Bitter sugarification: sugar frontier and contract farming in Uganda

ABSTRACT

Contract farming schemes have recently been portrayed by global development agencies as an alternative to ‘land grabs’, promoting processes of inclusive development through the integration of smallholders within global agro-industrial production complexes. The paper takes issue with such argument, using the case-study of contract farming scheme at Kakira Sugar Works in Uganda as empirical terrain for this investigation. It argues that despite contract farming schemes at first sight appear not to generate dispossession or displacement, they lead to forms of expulsion and/or marginalization of poor smallholders from sugar agro-poles through social differentiation. It also maintains that rather than being the antithesis to land enclosures, contract farming represents one instance of global neoliberal agricultural restructuring, functional to the expansion of the sugar frontier at cheap costs. This process, which I term sugarification, involves the maximization of value extraction from farmers, its appropriation by agribusiness and finance capital, and a regime of production which devaluates labour (wage and family) and nature, while dramatically affecting existing livelihoods and landscapes.

KEYWORDS:

• Contract farming
• land enclosures
• sugarification
• sugar frontier
• dispossession from below

Introduction

Africa has been the epicenter of the global wave of large-scale land acquisitions (Moyo et al., 2012; White et al., 2012). Eastern Africa, in particular, has attracted the highest number of deals in the continent according to the Land Matrix portal (https://landmatrix.org). ‘Land grabs’ have attracted criticisms by critical agrarian scholars, civil society organizations and transnational agrarian movements who condemned the dispossessing and/or displacing effects on rural communities, and the transformation of existing modes of land use and livelihoods (Borras & Franco, 2012). These critiques, and the social conflicts which emerged around contested lands, have contributed to portray land acquisitions as forms of land enclosures, often involving human rights abuses, extra-judicial evictions, environmental devastations, and commons’ appropriations (Hall et al., 2015).

In such context, we witnessed a resurgence of interest, debates and policies about contract farming in Africa, and the suggestion, raised in unison by global development agencies, African government and corporate agribusiness, that it represents a less harmful and more inclusive development model than outright land acquisitions (Cotula & Leonard, 2010). According to its proponents, contract production schemes aim at fostering links between agribusiness and farmers, limiting transaction costs along global agricultural commodity chains and reducing rural poverty. Yet, whether large-scale agricultural investments generate inclusive development in the form of quality employment, sustained rural income, and diversified rural livelihoods, or result in increased dependence and impoverishment, remain contested (and open) questions (Little, 1994). According to Dubb et al. (2017) outgrower systems needs to be understood as manifestations of context specific political-economic relationships between corporate capital, national governments and a variety of local holders of capital, land and labour. Hall, Scoones and Tsikata have linked the success or failures of these investments to farming models and local conditions that underpin their unfolding, including land relations and labour regimes (2017).

Scholarly work pointed out the prevalence of sugarcane in contract farming schemes in Southern and Eastern Africa and the rapid spread of farming systems based upon the combination of large-scale nucleus estates managed by corporate agro-industrial companies plus outgrower schemes¹, composed of socially differentiated rural producers (Hall, 2012; Smalley, 2013). Despite Sub-Saharan Africa contributes only 5% to the current global sugarcane production, it has been estimated that in southern Africa alone six million ha are available and suitable for sugarcane cultivation, an amount significantly larger than 1.5 million ha cultivated across the African continent in 2012 (Watson and Puchase, 2012). More recent data estimate that in Southern Africa sugarcane production covers more than half a million hectares and total cane harvested in the region has grown 80 per cent over the past 20 years (Dubb et al., 2017, p. 2).

In Uganda the sugarcane industry has gained momentum pushed by the crop’s multiple end uses, expectations of growing prices, and rising global and regional consumption/demand. Fuelled by the credo in comparative advantages theory, rising foreign and national investments, large-scale estates and plantations, outgrower schemes and milling plants mushroomed, making sugarcane the second crop in terms of tons after banana plantain, the traditional foot staple in the country (www.faostats.org, accessed in June 2018). Over the last 10 years, the industry has been expanding production by nearly 20% per annum. The boom has been legitimized through narratives of ‘poverty eradication and prosperity for all Ugandans’ since ‘much of the cane supply for this expansion shall come from the out-grower farmers who are currently supplying about 50% of the total cane requirement of the major sugar factories’ (Ministry of Tourism, Trade and Industry, 2010, p. 1).

Theoretically grounded in agrarian political economy and political ecology, this paper delves further into this debate analysing the dynamics of agrarian production, surplus appropriation and capital accumulation resulting from contract farming schemes at Kakira Sugar Works Ltd, the largest (and oldest) producer of refined sugar in Uganda, as the empirical terrain of this investigation. Situated in the Jinja district in the Busoga sub-region, a global agricultural enclave transformed in a veritable sugar agro-pole with approximately 80% of farmland currently under sugarcane, this case-study represents an insightful entry point to revisit and reframe debates about land grabbing, social differentiation, rural dispossession and ecological degradation. It explores the political and economic drivers of contract farming and the socio-ecological implications from an historical perspective, asking who benefits and who loses, where livelihoods get secured for whom, what are the conditions of existence for those who cannot engage in commercial production, and what are the broader spatial and ecological implications.

