The Sugar Amendment Bill

287

THE SUGAR (AMENDMENT) BILL, 2011

A Bill for

AN ACT of Parliament to amend the Sugar Act to review the composition and powers of the Kenya Sugar Board and for connected purposes.

ENACTED by the Parliament of Kenya, as follows—

1.  This Act may be cited as the Sugar (Amendment) Act, 2011.	Short title
2.  The Sugar Act, in this Act referred to as “the principal Act”, is amended by deleting section 5 and substituting therefor the following—	Amendment of section 5 of Act No. 10 of 2001

Composition of the Board	5. (1) The Board shall consist of— (a)   a chairperson elected by the members of the Board and appointed by the Minister from amongst the members appointed under paragraph (b); (b)   seven representatives who shall be elected by growers, approved by the National Assembly and appointed by the Minister; (c)    two representatives who shall be elected by millers, approved by the National Assembly and appointed by the Minister; (d)   three members who shall be nominated by the Minister following a competitive and transparent process, approved by the National Assembly and appointed by the Minister. (e)    the Permanent Secretary in the ministry for the time being responsible for agriculture or a person designated by the Permanent Secretary in writing; (f)     the Permanent Secretary in the ministry for the time being responsible for finance or a person designated by the Permanent Secretary in writing; and (g)   the Chief Executive Officer who shall be an ex officio member and the secretary to the Board.
	(2) The Board shall elect a vice-chairperson from amongst the members of the Board referred to in paragraph (b).
	(3) A person shall not be eligible for appointment under paragraphs (b), (c) and (d) of sub-section (1) if the person— (a)   has a debt, other than a performing loan, owing to the Board, a sugar company or an outgrower institution; (b)    is a State officer or a public officer; (c)     is an undischarged bankrupt; (d)    is of unsound mind; (e)    has, at any time, been convicted of an offence under this Act or of an offence involving moral turpitude; (f)      is, at the date of appointment, serving a term of imprisonment of six months or more; or (g)   does not hold a degree from a recognized university and does not possess knowledge and experience in— (i)    agriculture; (ii)               business management; (iii)             law; (iv)             finance; or (v)               marketing;
	(4) A member of the Board appointed under paragraphs (b), (c) and (d) of sub-section (1) shall hold office for a term of three years and shall be eligible for re-appointment for one further term.
	(5) The Minister shall make Regulations to govern the conduct of an election under paragraphs (b) and (d) of sub-section (1).
	(6) The Minister shall cause a draft of the Regulations proposed to be made in exercise of the power under sub-section (6) to be laid before the National Assembly for approval before gazettement.

3.  Section 6 of the principal Act is amended by inserting the following new paragraph immediately after paragraph (e)—	Amendment of section 6 of Act. No. 10 of 2001
(ee) regulate the prices of inputs supplied to farmers so long as the prices of the inputs shall not exceed the mean price of inputs supplied by state corporations;
4.  Section 10 of the principal Act is amended—	Amendment of section 10 of Act No. 10 of 2001
(a)   by deleting subsection (1) and substituting therefor the following— (1)       There shall be a Chief Executive Officer of the Board who shall, subject to the directions of the Board, be responsible for the day to day management of the Board. (1A) The Chief Executive Officer shall be— (a)       nominated by the Board following a competitive process; (b)       approved by the National Assembly; and (c)         appointed by the Minister.
(b)     in subsection (2) by deleting the words “in agriculture, economics or business administration” appearing immediately after the words “a university recognized in Kenya”; and
(c)    by deleting subsection (4).
5.  Section 16 of the principal Act is amended by inserting the following new subsections immediately after sub-section (5)—	Amendment of section 16 of Act. No. 10 of 2001
(5A) A miller shall not own or operate a weighbridge for use in determination of the weight of cane under this Act but is entitled to be represented at a weighing exercise in which the miller has an interest.
6.  Section 19 of the principal Act is amended by inserting the following new sub-sections immediately after subsection (2)— (3)               The Fund shall be applied to the following purposes— (a)       general administration expenses of the Board and the Tribunal which in each financial year shall not exceed three per cent of the monies in the Fund and the annual budget of which shall be approved by the Minister; (b)       development of infrastructure in sugar growing areas; (c)        conduct of research in matters relating to the sugar industry and dissemination of the research findings; (d)       advancing credit facilities to growers, millers, and refiners of sugar and its by-products; and (e)        any other purpose that would enhance the development and promotion of the sugar industry that may be approved by the Board.	Amendment of section 19 of Act No. 10 of 2001
(4)       The Minister shall, in consultation with the Board, make Regulations to govern the administration of the Fund, including the proportion of funds to be applied to each purpose under sub-section (3).
(5)       The Minister shall cause a draft of the Regulations proposed to be made in exercise of the power under sub-section (4) to be laid before the National Assembly for approval before gazettement.
7.  The principal Act is amended by inserting the following new section immediately after section 26—	Insertion of new section 26A in Act. No. 10 of 2001

