longitudinal impact assessment study of sugar producers in malawi

7.2 The process of certification
KCGL interest in becoming Fairtrade (FLO) certified was registered in 2003. They
were given the standards to meet, and duly became certified as a Producer
Organisation in 2004. Initial certification was for a few months, but this was later
confirmed for a year. They are now certified for 3 years (through to 2012), but there is
still an annual audit by FLO-Cert which reviews their documentation, use of Fairtrade
Premium, minutes of General Assemblies, Premium Committee meetings,
communications with farmers, relationship between farmers and management, and
environmental issues. The cost of the FLO audit is €1194 per year.
While the farmers are responsible for production, it is the Company that is
responsible for compliance with environmental standards – e.g. use and storage of
chemicals, forest management, soil management and waste water management.
Illovo conduct training on safe use of chemicals
Illovo sugar (Malawi) was FLO-certified as a processor/exporter of sugar in July
2009, but have always been the buyer for all KCGL’s sugar from the outset.
7.3 Production achievements and challenges
In 2008 total KCGL revenues from cane production and sale to Illovo was MK412
million (equivalent to US$2.9 million).
While these revenues are substantial, after deductions for operating costs (pumping
water, machinery, transport, ploughing and other field operations) and salaries for the
substantial labour force there is nothing left over for loan repayment on the whole
754 ha. Despite this, members are still paid a gross amount of MK12000 (US$84.50)
per month. This adds to the increasing overdraft owed by KCGL.
This is particularly significant as cane yields have been going down year on year (last
year partly due to the breakdown of irrigation pumps). The present yields (c90 tonnes
of cane per hectare) are insufficient to generate a profit. An average yield of 100 t/ha
is needed to break even. Illovo feel that the way to higher yields is through doing
things right in the field (weeding on time, fertiliser application, water application).
Cane quality is OK, but the Illovo management is confident that it should be possible
to raise yields from 90 – 105 t/ha, without substantially increasing overheads. The
pumps have now been repaired and husbandry improved, so that with luck this year
will see an improvement.
Despite these problems, economically sugar is the best crop the smallholders could
grow. Illovo feel that KCGL overheads (on managerial staff and labour) is not
excessive.
Farmers don’t hire much labour directly, but if they are behind on field activities,
KCGL management hire labour and deduct the cost from the farmer out of his
income. Field Irrigation, is done by labour hired by the management, rather than by
individual farmers. However, in 2006, the annual FLO inspection (Brinkschneider,
2006) noted the following numbers of male and female labour employed:
24