In doing so, this research paper contributes to the widespread literature and debate in critical agrarian studies interested in ‘agrarian social classes and the political-economic forces that call them into existence or make them disappear, and that facilitate or impede their reproduction’ (Edelman & Wolford, 2017, p. 5). Despite contract farming schemes not involving prima facie the displacement of smallholders, I argue that they result in widening patterns of social differentiation and land concentration, through the expulsion of less-competitive farmers from agricultural enclaves. By contrast with self-celebratory interpretations of contract farming as alternative to land grabs, I understand it in continuity, rather than rupture, with large-scale land acquisitions, as they are both expression of the dynamics of neoliberal agrarian restructuring imposed by global corporate agro-industry over previously unreached spaces, rural households and natural resources. Drawing from Watts’ seminal work (1994), I interpret the re-emergence of contract farming as part and parcel of a wider strategy of corporate outsourcing in which industrial agriculture expands its control over farmers’ agricultural labour and produces at cheaper costs than those that would have incurred under direct production (1994). I argue that the spread of contract farming in Uganda must be seen as part and parcel of the advancement and consolidation of the ‘sugar commodity frontier’ (see Patel & Moore, 2017), a process which I term sugarification. This analytical notion is key to disentangle the political, economic and discursive processes that are advancing the sugar frontier in the country and understand why and how farmers get locked into adverse incorporation in outgrower schemes.

Fieldwork for this study was conducted in the rural community of Musoli in the Jinja district of Busoga during July–September 2015 and in August 2016 and 2017. Data and information were gathered through participant observation, semi-structured interviews with key informants such as company officials, outgrowers’ association leaders, and bank managers, with forty among small-, medium- and large-scale farmers, and with a group of women. Two focus groups were organized respectively with a group of smallholders and casual workers.

Land grabs, contract farming and the sugar frontier

The dispossessing and/or displacing effects of one-off mega-deals have been a key concern and focus of research for critical scholars and activists. A significant amount of scholarly work concentrated their analysis to una tantum large-scale land deals, which often culminated in outright forced evictions. The unintended effect of this research trajectory has been to detract attention from small-scale, everyday and long-term dynamics of land dispossession, for the epiphenomenal focus of much of the scholarship on land grabbing limited the analysis of the social structures of accumulation and dispossession already at work. An alternative trajectory to the primitive accumulation mode of agrarian transformation is represented by a bifurcated agrarian structure in which export-oriented corporate driven industrial agriculture sits side by side with a peasant subsector within a social configuration in which ‘production is undertaken by peasants, not for peasants’ under the logic of the market (Akram-Lodhi et al., 2009, p. 228). Contract farming has been framed as a vehicle of collaborative business models and a catalyst of inclusive development (FAO, 2013), finding increased political legitimization among governments, donors and transnational corporations, as claims of inclusivity allow them to repeal allegations of land grabbing by advocacy and civil society groups (Martiniello, 2017, p. 12).

And yet critics have cautioned the widespread understanding that outgrower models are generally better than upright land acquisitions in terms of dispossession or livelihoods (Vicol, 2017). Studies of outgrower schemes based on sugarcane cultivation in Africa have questioned win-win assumptions showing a more complex set of dynamics, including: the creation of new dependencies and power relationships particularly in relation to land access in Malawi (Adams et al., 2019b), the shift from broad-based to narrow-based livelihoods on the Zambian sugar belts (Manda et al., 2018), the differential and adverse incorporation of petty commodity producers in vertically structured value chains in the Kilombero valley in Tanzania (Martiniello, 2017); the gendered nature of the process in Malawi and the health and work implications in Mozambique (Adams et al., 2019a; O’Laughlin, 2017).

To avoid dichotomous and Manichean characterization of land enclosures and contract farming, I analyse them as an expression of the expansion of the sugar commodity frontier (Patel & Moore, 2017) and the corporate interest in ‘value-chain agriculture’ (McMichael, 2013), entailing a process of re-territorialization of a new land use and division of labour that selectively incorporates farmers and workers, resources and geographical spaces into the capitalist metabolism. According to Richardson (2015), 58% of the estimated two hundred million ha of farmland grabbed in the last decade, had at the core crops with multiple fungibility, e.g. used for food, feed and biofuel. Driven by its multiple fungibility, sugarcane has been associated with the possibilities of diversifying the products portfolio of agribusiness companies reducing the risks against the price oscillations connected with production and marketing of a single crop, and maximizing returns from every cane (McKay et al., 2016). Extensive access to land and water, expanding domestic and regional markets, along with the new opportunities provided by high flexibility of sugarcane in terms of multiple end uses, such as ethanol, ‘green electricity’ and bioplastics, have attracted South African sugar giants and other transnational corporations to aggressively invest in the region (Richardson, 2010). Countries such as Mozambique, Zimbabwe, Malawi, Tanzania offer the best potential in terms of land availability while Cameroon, Equatorial Guinea, DRC and Uganda offer optimal agro-ecological conditions and production potential.

Contrary to economistic discourses that interpret contract farming through institutionalist and technicist lenses that depoliticize it by isolating them from the socio-economic and ecological structures and power dynamics in which they are embedded, I link the rising significance of contract farming to processes of global restructuring of industrial agriculture interpreting it as an instrument that deepens the division of labour external to the firm and cheapens the production costs that would occurred under direct production. In this sense, contract farming becomes an instrument to impose a new industrial discipline on land, labour and nature which simultaneously expands the company’s influence and indirect control over land, maximizing land acreage under sugarcane. More specifically, I link the social dynamics of contract farming to the operation of the booms and busts of the sugar commodity frontier in Patel and Moore’s sense of ‘encounter zones between capital and all kinds of nature – humans included’ (2017, p. 18). These frontiers expand through the constant mechanism of cheapening, i.e. reducing costs of doing business. But frontiers are also the place where political power is exercised to produce nature at low cost, transforming socio-ecological relations and producing more kinds of goods and services that circulate through a growing series of exchanges (Patel & Moore, 2017).

