Kasinthula Cane Growers (KCG), Sugar Cane Co-operative, Malawi



 Introduction

Chikafa Kachingwe, Kasthinula by Anette Kay
Chikafa Kachingwe, Kasthinula © Anette Kay


The Kasinthula Cane Growers (KCG) smallholders’ project is located in the inhospitable Shire Valley region in the south of Malawi, one of the poorest countries in Southern Africa. Long droughts occasionally result in famine and the twice-yearly rains frequently bring floods. Most families eke out a living growing maize, cassava or rice on the arid land, while others earn cash from sugar cane or cotton or work on nearby sugar plantations. Poverty is rife with most people living in very basic mud huts and few able to afford to keep livestock.

Agriculture provides a livelihood for over 85% of the population, of which around 90% are smallholders. Sugar is the third biggest export earner after tobacco and tea. Development of the sugar sector is constrained by high input costs, poor rural infrastructure, inadequate health facilities, lack of agricultural support services, and lack of appropriate technology.


Background



KCG was jointly set up in 1996 by the state-run Sugar Corporation and a sugar mill later taken over by Illovo Sugar (Malawi) Ltd, part of Illovo Sugar, a South African-owned leading global sugar producer which dominates production in Malawi.

The project involved converting an area of largely uneconomic land to sugar cane production in order to increase the supply of raw cane to the mill and at the same time provide an income for the subsistence farmers who were barely able to grow enough food to eat. The project extends to around 1,200 hectares of land leased from the government, with individual plots of 2.5 to 3 hectares.

From the start, the project was threatened by enormous and escalating debts. The mill had taken out a considerable loan from foreign creditors to finance the installation of an irrigation system and prepare the land for cane production. But the amount owed was multiplied several times over when the local currency was dramatically devalued against the US dollar and interest rates rocketed to more than 40%.
 

It then transpired that KCG and its 282 members were liable for the debt as owners of the land. Through no fault of their own the co-operative was suddenly thrown into serious financial difficulties. Proceeds from the first harvest didn’t even cover interest repayments let alone reduce the capital amount. But with key issues now clarified, good management in place and support from the government, KCG has started to make headway in paying back some of the debt. Although still a long way from turning a profit or breaking even, the farmers can afford to pay themselves a living wage.


KCG and Fairtrade



But the future is looking much brighter. KCG was Fairtrade certified in 2002 and is now supplying sugar on Fairtrade terms to a growing number of companies in the UK, Europe and the US.

The sugar cane is cut by hand and delivered to the Illovo mill approximately 25km away. On top of the negotiated contract price for the sugar cane, Fairtrade sales attract an additional Fairtrade premium of $60 a tonne which is ring-fenced for much-needed community development projects. Members agreed that the first priority was to increase access to clean water and future plans include building a secondary school and health clinic.

Having invested hope and a huge amount of hard work, the farmers have fought hard to get where they are today and it is clear they will stay the course. Given the chance, they will fulfil their ambition to work their way out of poverty. And their children will go to school and have better opportunities in the future.

Around 30% of KCG’s production is now sold to Fairtrade buyers. They include companies from Belgium, Germany, Norway and the US as well as Billington’s, the Co-op, Equal Exchange, Napier Brown, Nirvana Sugars, Traidcraft and Whitworths in the UK.

KCG’s sugar is available in brown and white sugar packs and catering sticks, as well as in biscuits, cakes, drinking chocolate, sweets and even spiced drinks such as mulled wine. With the launch of Fairtrade cosmetics, the sugar is also available in body scrubs and face masks.


Use of the Fairtrade Premium



KCG members met for discussions and agreed to use the Fairtrade Premium as follows:

  • 30% direct cash payment to farmers to help pay for necessities.
  • 30% for community projects (support to water and electricity supply, health centres, schools, roads etc)
  • 40% for initiatives to ensure the sustainability of the business (annual plough-out and replant, replacement of vital machinery etc).

The first priority for the farmers was to provide safe, clean water to the three villages that had to collect water from the Shire River, risking water-borne diseases and attack from crocodiles. Access to clean water is literally a lifesaver here.

The first borehole was dug in the village of Kapasule in March 2004. The 500-plus villagers no longer have to use the river or make the 2.5 km walk to Siseu village to collect clean water. The second borehole was dug in Chinangwa village in 2005 and 10 more were constructed in 2008.

An exciting water project is underway in Salumeji village to bring tap water to farmers’ homes. The Southern Regional Water Board has installed underground pipes and water will be flowing by the end of 2009.

The extra income from Fairtrade sales has allowed virtually all members to build new houses. Small mud huts with flimsy thatch roofs have been replaced by larger, sturdy houses with brick walls and tin roofs.

In 2005, the Lower Shire valley was badly affected by a severe drought that caused crops to fail. The premium fund was used to provide every farmer with two separate cash payments to buy food.

In 2006 a donation was made to the Kasinthula Bilharzia Clinic for the purchase of anti-bilharzia drugs after the government repeatedly failed to provide them. Around 70% of local people are affected by bilharzia, a chronic parasitic disease that is second only to malaria in terms of its destructive social and economic impact. The clinic is now being extended into a full healthcare clinic and is due for completion in 2010, along with a house being built for a resident clinical officer.

Four bicycle ambulances have been purchased and allocated to a village. The bikes are adapted to pull specially designed trailers as a cheap and simple way of transporting people for medical treatment.

Significant amounts of premium money have been used to support a government electrification project to make electricity available for the first time in villages where members live. Pylons and transformers have been brought in and 82 houses in Chinangwa village have already been connected. Villagers can now work at home or conduct business more easily in the evenings and no longer struggle to see and read in the dark, particularly helpful for children with their homework.
 

A low-interest loans scheme has helped farmers get connected to the power supply. While the main infrastructure is provided at no cost, each household is responsible for installing wiring and fitting sockets that meet government standards. The scheme will eventually be extended to 532 households in villages where members live.

A 3.5 tonne truck has been purchased to transport crops and farm machinery. It also doubles up as transport for funerals, meetings and social events.


While KCG still faces huge challenges, its partnership with Fairtrade is bringing tangible benefits to the community. Its members are looking to the future with optimism and are considering plans to extend membership by 50% in 2009.


Fairtrade Foundation April 2009



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