Posted on July, 15, 2019 at 09:47 am
By Reuben Mwambingu
Commodities Fund is bearing the brunt of the acts committed by its predecessors as it is unable to recover Sh15 billion provided as credit and advances to sugar and coffee farmers.
The Fund is the successor of Coffee Development Fund and Sugar Development Fund (which was part of Kenya Sugar Board).The loans were given to farmers by the two institutions that ceased to be, following coming into effect of Crops Act 2013 on August 1, 2014.
Set up in 2014, the Commodities Fund is mandated to provide financial assistance to farming of all scheduled crops under the Agriculture Fisheries and Food Authorities Act of 2014.
Approach farmers
Commodities Fund Chief Executive Officer Nancy Cheruiyot said the institution has found it challenging to approach farmers to recover the owed money since majority are not familiar with it. “Some of the farmers are very cheeky and cunning, in fact, when we follow them they say they don’t know us,” she said.
Speaking on the sidelines of the just-ended Intergovernmental Agriculture Forum in Mombasa, Cheruiyot observed that the poor performance of the sugar sector which has been the major beneficiary of credits from the pre-existing funds has resulted in huge amount of uncollectible funds – debts that have virtually no chance of being paid.
“As a result of actions by pre-existing funds such as Sugar Development Fund, we have a huge amount which is uncollected because of the performance of the sugar sector at the moment,” she added. Cheruiyot said attempts to recover outstanding debts have been frustrated given that most of the government-owned sugar millers are down at the moment yet they are the ones that benefited most.
“Ninety per cent of the funding to the sugar sector was channelled to the State-owned mills,” she added. She said some of the sugar mills such as Mumias Sugar collapsed with over Sh12 billion, adding that the government has to look at a way of salvaging the funds.
As at December 31, 2018, five millers namely; Mumias Sugar Company, Nzoia Sugar Company, South Nyanza Sugar Company, Muhoroni Sugar Company and Chemelil Sugar Company reportedly owe the Kenya Revenue Authority a total of Sh17.1 billion.
Unpaid arrears
Besides, the millers were chocking with unpaid arrears to farmers, including a Sh2.6 billion debt they were meant to repay before last Christmas.
The millers also owe suppliers and employees hundreds of millions of shillings, making their mountain of debt virtually an insurmountable obstacle on the road to recovery.
Cheruiyot disclosed that the fund has been unable to support other scheduled crops under the AFFA Act of 2013 besides coffee and sugar given the lean budget it operates with.
She said the last time the institution received funds from Treasury was in 2013, adding that Sh50 billion will be required for the Fund to support all scheduled crops under AFFA Act.
Priver Toywa, a former Agronomist at Mumias Sugar Company said the overall performance of the sugar industry has been on the decline, adding that 2017 was its lowest point in the last two decades. He said total cane milled decreased to 4,640,771 tonnes in 2017 from 7,411,303 tonnes in the previous year.
Source: MediaMax Network