Smallholders’ commercialization, through their integration in generally export-oriented agro-industrial clusters or agropoles, has been one of the rallying cries of the Ugandan government as the political establishment identified the rise of global agricultural prices not as a threat to the social order but as an opportunity to be seized by expanding the production of export crops that are increasingly being demanded on the regional and global market for which Uganda enjoys a comparative advantage (Martiniello, 2015b). The Museveni’s government has been a strong advocate of the biofuels bonanza (Zommers et al., 2012), in the belief that ‘every sugar plantation is also an oil field’ (Child 2009, p. 248–249). In his speech on the ‘State of the Nation’ in 2012, President Yoweri Museveni magnified the virtues of large plantations owners, big- and medium-scale farmers while conversely blaming subsistence-oriented peasants and poorly commercialized smallholders for their incapacity to seize the conjunctural market opportunities. He further argued: ‘if the 40 million acres of land in Uganda that are suitable for arable farming are put to their full potential, there will be a revolution in this country … everybody will be richer’ (Museveni, 2012, p. 3).

I read these processes through the prism of sugarification, a notion which allows us to link contract farming to the imperative of extracting as much as possible of high-demand resources (be it land, water, forests, agricultural products, cheap and disciplined labour or others) at lowest cost within shortest period. As a mode of accumulation and appropriaton, it helps us understanding the ways in which it encroaches upon existing resources, which have been provided by nature or by the work of previous generations, until it exhausts them and moves to more attractive locations. This notion also helps us bringing to light a coalescence of political and economic actors and interests, and discursive formations which contributed to make sugar ‘the only business in town’. In what follows, I provide a synthesis of the origins and development of outgrowers schemes in Busoga in the colonial and post-colonial eras. Then, I analyse the revival of outgrower schemes under neoliberal restructuring, the sugar boom of the last couple of decades and the socio-ecological implications.

Sugarcane cultivation and contract farming in Busoga in historical perspective

Under British control, Uganda became a Protectorate in 1890 and its economy strictly tight to the interests and requirements of the metropolitan bourgeoisie. However, differently from Kenya, white settlers did not proliferate and the colony failed to attract consistent flows of foreign investments in the light of the absence of an internal market for British manufactured goods (Cliffe, 1977). Under these circumstances, the mode of colonial exploitation was going to be organized around the bulk of Ugandan peasantry coerced into cash-crop production (cotton first, then coffee) through an array of taxes, forced labour, and impositions (Wrigley, 1959). The economic crisis of the 1920s generated a plethora of European planters’ bankruptcies facilitating the penetration of Indian merchant capital in the plantation economy. After the crash of cotton price, ‘family firms’ such as Metha and Madhvani (Hundle, 2018) began diversifying their investments portfolios becoming pioneers in large-scale sugarcane cultivation. In 1929, Muljibhai Madhvani established the largest sugar factory in the country at Kakira in the Busoga province, under the name of Vithaldas Haridas, on an estate of 4,000ha (Ahluwalia, 1995, p. 35), purchasing land from European planters and African landowners, and leasing Crown land directly from the British authority (Olanya, 2014, p. 83). In 1932 the company was re-organized and divided into two separate entities, one maintaining cotton and trade interest, and a new Kakira Sugar Works Ltd (KSW) in charge of the sugar project controlling 2,818.19 acres in freehold and 6,095.74 acres of leasehold (Ahluwalia, 1995, p. 77). As reported in colonial records, sugarcane estates could not be better situated in terms of proximity to markets and climatic and soil conditions (Ugandan Protectorate, 1960, p. 50). In the 1940–50s Kakira group of estates expanded land acreage to 22,750 making sugar the first-large scale manufacturing industry in the country, while Indian family firms contributed for two thirds to the total East African sugar production (Ahluwalia, 1995, p. 159).

The first outgrowers’ scheme was initiated in 1958 at Kakira’s sugar factory when a group of few pioneer private farms began to supply sugarcane to the factory. The Kakira’s outgrowers scheme was one among the many large-scale settlement projects in collaboration with African tenant-farmers which enhanced their integration within the circuits of colonial economy. These schemes represented an important expedient used by the company to bypass the limitations to landholding for foreign owners imposed in the years of late colonialism, though they also resulted from kulaks’ political agitations claiming better terms of integration within the colonial economy (see Mamdani, 1975).

Outgrowers were subdivided into three categories: (a) aided and registered farmers; (b) registered but unaided farmers; (c) unregistered autonomous farmers. The first group of farmers was assisted by the company with seeds provision, extension and transport services, and hired labour mostly recruited from north-western part of the colony and from Rwanda and Urundi for purpose of harrowing, ploughing and weeding. Payments for these services were deducted at a later moment from the first harvest, or if the debt persisted, detracted from the earnings of ratoon crops. To the second group belonged those farmers who were entitled to a market for their cane but did not receive any financial aid or support. The latter group included unregistered farmers who only occasionally provided cane to the factory but without guarantee that the factory would have bought it.

