Kenya : Sh1.3 billion testing units ignored as sugar firms ‘rob’ farmers
An audit revealed that 11 sugar companies have not operationalized cane testing units installed four years ago, undermining a quality-based payment system meant to protect farmers. The government allocated Sh1.4 billion for comprehensive support, but regulations for usage remain unpassed. Integration issues persist between systems, risking cost overruns. The report also highlights land ownership disputes and financial discrepancies involving the Horticultural Crops Development Authority.
Farmers could be losing millions in earnings as millers continue to use weight as a measure for payment other than sucrose content.
An audit has revealed that the units installed in the 11 sugar companies four years ago were yet to be operationalised.
It emerged that no miller had fully adopted the cane testing unit in its operations.
The quality-based cane payment system was rolled out by the government to protect farmers from exploitation.
A firm was hired to provide comprehensive support and maintenance of 11 cane testing units and upgrade two others which were piloted at Sony and Nzoia Sugar.
The contract was signed in 2020 at a sum of Sh1.4 billion, money whose value is in doubt as the system is yet to be put to use.
Auditor General Nancy Gathungu said anomalies were noted during an inspection in September 2023.
The failure to enact regulations for adopting the testing units is also to blame.
“The operationalisation and adoption of the cane testing units by the sugar companies have remained impossible due to failure to enact these regulations to law,” Gathungu said.
AFA managers told auditors that the authority developed regulations – The Crops Act, 2013 – that will enable the operationalisation of the system.
The proposed regulations were approved by a team of experts who were charged with drawing the same.
Auditors also established that though there is a functioning laboratory information system, it was not integrated with the weighbridges.
The laboratory system should be integrated into the sampling point, payment and data collection systems.
There should also be card readers to pick farmers’ details in the respective factories.
The millers’ enterprise resource planning systems should also be integrated with the cane testing units, which was not the case.
“In the circumstances, delay in operationalisation of the cane testing units may result in cost overruns and the intended objective of the project may not be achieved,” Gathungu said.
Ideally, the weighbridges should be aligned to the cane testing units.
This was not the case, as per the report by the auditor general for the financial year ending June 30, 2023.
“In West Sugar and Sukari Sugar Companies, weighbridges were not aligned to the cane testing units making it difficult to ensure every truck goes through both the cane testing units and the weighbridge,” Gathungu said.
The government however said the testing units are in operation as part of efforts to boost cane farmer’s returns.
AFA’s parcels of land are also exposed to grabbers, the report reveals.
Some 13 parcels valued at over Sh5 billion had no title deeds.
“The parcels had no evidence of ownership vesting with the Authority due to lack of ownership documents,” she said.
A depot located in Machakos was reportedly taken over by the county without any lease agreement with the Horticultural Crops Development Authority.
The depot is no longer accessible to the Authority staff and no evidence was provided that the county government signed a lease agreement with the HCDA.
A plot belonging to HCDA situated along Mombasa Road measuring 3.5 hectares was also allocated to a private developer despite the authority having an allotment letter.
Also flagged is a parcel of land at JKIA valued at Sh588 million, where the horticultural crops directorate is located, whose ownership details were not provided for audit review.
Gathungu has also queried why some assets were not included in the financial statements, including some 10 acres of land situated in Wundanyi, Taita Taveta county.
Land of undetermined acreage situated in Kitui valued at Sh36.6 million allocated to the HCDA was also not included.
An asset belonging to the defunct Cotton Board was not disclosed, as well as a property in Riverside Estate where the Cotton Development Authority office was located.
Some Sh52.2 million held at Euro Bank is also in doubt after the bank was placed under receivership.
“Payments are pegged on the availability of funds thus the amount is still not accessible to the authority,” Gathungu said.
Source Link : https://www.the-star.co.ke/news/2024-09-21-sh13-billion-testing-units-ignored-as-sugar-firms-rob-farmers/
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