Entry and inspection

26A. (1) A person duly authorized in writing by the Board may, upon production of such authority, enter any land or buildings occupied by a grower, miller, outgrower or importer of sugar and make such inspection and enquiries as may be necessary to ascertain whether the provisions of this Act or Regulations made thereunder are being complied with. (2) A person who hinders or obstructs a person exercising any of the powers conferred under sub-section (1) or who fails to give any evidence required under sub-section (1) commits an offence.

                              

8.  The principal Act is amended by inserting the following new sections immediately after section 28—

Insertion of new section 28A in Act. No. 10 of 2001.

Payment to growers	28A. (1) The formula to be used in determining the payment due to growers by millers shall be determined by the Minister in consultation with the Board and with the approval of the National and shall be based on— (a)   the weight of the sugarcane; (b)   the sucrose content of the sugarcane; and (c)    the value of the by-products obtained from the sugarcane.
	(2) In determining the formula under sub-section (1), the Minister shall take into account all recognized parameters and international trends.
	(3) The payment due under sub-section (1) shall be made within fourteen days of delivery of the cane.
	(4) Where the payment is made after the period specified in sub-section (3), the payment shall attract interest at the rate of twelve per cent per annum.
Transport of cane to the weighbridge	28B. The mode of transport to be used in transporting cane to the weighbridge shall be determined by the grower.

9.  The principal Act is amended in paragraph (c) of section 29 (3) by inserting the words “subject to section 28A” immediately before the words “a formula for determining the price”.	Amendment of section 29 of Act No. 10 of 2001
10.  Section 31 of the principal Act is amended in sub-section (3) by deleting the word “five” appearing immediately after the words “a period not exceeding” and substituting therefor the word “three”.	Amendment of section 31 of Act No. 10 of 2001
11.  Section 33 of the principal Act is amended by inserting the following new paragraphs immediately after paragraph (c)— (d)       representation of a miller at a weighing exercise in which the miller has an interest; (e)        mechanisms to enable a grower to supply cane to a miller of the growers choice; (f)         the maximum value of inputs to be supplied to each grower.	Amendment of section 33 of Act No. 10 of 2001
12.  The principal Act is amended by inserting the following new section immediately after section 33.	Insertion of a new section 34 in Act. No. 10 of 2001

Transitional

34. On the commencement of this Act— (a)       a person who immediately before the coming into force of this Act was a member of the Board shall cease to hold office on the expiry of three months from the date of the coming into effect of this Act; (b)       a person who ceases to hold office by reason of paragraph (a) is, subject to section 5 of the Act, eligible for appointment as a member of the Board; (c)        the person who immediately before the coming into force of this Act was the Chief Executive Officer of the Board shall continue to hold office for three months and shall, on the expiry of the three months, be entitled to the benefits payable under the instrument of appointment; and (d)       the person who ceases to hold office by reason of paragraph (c) may, subject to section 10 of the Act, apply for appointment as the Chief Executive Officer of the Board.