In the post-independence period and specifically with the ‘Move to the Left’ and the related strategies of ‘Africanization’ introduced under Obote (1969–70), the government acquired 50% of the shares of KSW. To the state this meant a larger involvement in the control of key commodities such as sugar, which were increasingly being traded under the ACP agreements with EU with quotas and preferential prices. On the other hand, by connecting itself with the state, the company facilitated its access to credit from international donors. In this context outgrowers’ numbers increased between 1958 and 1970 from 4 to 1462 and cane supply expanded to 148,919 tons (Ahluwalia, 1995, p. 90). By the early 1970s, under the aegis of green revolution ideas, the company started to impose strict regulations about planting and harvesting time, inputs, minimum landholding acreage (5 acres) and hybrid seeds. Nonetheless, yields differential between the company (58tons per acre) and outgrowers (22–38 tons per acre) remained high, mostly due to the lack of irrigation. In those years KSW crushed 83.000 tons of sugar per year that was about 50% of all the sugar produced in Uganda with revenues amounting to 15% of the national GDP (Ahluwalia, 1995, p. 89).

However following the 1972 expulsion of 35,000 Asians by Amin’s regime (1971–1979) and the ensuing expropriation of major Asian corporate enterprises, included Metha and Madhvani, the outgrowers scheme was eventually abandoned because of the political instability in the country. The expulsion of the Indian commercial classes produced a veritable economic crisis in the country (Mamdani, 1976), as Asians had traditionally controlled the processing and marketing rural produce. Rising inflationary pressures, exasperated by the 1973 oil shock, and worsening terms of trade, ended up complicating the prospects of peasants’ engagement in cash crops production, a phenomenon which pushed them to commercialize food crops (such as rice, cassava, maize and millet), traditionally the domain of women’s duties and responsibilities (Sorensen, 1996, p. 615). After Amin was deposed in 1979 by Obote, Madhvani and Metha families returned to the country, retaking possession of expropriated properties and rehabilitating ruined sugar plants with the assistance of the World Bank (Olanya, 2014).

The revival of outgrower schemes in the neoliberal era

After 1986 with the advent of Yoweri Museveni, the economy in general, and the agricultural sector in particular, have undergone radical (neo)liberalization. Under the pressures from international donors, the Ugandan government accepted a market reform programme, involving currency devaluation, reduction in budget deficits, liberalization of the marketing system and privatization of parastatals (Brett, 1998, p. 324). The reforms also included liberalization of agricultural input trade, liquidation of cooperatives and domestic and export tariff barriers, and lastly the abolition of taxes on most agricultural products (Martiniello, 2015b). In the 1992, the Kakira outgrower scheme was re-introduced as a strategy to boost production and cost-efficiency in line with the agricultural modernization strategies put in place under neoliberalism.

In order to re-stimulate adhesion to the newly re-fashioned scheme, KSW offered ‘incentives’ to smallholders including the provision of a package of services and inputs on credit along with an attractive price in the initial years. The price of sugarcane/ton paid by KSW to outgrowers increased from 24,066Ugsh in 1995 to 28,404Ugsh in 2000 (Kafuko, 2005, p. 31). Smallholder farmers’ need for financial support and technical expertise to enter commercial farming in the aftermath of state’s removal from the provision of agricultural services and inputs under the marketing boards and cooperative system (Wedig and Wiegratz, 2017), and KSW’s readiness to provide it on credit, tempted many smallholders to become out-growers.

The unconditioned support for contract farming by international financial institutions stemmed also from the fact that these schemes were meant to disaggregate and replace the cooperatives’ model by bringing in more individualist, entrepreneurial and utilitarian mind-set, attitudes and practices. Moreover in the 1990s, as structural adjustment measures of austerity, privatization and labour market deregulation had generated opposition from trade unions struggling for their associational space (Barya, 2001), a series of strikes at sugar plants paralyzed sugar production and culminated in widespread police repression and detention of the leaders of protest. The expansion in outgrower schemes in the mid-nineties allowed the company to diffuse the pressures of labour mobilizations by gradually shifting sugarcane cultivation away from its estates to outgrowers’ farms. In this way, the supply of growing shares of total sugarcane output was delegated to a myriad of socially differentiated outgrower producers.

Driven by prospects of a secure market for their agricultural produce and by the flexibility of pre-existing land markets and informal rental arrangements, outgrowers’ participation in the scheme started to grow exponentially, increasing from three thousand in the early 1990s to six thousand in 2008, up to nine-thousand five hundred in 2015. Outgrowers’ cane supply has moved from 13,448 tonnes in 1991 (or 14% of the total cane supplied to the mill) to 244,672 tonnes (38%) in 2000, up to 407,456 in 2006 (41%) and 1,169,268 (70%) in 2010 (Table 1; Kakira Sugar Works Limited, 2014). Recent data estimate that the percentage of sugarcane provided by outgrowers has further grown to 74% (Interview Kakira Outgrowers Branch Director, 15 August 2015).

Table 1. Total cane supply and outgrowers share 1990–2010 cane supply – tonnes per annum (TPA).

Outgrower cane supply (1990–2010)	1990–1991		1995–1996		2000–2001		2005–2006		2009–2010
Total sugarcane supplied	94,219		647,084		637,162		989,767		1,661,346
Outgrowers cane	13,448.00	14%	187,357	29%	244,672	38%	407,456	41%	1,169,268	70%
Estate cane	80,771	86%	459,727	71%	392,490	62%	582,311	59%	492;078	30%

Source: Kakira Sugar Works (2014).

The spectacular rise of outgrowers’ cane supply clearly marks the company’s progressive distancing from direct cultivation and its concentratation on value-generating activities upstream such as supplying seeds, equipment and other inputs, and downstream, like in food trading and processing (see Isakson, 2014), a strategy which coincides with externalising the risks involved in agricultural production to outgrower producers. Outgrower schemes have been functional to the continuous expansion of KSW’s industrial capacity which stepped up from 1200 tonnes per day in 1989 to 2500 in 1995 and from 3000 to 6000 between 2002 and 2008 (Hihubbi, 2014). With 3,35 million tonnes of refined sugar produced in 2014, KSW controls 41.06% of the Ugandan sugar market share. Aggregate figures, however, tend to conceal how different groups of outgrowers are differentially affected by the scheme, who gets the lion’s share among and within rural households, and what are the wider social and ecological implications of these processes.

