longitudinal impact assessment study of sugar producers in malawi

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local smallholder production that they purchase, they produce around 270,000 tonnes of sugar per year (5% of production at Nchalo is from bought-in Kasinthula smallholder production). Kasinthula Cane Growers Limited produced 69,831 tonnes of sugar cane in 2009 from 754 hectares of land. KCGL has 282 farming families and 460 permanent workers. All of that production is purchased by Illovo and processed at its Nchalo factory. There are around 50 buyers of the sugar produced, with 28% going to Europe, 67% used for the domestic market and speciality sugars being sold to Europe and the USA. The socio-economic situation The main crops grown in the Kasinthula area are rice, cotton, maize (the main food security crop), sorghum, millet and sesame. The average land holding in the area is 1 ha of mostly rainfed land (compared to 2.5 or 3 ha of irrigated cane land allocated to KCGL members). Cotton is the main cash crop for the majority of farmers in the area who are not members of KCGL. However, sugarcane is the main source of income for KCGL members. This secure and significant income is supplemented by the sale of crop and livestock products. There is also reduced household expenditure on bought-in food because members have access to irrigated land to grow their crop staples. The area experiences poor rainfall and anecdotal evidence from farmers suggests that this is getting worse over time. Soil fertility is also declining partly due to heavy deforestation. The farmers and labourers for KCGL are drawn from 13 villages around Kasinthula, which is itself situated at some 25 km from the Illovo Nchalo sugar factory. There are 5 primary schools and 3 Secondary Schools in the area. There is only one clinic in the area (TA Katunga) dealing mainly with bilharzia, the under-fives and cholera cases. Food security is generally poor among non-KCGL families in this area; about 85 percent of households run out of food by December. In contrast most KCGL members have enough food all year round due to relatively high incomes from sugarcane and producing more than one crop of maize in a year under irrigation on the 30ha of KCGL land not allocated to sugar which is available to members. Findings and conclusions The positive impacts of Fairtrade since certification in 2004 have been: • The amount of Fairtrade Premium has been increasing year on year and substantial sums of money have been well managed • Individual KCGL members have benefitted from the 40% farmers livelihoods component of the Fairtrade Premium. This has assisted significant diversification of incomes into small businesses, cattle ownership and crop cultivation • Individual producers and labourers are benefitting from separate revolving funds that enable them to access credit • KCGL as a whole is benefitting from the 30% of Fairtrade Premium allocated to ploughout and renewal of cane fields that should lead to improved yields and therefore improved profitability • Communities, including non-members, are benefitting from the 30% community development and environmental uses of Fairtrade Premium • Company and Trust officials have received numerous trainings and attended Fairtrade events outside the country • There are functioning democratic structures in place (Committees, General Assemblies and the start of a Workers Union) 4
• Food security for producer households is good and living conditions (housing, services, household durables) are improving due to the good levels of income and use of Fairtrade Premium A negative impact that could be attributable to Fairtrade is that the high proportion (40%) of Fairtrade Premium going directly to members as an in-kind contribution to their livelihoods creates dependency. It is hoped that as the Company becomes more profitable, this will be replaced by Company dividends. A number of concerns that are not attributable to Fairtrade, but affect the mediumterm prospects of KCGL are: • A combination of management failures and free-riding by farmers has led to the situation where field husbandry declined in previous years leading to low yields and consequent low profits. Yields need to be brought up from the present 94t/ha to over 100t/ha. This is being tackled vigorously by new KCGL Management and staff. However, mechanisms to overcome the freeriding of farmers (who get an equal share of advances and Fairtrade Premium) are still to be instituted; • The large debts borne by KCGL have created a situation where it is impossible for the company to make a profit. Revenues from cane sold to Illovo do not cover the repayments. In order to become a profitable company, yields of cane need to rise towards those attained on the Illovo plantation (through ploughout, better weeding, better irrigation and use of fertiliser), labour use needs to be further reduced (by farmers taking greater responsibility for field operations), dis-incentives need to be removed that lead to free-riding farmers (at present all farmers receive the same advance and in-kind payments), the area under cane needs to be expanded to benefit from economies of scale (this is being addressed through Phase III), and the debt situation needs to be reduced as far as possible (through pressure on Illovo); • The number of labourers employed on a permanent basis is cause for concern. Although the situation has improved, the ratio was still 460 labourers to 282 farmers in March 2010. These permanent labourers do not receive a fair share of the benefits of Fairtrade. A disproportionate share goes to the 282 farmers. • There are only 282 farming households in the KCGL at present, out of the catchment area of 13 villages. This has inevitably led to inequality of incomes and food security between those in and those outside the KCGL member families. This is only partly mitigated by community development projects under the Fairtrade Premium. The omens that bode well for the future of KCGL are that: • The EU project is developing a KCGL Phase III, and putting significant amounts into capacity development for farmers and the Boards and Committees that run KCGL • The situation of the labourers engaged on KCGL activities seems to be improving, with a realisation that they should get a larger share of the benefits (from the sale of sugar and from the Fairtrade Premium) • Relations between KCGL and Illovo Sugar (Malawi) are in general good, with healthy interdependence and cooperation • Relations between farmers and KCGL management are also improving after a difficult period 5
Page 1 and 2: LONGITUDINAL IMPACT ASSESSMENT STUD
Page 3: Executive Summary The study This st
Page 7 and 8: Contents 1. Introduction Page 8 2.
Page 9 and 10: 3. Methodology This study is a long
Page 11 and 12: 4.2 The sugar situation in Malawi A
Page 13 and 14: Malawi exported sugar during the ye
Page 15 and 16: 6. Support to KCGL from TWIN/TWIN T
Page 17 and 18: 7. Findings of the study 7.1 The pr
Page 19 and 20: There are now plans for a Phase III
Page 21 and 22: The limiting factors to the success
Page 23 and 24: Cane transport Concern Universal En
Page 25 and 26: Table 7.1 Labour employment by KCGL
Page 27 and 28: Major economic and social benefits
Page 29 and 30: demands have come from villages out
Page 31 and 32: KCGL employees do not feel that the
Page 33 and 34: 1998 MK400 fortnightly (MK800 per m
Page 35 and 36: He plans to build a house of his ow
Page 37 and 38: A grocery shop at Dyeratu Trading c
Page 39 and 40: The relationship with the KCGL Boar
Page 41 and 42: The disciplinary committee oversees
Page 43 and 44: Frequent ploughing out and replanti
Page 45 and 46: 8.5 Changes in local, regional and
Page 47 and 48: 9. Improving impact 9.1 Producer st
Page 49 and 50: and their solutions in order to imp
Page 51 and 52: Number of families receiving money
Page 53: to 282 farmers in March 2010. These

longitudinal impact assessment study of sugar producers in malawi

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