KENYA: SONY changes strategy to stay afloat during shortage
Published: 09/13/2017, 10:59:23 AM
Until February this year, Sony Sugar Company used to crush KES6 billion (US$58.3 million) to KES7 billion worth of cane a year, according to Kenya's Daily Nation newspaper.
Then a raw material shortage emerged, hitting the region where it previously enjoyed a monopoly.
"The prevailing circumstances have forced us to move out of our ivory tower in order to meet the high expectations of the over 15,000 farmers in the region," Sony Acting Managing Director Bernard Otieno said.
He said they had opted to operate more from the field to maintain an edge over the two privately owned firms, Sukari Industries Ltd and Transmara Sugar Company, which are new entrants.
"Sony is now losing over KES500 million due to cane poaching that has been experienced over the last few years," Otieno said.
Sony Sugar now dispatches senior managers every week to the field to maintain close contacts, train and establish the problems facing their suppliers of raw materials as some of the comeback plans the company has adopted to stay afloat in the increasingly competitive market.
"We want to create our own unique niche so that farmers can trust us," he told the Nation.
Currently the firm, which is operating on an average of three to four days a week, is forced to accumulate enough cane before running the machines.
In the last four years, the company lost over KES500 million after their contracted farmers opted to sell their cane to the rival firms.
"The private firms target over 80% of the region's cane farming land, which is made up of small-scale farmers with less than six acres," Otieno said.
He accused the firms of taking advantage of the financial vulnerability of the farmers to woo them.
As a way of wooing farmers, Otieno said Sony Sugar has opted to reduce the payment cycle for farmers from the current one month to just a week.
Otieno, who is championing the establishment of a special tribunal by the Judiciary to preside over the numerous court cases between sugar companies, underlined the need for millers to act in accordance with the law.
To safeguard themselves from legal proceedings and processes, Sony is formalising an MoU with Transmara Sugar Company to ensure that they do not encroach on each other's space.