Class dynamics of social differentiation and expulsion

Outgrower schemes have been major incubators of class differentiation among petty rural producers by enhancing the formation of socially differentiated classes in a pyramidal agrarian structure with corporate agribusiness at the top, large and medium in the middle, and smallholders and agricultural workers at the bottom. Sugarcane commercialization propelled the crystallization of various social groups stratified in terms of access to landholding, labour regimes, production, non-farm income, and farming practices, so sub-divided: 85% (7950) were considered small-scale farmers with landholdings between one and five acres; 12% in the category of small-medium scale farmers with acreage between 6–10; 2% medium to large-scale farmers between 10 and 50 acres; and less than 1% with land availability above 100 acres (Interview Kakira Outgrowers Branch Director, 15 August 2015)

At the top, a class of emergent capitalist farmers has clearly emerged among outgrowers (cfr. Pérez Niño, 2016). Some of them were among the pioneers who had initiated the schemes in the 1990s benefiting from incentives, attractive prices and very low land and labour prices in local communities. In virtue of low net profit per acre for most of the last two decades, a reasonable annual income from the sale of sugar cane necessitated a fairly big acreage. Outgrowers who started with relatively large acreages and alternative (non-agricultural) sources of income could accumulate at an increasing rate. Significantly this is a symptom of the importance of non-farm income sources in accelerating tendencies of class differentiation. Moreover, in virtue of their strong financial position, rich outgrowers have been able to access credit and use it for further investments; including buying more land or ‘renting’ it from the poor outgrowers; purchasing land in more distant areas for the commercialization of food crops or investing in the sugar transport business. Next in descending order are the medium-scale farmers largely composed of civil servants, urban salaried or landowners. Yet because of the precarious and extremely fragile conditions of farming, coupled with the capital-intensive nature of sugarcane cultivation, medium farmers are often lured into the ranks of poor farmers as they are increasingly vulnerable to shocks like droughts, flood and deterioration of terms of exchange (see Bernstein, 2010, p. 108).

Most small outgrowers, who mostly depend on family labour for sugarcane cultivation, in combination with seasonal migrant labour, are instead struggling to remain in the sector, caught in what Henry Bernstein calls ‘simple reproduction squeeze’ (2010, p. 104): a condition which makes increasingly problematic for them to reproduce their replacement and rent funds (see Wolf, 1966). Petty producers increasingly find themselves unable to reproduce the means of production necessary to start a new agricultural cycle such as land preparation services, seeds, fertilizers, pesticides, and other agricultural tools, and the costs of land rental, ending up in a vicious debt cycle (McMichael, 2013). KSW provides ploughing, harrowing and canal opening services to outgrowers on predetermined terms of credit. The terms of credit upon which the company offers services and farm inputs to outgrowers are largely determined by factory management. The monopsonistic power of the company and the rising cost of fertilizers and fuel contributed to exert a price squeeze on small outgrowers’ rural incomes. Outgrowers are obliged by the agreement between them and the company to allocate 40% of their cash from their first harvest to repaying the credit extended by the factory in the forms of services and other inputs.

Petty-commodity producers involved in sugarcane cultivation are cyclically subjected to a variety of money demands at the various stages of sugarcane production from ploughing and soil preparation, to seedling, weeding several times before maturation, harvesting and transporting. Though poor outgrowers receive, whereas required, agricultural services and inputs such as land preparation, agricultural extension, fertilizers and pesticides, and seeds, on credit, i.e. deducted from future sugarcane revenues, in the long wait for sugarcane to mature, they get in many cases heavily indebted with local banks for credit advanced to pay land rents, maintain sugar plots, pay labour costs and sugarcane transport, and support households members. Outgrowers have become increasingly concerned with the dramatic increase of transport fees, which sucked up to 35% of the sugar revenues, making the business increasingly unviable for those outgrowers who do not possess their own means of transport (personal communication, 12 September 2015).

KSW serves as a guarantor to its registered outgrowers to borrow from the local branch of Tropical African Bank situated on the perimeter of the sugar plant. The two-guarantors policy established by the company makes mandatory for outgrowers to ensure the loan through two persons who can be clan members or fellow farmers in addition to a mortgage agreement. The bank provides two forms of loans: short-term loans – from 500,000 to 25millionUgsh (150–7,600 USD) repayable in six months; and commercial loans of 100 million Ugsh generally to buy machineries or land repayable in 5 years. For both loans the interest rate provided oscillates between 17% and 22%. In 2015 approximately 2000 outgrowers asked for a loan with a default rate estimated at 20% (Interview Bank Manager Tropical bank of Africa, 10 September 2015).