MEMORANDUM OF OBJECTS AND REASONS

The Committee on Agriculture, Livestock and Cooperatives of the Kenya National Assembly, in pursuance of its mandate under the Standing Orders, embarked on a fact finding exercise to assess the impact of cane farming in Kenya’s sugar belts.  The Committee conducted public hearings in the sugar belts in Nyanza and Western Kenya between 6th and 13th of September, 2009 and in the sugar belts in the Coast region between 14th and 18th October, 2009.  In the end, the Committee in its report made several recommendations aimed at revamping the sugar industry.  Key among the recommendations was the proposal to review several sections of the Sugar Act, No. 10 of 2001.  The amendments proposed to the Sugar Act seek to review the composition of the Kenya Sugar Board in order to inject professionalism into the Board by the inclusion of members with knowledge and experience in agriculture, business management, law, finance or marketing.  The amendments further seek to specify the purposes to which the monies in the Sugar Development Fund shall be applied.  This will include the development of infrastructure in sugar growing areas as well as research and the dissemination of research findings.

The enactment of this Bill will go a long way in reforming the sugar industry and maximizing the benefits to be reaped by all stakeholders in the industry.

The enactment of this Bill shall not occasion additional expenditure of public funds.

Dated the 4th April, 2011.

JOHN M. N. MUTUTHO,

Member of Parliament.

Section 5 of Act No. 10 of 2001 which it is proposed to amend—

5.   Composition of the Board

(1)       The Board shall consist of—

(a)       a non-executive Chairman elected by the Board from among the representatives of growers representatives on the Board and appointed by the Minister;

(b)       seven representatives elected by growers and appointed by the Minister;

(c)        three representatives elected by millers and appointed by the Minister;

(d)       the Permanent Secretary in the Ministry for the time being responsible for matters relating to Agriculture;

(e)        the Permanent Secretary to the Treasury;

(f)         the Director of Agriculture; and

(g)       the Chief Executive of the Board appointed under section 10 who shall be an ex officio member and the secretary to the Board.

(2)       The Board shall elect a vice chairman from amongst its members.

(3)       A member of the Board other than an ex officio member shall hold office for a period of three years, on such terms and conditions as may be specified in the instrument of appointment but shall be eligible for reappointment or re-election, as the case may be.

Section 6 of Act No. 10 of 2001 which it is proposed to amend—

6.   Powers of the Board

The Board shall have all the powers necessary for the proper performance of its functions under this Act and in particular, but without prejudice to the generality of the foregoing, the Board shall have the power to—

(a)       impose a levy or levies upon growers and millers for the purposes of giving effect to the provisions of this Act;

(b)       control, supervise and administer the assets of the Board in such manner and for such purpose as best promotes the purpose for which the Board was established;

(c)        receive any grants, gifts, donations or endowments and make legitimate disbursements therefrom;

(d)       determine the provisions to be made for capital and recurrent expenditure and for the reserves of the Board;

(e)        lay down policy guidelines for the operations and management of all the funds collected by the Board;

(f)         access all such relevant information as may be necessary for the efficient administration of the industry;

(g)       enter into association with other bodies or organizations within or outside Kenya as the Board may consider desirable or appropriate and in furtherance of the purpose for which the Board is established;

(h)       open a banking account or banking accounts for the funds of the Board; and

(i)         invest any funds of the Board not immediately required for its purposes in the manner provided in section 22.

Section 10 of Act No. 10 of 2001 which it is proposed to amend—

10.   The Chief Executive Officer

(1)       There shall be a Chief Executive Officer of the Board who shall be appointed by the Board and whose terms and conditions of service shall be determined by the Board in the instrument of appointment or otherwise in writing from time to time.

(2)       No person shall be appointed under this section unless he holds a degree from a university recognized in Kenya in agriculture, economics or business administration and has at least five years experience in a managerial capacity.

(3)       The Chief Executive Officer shall be an ex officio member of the Board but shall have no right to vote at any meeting of the Board.

(4)       The Chief Executive Officer shall, subject to the directions of the Board, be responsible for the day to day management of the affairs of the Board.

