Farmers may be losing millions in potential earnings as millers continue to base payments on weight instead of sucrose content.
An audit has revealed that the cane testing units installed in 11 sugar companies four years ago have yet to be put into operation. It was found that no miller has fully integrated the cane testing units into their processes.
The government rolled out the quality-based cane payment system to protect farmers from exploitation. A company was contracted to provide support and maintenance for the 11 cane testing units and to upgrade two pilot units at Sony and Nzoia Sugar, with a contract signed in 2020 for Sh1.4 billion—funds whose value is now questionable as the system remains unused.
Auditor General Nancy Gathungu noted several anomalies during an inspection in September 2023, attributing the lack of implementation to the failure to enact necessary regulations. “The operationalization of the cane testing units by sugar companies has been hindered by the absence of these regulations,” Gathungu stated.
Managers at the Agricultural and Food Authority (AFA) informed auditors that regulations under The Crops Act, 2013, were developed to enable the system’s operationalization. Proposed regulations were approved by a team of experts tasked with drafting them.
The auditors also found that although a laboratory information system is functional, it has not been integrated with the weighbridges. Ideally, this system should connect to the sampling points, payment systems, and data collection methods. Additionally, card readers are needed to capture farmers’ details at the respective factories, and the millers’ enterprise resource planning systems should be integrated with the cane testing units—something that has not occurred.
Gathungu warned that delays in operationalizing the cane testing units could lead to cost overruns and undermine the project’s intended goals. The weighbridges should align with the cane testing units, but the report indicated that this alignment is lacking in West Sugar and Sukari Sugar Companies, complicating the process of ensuring that each truck passes through both systems.
The government has claimed that the testing units are operational as part of its efforts to enhance returns for cane farmers.
The report also highlighted that AFA’s parcels of land are at risk of encroachment, with 13 parcels valued at over Sh5 billion lacking title deeds. “These parcels show no evidence of ownership due to missing documents,” she explained.
One depot in Machakos was reportedly taken over by the county without any lease agreement with the Horticultural Crops Development Authority, making it inaccessible to Authority staff. Additionally, a 3.5-hectare plot on Mombasa Road was allocated to a private developer despite the authority holding an allotment letter.
A parcel of land at JKIA, valued at Sh588 million, was also flagged for not having ownership details available for audit review.
Gathungu further questioned the omission of certain assets from financial statements, including 10 acres in Wundanyi, Taita Taveta county, and land in Kitui worth Sh36.6 million allocated to HCDA, which were not included. Assets belonging to the defunct Cotton Board and a property in Riverside Estate where the Cotton Development Authority was located were similarly not disclosed.
Additionally, Sh52.2 million held at Euro Bank is now in doubt following the bank’s placement under receivership. “Payments are contingent on fund availability, so this amount remains inaccessible to the authority,” Gathungu noted.
