively, QBCPS could provide a more stable and sustainable future for Kenya’s sugar industry, benefiting all stakeholders in the sector.