Section 16 of Act No. 10 of 2001 which it is proposed to amend—

16.   Registration of millers

(5)       No person shall conduct the business of a miller unless he is registered as such by the Board and no such business shall be conducted at any premises other than the premises specified in the register.

(6)       A person who contravenes any of the provisions of subsection (1) commits an offence.

(7)       The Board shall issue to every miller registered under this section, a certificate of registration specifying the premises at which milling may be carried on by the miller.

(8)       No fee shall be charged in respect of any registration or certification of registration made or issued under this section.

(9)       A miller may offer extension or other services to growers.

(10)   Every miller registered under this section shall conduct business in accordance with this Act and any Regulations made thereunder.

Section 19 of Act No. 10 of 2001 which it is proposed to amend—

19. Sugar Development Fund

(1)       There shall be established a Fund to be known as the Sugar Development Fund which shall be administered by the Board.

(2)       The Fund shall consist of-

(a)       the Sugar Development levy;

(b)       any funds provided by bilateral or multilateral donors for the purposes of the Fund;

(c)        any moneys provided by Parliament for the purposes of the Fund;

(d)       moneys from any other source approved by the Board.

Section 29 of Act No. 10 of 2001 which it is proposed to amend—

29. Sugar industry agreements

(1)   There shall be, for the purposes of this Act, agreements to be known as the sugar industry agreements negotiated between growers and millers, growers and out-grower institutions, and millers and out-grower institutions.

(2)   The agreements referred to in subsection (1) shall conform to the guidelines set out in the Second Schedule.

(3)   Without prejudice to the generality of subsection (2), the matters to be provided for in the agreements shall include—

(a)       the designation of any agricultural crop from which it is possible to manufacture sugar which is subject to the agreement;

(b)       a sugarcane farming contract providing for the terms and conditions of the production of sugarcane and sugar and prescribing the rights and obligations of growers and millers;

(c)        a formula for determining the price to be paid by millers to growers for sugarcane or any other designated agricultural produce, which may include  any factor related to the sale or other disposal of sugar industry products;

(d)       the functions to be executed by the Board in the execution of the agreement;

(e)        the granting of powers to the Board to impose penalties prescribed in the agreement for the contravention of, or failure to comply with any term of the agreement; and

(f)         the imposition of levies upon growers and millers for the purpose of enabling the Board to fulfil any obligation incurred by it in accordance with its constitution.

Section 31 of Act No. 10 of 2001 which it is proposed to amend—

31.   Establishment and constitution of the Tribunal

(1)       There is established a tribunal to be known as the Sugar Arbitration Tribunal for the purpose of arbitrating disputes arising between any parties under this Act.

(2)       The Tribunal shall consist of—

(a)       a chairman who shall be a person qualified for appointment as a judge of the High Court of Kenya; and

(b)       two other members, being persons with expert knowledge of matters likely to come before the Tribunal and who are not persons with a direct material interest in the sugar industry, all of who shall be appointed by the Minister in consultation with the Attorney-General.

(3)       The members of the Tribunal appointed under subsection (2) shall hold office for such period, not exceeding three years, on such terms and conditions as shall be specified in the instrument of appointment but shall be eligible for reappointment for one further tem of a period not exceeding five years.

(4)       The provisions set out in the Third Schedule shall have effect with respect to the meetings and procedure of the Tribunal.

(5)       Except as provided in the Third Schedule, the Tribunal shall regulate its own procedure.

Section 33 of Act No. 10 of 2001 which it is proposed to amend—

33.   Regulations

The Minister may, in consultation with the Board, make Regulations generally for the better carrying out of the provisions of this Act and without prejudice to the generality of the foregoing, such Regulations shall provide for—

(a)       the regulation and control of the production, manufacturing, marketing, importation or exportation of sugar and its by-products;

(b)       the forms of licences to be issued under this Act, and the form and manner of application therefor;

(c)        the fees which may be charged for any activity relating and incidental to the development, products, marketing and distribution of sugar and its by-products.

source: www.kenyalawreports.or.ke/.../bills/.../SugarAmendmentBill2011