This figure is however contested by the Busoga Sugarcane Outgrowers’ Association, which instead claims that 924 defaults had been reported in 2015 (almost 50% of the applicants). The growth of debt dependency under contract farming arrangements which enhances the extraction of rents from farmers by finance capital and corporate agribusinees, points to the growing role of finance in African agriculture. The rampant indebtedness also results from farmers’ entering a ‘technology treadmill’, which increases the degree of monetary demands upon farmers trapping them in a vicious circle (Amanor, 2019). Processes of expanded commodification raise the ‘entry’ and reproduction costs of capital needed to participate in the scheme, and increase competition for land. This drives what Amanor defines as dispossession from below (2012, p. 118) whereby less competitive farmers, unable to meet those costs and/or bear the risks associated with sugarcane plantations, are displaced from sugarcane areas, fertile lands are converted to more profitable uses, and landholdings become concentrated in the hands of more powerful large-scale producers. Under pressures of incoming settlers and commercial farmers, poor peasant households, often end up renting (generally paid between 100,000 and 150,000Ugsh – 30–50USD per acre per year), or selling their plots because they do not have the start up capital and/or sufficient landholding to engage in sugarcane cultivation (Interview smallholder, 28 August 2016). Interesting parallels can be drawn with dynamics of ‘productive exclusion’ in the case of Bolivia’s soy complex whereby capital-poor farmers are unable to put land into cultivation due to the highly mechanized form of production (McKey and Colque, 2016).

Another key challenge faced by outgrowers of all ranks is the question of price setting by the company. The average price per ton of sugarcane is the subject of an elaborated calculation or ‘formula’. It takes into account the average sale price of the final product multiplied per the total amount of refined sugar, less VATT. Out of that, 40% is given to outgrowers. Payment to the farmers is made (net of deduction for inputs, loans, and services) in two instalments: the first, once cane is delivered to the factory for crushing (generally 2months after) covering 70% of sugarcane earnings paid at an interim price; the second consists of arrears (30%) paid once the yearly price of the cane is calculated and sucrose content measured. However, farmers suffers from very low productivity rates and sucrose content which are due to the poor usage of fertilizers and irrigation (water being one of the major factors affecting it) and low sun-light exposition (on average 6 h per day). In their view the problem with the use of fertilizer is that it is needed in rising quantities to maintain a stable productivity, making it unaffordable (Outgrowers Focus Group, 15 September 2015).

Another set of factors contributes to the adverse incorporation of poor outgrowers, some of which are specifically related to the character of sugarcane as an industrial crop: its capital- and water-intensive character, its elevated perishability (requiring immediate transportation and processing after cutting) and the long gestation period to maturity (18–20 months). Differently from other outgrower schemes in the southern African region where minimum land acreage or availability of water irrigation represent preconditions to join them scheme, creating steep barriers of entry for small farmers, the outgrower model at Kakira does not institute these limitations. The result is the proliferation of petty producers joining contract farming schemes often without the necessary material resources to access fertile land, recommended seeds, package of fertilizers, and irrigated water, producing therefore poor quality low-sucrose sugarcane ² (Interview with Kakira Production Manager, 10 August 2016).

Despite KSW increased the price of sugarcane per ton from 40,000Ugsh in 2009to 80,000Ugsh in 2015 in the attempt to hold onto its supply base of outgrowers in the face of the advent of new investors and mushrooming mills in the region, small outgrowers have seen enormously restricted the margins of profitability of sugarcane cultivation (Outgrowers Focus Group, Musoli, 28 August 2016). The monopsonistic power of the company and the poor leverage of smallholders’ interests in the outgrowers’ associations further limited their bargaining power in negotiating the sugarcane price. Outgrowers also decried delayed payments and arrears paid as interest to the bank. As a smallholder put it in a focus group discussion: ‘Madhvani behaves like a dictator, associations are siding the company and have limited influence. We have become like camels begging on our own lands’ (Outgrowers Focus Group, Musoli, 22 September 2015).

Other studies in the areas surrounding KSWL revealed in fact that sugarcane intensification has created economic hardship, extreme poverty, widespread food insecurity and malnutrition (Waluube, 2013). In 2008, 52% of the population living in the surrounding districts were living below USD 1.25 (Kakira Sugar Works Limited, 2014). To retain possession of a small piece of land, poor peasant households have eventually maximised the self-exploitation of households’ members at certain moments of the sugarcane cycle and/or reduced their consumption to extreme levels (see Chayanov, 1966). As a process of reorganization of land and labour relations with a marked gendered content contracting sugarcane farming has enhanced a marked division of labour within the household, with men taking care of managerial functions and women and children in the labour sphere (see Adams et al., 2019a). Farmers with small land acreage have been compelled to devote it entirely to sugarcane production to make the business viable often neglecting the household food requirements with negative implications especially for women and children. In some cases, we have seen farmers inter-cropping maize with sugarcane, a practice suggested by the company on the assumption that such combination produces optimal results. However, trials in KwaZulu-Natal showed that such combination provides good results only if combined with irrigation and fertilizers application, in whose absence such techniques contribute to further soil deterioration (Parsons, 1999). Rural households in Jinja have committed almost all their land to sugar cane growing and therefore depend on the market for most of their food needs (Hihubbi, 2014).

As a small-scale farmer in Musoli, a village 10 km away from the factory argued: ‘the Budongo-Jinja area represented a food basked for Jinja and other districts up to Kampala. Vehicles used to come and buy foods. Now it’s the reverse’ (Interview small scale farmer, Musoli, 30 July 2015). In sugar cane growing districts food has become expensive for most months of the year. In a more recent survey of 244 families interviewed on the subject of food insecurity only 28 households responded they had enough food, while all the others expressed desperation in accessing food especially during the long periods of cane maturation. One hundred sixty families reported to have hired out their land for cultivation or sold their crops while they were still young (Waluube, 2013). Famine has consequently been a persistent plight in all-major sugar cane growing districts with nutrition standards of elders, women and children below the average requirements due to the rarity of fruits and animal proteins in their daily diets.

