Sugar Company Faces Sh972m Farmers Claim

Farmers and former employees have filed a Sh972 million lawsuit against Transmara Sugar Company for alleged breach of contract and unfair retrenchment.

Details of the legal disputes have been revealed by Mauritian conglomerate IBL Group, which owns a stake in the Western Kenya sugar company.

“There are several legal cases against Transmara Sugar Company Ltd relating to disputes and breach of out growers’ contracts and termination of employment with total exposure amounting to 343 million Mauritian rupees (Sh972 million),” IBL said in its latest annual report.

“A provision amounting to 7.8 million Mauritian rupees (Sh22.1 million) was recorded in the year [ended June 2022] for the cases that management assessed the probability of losing as possible.

The multinational organization noted that as Transmara Sugar’s management does not expect to receive payments for the remaining debt, no preparation was made.

The majority of the disagreements with farmers’ center on who is responsible for harvesting and transporting sugarcane to the factory.

According to court records obtained by Business Daily, some farmers have been awarded hundreds of thousands of shillings.

Transmara Sugar, on the other hand, believes that the majority of the applications are invalid. Previously, the company stated that it had been inundated with hundreds of cases brought to court by unscrupulous lawyers.

Transmara Sugar claims that the sugarcane it crushes comes from approximately 18,000 farmers within a 30-kilometer radius of the factory.

The business is one of the millers profiting from increased sugar production and rising sugar prices.

According to official statistics, millers operating in the nation produced 587,697 tonnes in total in the nine months leading up to September 2022, an increase of 11% from the 528,391 tonnes seen in the same period a year earlier.

“Sugar prices have been soaring due to inflation in Kenya’s economy and supply crunch in the industry.

In the period under review (January to September), the average wholesale price of a 50-Kg bag increased by 25 percent from Sh4,736 in 2021 to Sh5,957 in 2022,” the Sugar Directorate said in a report.

“On the other hand, the average retail price of 1 kg increased by 22 percent from Sh110 in 2021 to Sh134 in 2022.”

Since then, the cost of the sweetener has crept up, with top retailers now charging more than Sh150 for 1kg of the product.

The ownership structure of Transmara will change.

IBL and CIEL Agro Limited, a second Mauritian conglomerate, have begun the process of taking direct control of Transmara Sugar from their subsidiary Alteo.

The two international corporations are transferring the sugar producing operations from Alteo to Miwa Sugar Limited, a new investment company.

The current share in Transmara Sugar is 69.2% after Alteo spent $8.2 million to acquire an additional 18.2% of the miller last year (Sh1 billion).