Sugar cane farmers in Dwangwa, Nkhotakota are selling their crop directly to Salima-based Malawi Sugar Company, earning K21 000 per tonne disregarding the arrangement they have with registered grower associations.
This is despite 15 smallholder sugar cane growers—where farmers have been selling their cane—having signed supply agreements in 2015 with Illovo Sugar (Malawi) Limited to sell the crop to Illovo Dwangwa Factory, according to its public relations officer Ireen Phalula.
According to Tipate Sugar Cane Growers Limited director Makwinja Chipala, this means the farmers are not being deducted the cost of transport and inputs as Malawi Sugar Company, which is located about 150 kilometres from Dwangwa, is buying the crop right at their farms.
He said Illovo pays the contracted growers K178 542.26 per tonne of sugar produced, and individual farmers get their money after deducting the cost of farm inputs loans.
But Phalula said Illovo Malawi will be affected if the sugar cane that is bought was budgeted for in the current financial year.
She said: “Associations or companies could also struggle to pay back what they owe us through farm input loans. Inputs requested by associations for their growers have
already been ordered by Illovo Dwangwa Factory and should the cane be sent to Salima, we may not be able to give them inputs for next season.”
However, Salima Sugar Company Limited chairperson Shirieesh Betgiri in an interview on Wednesday disputed the claims, saying they are buying sugar cane from smallholder farmers they have legal agreements with.
“We are not forcing farmers to sell their sugar cane to us. We have legal agreements with farmers we are buying sugar cane from,” he said.
The company, which plans to commission its machine mid this month, has set aside K1.5 billion to buy sugar cane from Dwangwa since the cane they planted in Salima will be ready in three years
50 000 and 60 000 tonnes of sugar cane for the three months period they will operate this year.
Companies such as Tipate Sugar Cane Growers Limited contract smallholder farmers to grow sugar cane on their behalf.
Chipala agreed with Phalula that they will be negatively affected because once all the sugar cane that was grown on their behalf is sold to the new company, they will not have proceeds to pay back loans to Illovo Malawi and commercial banks where they got the loans.
He said: “We are about 15 companies contracted by Illovo Malawi to grow sugar cane on their behalf. We even get cuttings for planting and fertiliser from Dwangwa Sugar Corporation to give to our growers.
“Once we sell the matured crop, we pay our growers and pay back loans to Illovo Malawi. Now, if this new company gets our sugar cane, where are we going to get money to pay loans?”
On his part, Nkangazinja Cane Growers chairperson Bashir Umande Lambat confirmed in an interview that there have been misunderstandings when officials from Salima Sugar Company bought sugar canes from contracted growers.
The coming in of Salima Sugar Company, established under the Public Private Partnership (PPP) as part of the Green Bellt Initiative, is expected to heighten competition on the local sugar market and observers have said this could result in sugar prices on the market stabilising.