At this point a question imposes: if the conditions for most sugarcane outgrowers are so adverse, why sugarcane farmers do not delink from sugarcane cultivation and shift to more profitable crops? The answer can take different avenues. The first is related to indebtedness which impedes exit strategies given that all debts need to be repaid to abandon the contract without legal consequences. A second one is connected to the fact that through outgrower schemes farmers get access to an array of extension services and advices, health and education services for their households, which are basically absent outside the scheme. Third, the difficulty of diversification strategies. Amidst a ‘sugarbelt’ shifting to other crops and livelihoods strategies can be problematic when all the capital, the credit, the infrastructures, inputs, services and labour revolve around sugarcane cultivation. Moreover, the spatial invasiveness of sugarcane makes diversification problematic from a physical-spatial point of view. The few farmers encountered during fieldwork who have been successful in converting back to food-based livelihoods, argued that the transition was not straightforward: the soil had to be nourished by planting medicinal and fertilizing trees and mixed with organic manure before re-orienting its use towards maize, cassava, vegetables, legumes, and fruit trees.

Sugarification, labour and nature

It is currently estimated that approximately 80% of households’ land in the districts of Jinja, Luwuka and Mayuge are under sugarcane cultivation (Waluube, 2013). In Busoga, there are now eleven sugar plants (between small scale millers and big manufacturers), almost one for every district, which, along with the proliferation of outgrower schemes, contributed to produce a dramatic shift in the agrarian geography, eco-system, labour relations and livelihoods of the region, a process which I term sugarification. This descriptive notion does not simply capture the exponential expansion of land acreage under sugarcane, or the expanding numbers of sugarcane outgrowers. It rather places an emphasis on the political, economic, and discursive processes that are advancing the sugar frontier in the country. The expansion of acreage under sugarcane has in fact been substantially fuelled by the government’s politics of license granting to new entrants (millers) in the sugar market with the declared objective of decreasing sugar consumer prices and expand the state’s fiscal basis. New investors were lured into the sugar business, attracted by the expectations to find petty commodity producers used to specialized sugarcane cultivation and by the economic opportunities of the growing regional demand.

A central feature of sugarification is the super-exploitation of agricultural labour through its devaluation. Labour at the factory, in the fields and surrounding compounds is organized by Kakira through multiple arrangements (permanent, seasonal, casual) and around a gendered division of labour. It combines more specialized, stable (and remunerative) wage labour in the factory with unskilled casual migrant labour for the seasonal work of cane cutting. Sugarcane cutting, the hardest among the labour tasks in the sugarcane complex, is performed by young migrant workers recruited from north- western regions of the country. Their work gets remunerated on a piece-work basis, i.e. once the cutting of five lines of 25 meters of cane is completed, not through daily wage. The cane is then bundled and remunerated at 800 Ugsh for every bundle. Generally, workers take from seven to eight hours of strenuous and dangerous work to complete eight bundles, for a total of 6400Ugsh (less than $2). Sugarcane cutting on outgrowers’ farms is not less exploitative than on the company’s estate. Migrant seasonal workers receive on average 6000 Ugsh for the same task performed by workers in the company – slightly less than the wages paid by the company. Some of them wait the buyer’s truck to come to upload the sugarcane bundle for few more shillings. Similarly, they must provide their own instruments, but some prefer working for outgrowers because of their allegedly less controlling and disciplining character (Focus Group Cane Cutters, 5 August 2016).

Working and living conditions on the company estates are not necessarily better. Caught in the spiralling ‘from hand to mouth’ cycle, workers also suffer from unsafe water, cholera, and skin cancers while no protection instruments are provided by the company. Security personnel recruited from remote northern districts in West Nile, Teso or Soroti are paid monthly salaries of 140,000Ugsh (45USD), while women’s salaries for weeding and planting or for working as cleaners are even lower (120,000 Ugsh). Devaluating labour is the precondition to extract and appropriate value. Yet, it is not through super-exploitation of wage labour alone that cheapening occurs and capital reproduces, it is also and perhaps most importantly through the non-monetary women and family labour (Patel & Moore, 2017; Razavi, 2009). By performing a whole set of unpaid labour tasks such as weeding and maintenance on sugarcane fields in addition to daily activities of food production, water provision and the care of children and elders, unremunerated women labour represents a fundamental element in the social reproduction of outgrower schemes.

The expansion of land acreage under sugarcane cultivation is perhaps the major feature of sugarification. Through outgrower schemes, in fact, agri-business companies can bypass the limitations over land ownership, indirectly controlling huge portions of land (see Adams et al., 2019b) and turning contract farmers into ‘little more than propertied labourers' (Watts 1994, p. 33). As ‘factories in the fields’ sugarcane agro-industrial complexes impose a re-organization of social relations over lands and spaces through a unique ‘military’ discipline in terms of circulation flows of commodities, and associated rhythms and times of labour (Richardson, 2015). In this sense, contract farming schemes act as a transmission belt of the productivist and (agro)extractivist eco-logic characterizing the operation of agri-business capital, contributing to the maximization of value extraction from nature at a cheap cost. As a local respondent complained: ‘in Uganda we produce the cheapest sugarcane in the world: if one ton of cane costs 73,000Ugsh, then one kilogram of sugarcane gives you 73Ugsh, less than any other crop’ (Outgrowers Focus Group, 15 September 2015).

The production and reproduction of cheap nature is a major component of the sugarcane frontier’s uneven geographical expansion. As suggested by Moore, the accumulation of capital and the production of nature work as an organic whole; capital does not produce externalities on the environment, it works through it (2015). In this sense the accumulation of capital via sugarcane cultivation is grounded instead upon the co-production of capital, power and nature. Water, for example, an indispensable element in the sugar production chain, can be accessible at no cost by the company through the Victoria Lake or other secondary streams. Kakira Sugar Works, the single largest user of water, abstracts 459,175 cubic meters/per month from Lake Victoria mainly for irrigation (172,255) and in the production process in the factory (268,920) (Munabi et al., 2009, p. 763).

Another feature of sugarification is sugarcane’s spatial invasiveness and re-organization of the landscape which almost entirely wiped out fruit trees, fuel wood trees, pasture lands, and the rich variety foods and vegetables over the last two decades. Any form of livestock raising is now practically impossible. Local and life histories collected in Musoli, revealed a clear trajectory of agrarian and environmental transformations, associated with changes in land property, production, exchange and consumption relations. In the early 1970s the area was thinly populated. Before sugarcane became dominant, livelihood activities included the cultivation of food crops, intensive fishing, cattle husbandry and local trade. The Budongo-Jinja area had rainfalls all the year because of its proximity to the lakeshores. Forests surrounded the area but massive deforestation was initiated by the company through burning and cutting as it occurred in the case of Butamira forest. Clearing the vegetation altered the hydrogeological cycle contributing to the detrimental effects for the environment (Balaba, 2004). Other concerns denounced by environmental activists include the discharge of industrial wastes and effluents disposal into the water sources such as the Mutai swamp water where Chico river originates.

These agro-ecological concerns are furthermore relevant in the light of the dramatic drought that hit the eastern regions of the country in 2017, the worst in the last 50 years, reportedly pushing people to eat termites. The 2017 drought catapulted thousands of outgrowers into abject poverty and destitution given that the majority of them does not access irrigation services and relies on rainfalls for sugarcane cultivation. Many of them were left with young or immature cane in the fields. Sadly, this precipitation of events, which triggered rising mobilizations and protests by both company workers and outgrowers in the past years, was prophetically prospected by a local farmer in an interview in 2015 when he whispered: ‘sugarcane is a time bomb’. These outlines alert us to the ecologically hazardous and risky conditions under which commercial cultivation is undertaken by sugarcane outgrowers in Uganda. They also point to the ecological limits of frontier expansion. The drastic reduction in the production of sugarcane by outgrowers severely affected the final quantities of refined sugar pushing mills to operate at extremely low rates of crushing capacity utilization. To mitigate the effects of the sugarcane supply crisis, KSWL tried to source sugarcane from distant districts in Masindi and raised the price per ton of sugarcane from 85,000 in April 2016 to 160,000 Ugsh in April 2017. Thus, the sugar consumer price raised from 5000Ugsh in December 2016 to 8000 Ugsh in May 2017 generating widespread popular resentment (Bush & Martiniello, 2018).

The sugar crisis in Busoga has impressed a strong acceleration to the government and private capital attempts to shift the sugar frontier to the northern regions by providing credit and political legitimation to the establishment of new sugar complexes as in the case of the recently established Atiak Sugar Company, or in the case of Amuru Sugar Works, the latter being a case of strenuous and successful resistance, lasted for almost one decade, against the repetitive attempts of both Madhvani and the state to establish a mega-sugar plantation on 10,000 acres designed on the model of Kakira Sugar Works (Martiniello, 2015a).

Conclusions

The paper explored the extent to which outgrowers and other contract farming schemes represent a less-harmful, alternative to land enclosures and a more inclusive form of development using Kakira Sugar Works in Busoga as a case study. Showing the limitations of with win-win narratives, which alienate contract farming from their social, political, environmental and economic milieu through abstract notions of inclusivity, efficiency and productivity, it has argued that contracting sugarcane farming sets in motion a singular trajectory of agrarian change characterized by social differentiation, dispossession and expulsion of poor or less competitive peasants from sugar agro-extractive poles to make space for capitalist entrepreneurs and more commercially-oriented farmers.

It proposed to link the current proliferation of contract farming schemes to the logics of operation and dynamics of expansion of the agro-extractive sugar frontier in the region. It placed emphasis on the importance of analysing the unfolding agrarian political economies and ecologies from an historical perspective in order to decrypt the conditions of formation and deformation of agrarian social classes, providing new constructive insights to the debates over land enclosures and rural dispossession in Africa. In doing so it helped advancing a conceptualization of contract farming as a contested site of intense social, political, economic, ecological and discursive struggles, in striking contrast with views that portray it as a levelled playing field where all stakeholders can equally and freely exert their influence and choice.

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No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Giuliano Martiniello

Giuliano Martiniello is Assistant Professor of Rural Community Development at the American University of Beirut. Giuliano obtained his PhD from the School of Politics and International Studies at the University of Leeds in 2011. He was a research fellow at the Makerere Institute of Social Research at Makerere University (2012–2015) and post-doctoral research fellow at the School of Built Environment and Development Studies at the University of Kwazulu-Natal (2013–2014). He is broadly interested in the political economy, political sociology and political ecology of agrarian change and rural development in Africa and the Middle East. He has published articles in internationally recognized journals such as World Development, Journal of Peasant Studies, Journal of Agrarian Change, Geoforum, Third World Quarterly and the Review of African Political Economy, and is co-editor of the book Uganda: The Dynamics of Neoliberal Transformation (2018, ZedBooks).

Notes

1 The nucleus-outgrower scheme is one of the two most diffused types of contract farming. The other, independent contract farmers without nucleus estates, is predominant in Africa.

2 The company accepts sugarcane with a minimum of 5% sucrose content and makes further deductions on the price per tons according to the physical state of the cane.