Arusha — The government will seek debt rescheduling for Sh2.7 billion loan owed by sugarcane farmers in Morogoro Region to the lender, Azania Bank Limited.
Agriculture minister Adolf Mkenda said he would soon meet the management of the financial institution over the issue.
"We will seek debt rescheduling. None of the two cane crushing mills for sugar production has started to buy cane from the farmers as per contract," he said.
The minister gave the government's position on the standoff between sugarcane growers and the Mkulazi Holding Company Limited during his visit there last week.
He said he was aware of the problem and that the best intervention was to meet bank officials to seek reprieve for the cashless farmers.
The loan was extended to over 600 farmers and Agricultural Marketing and Cooperative Societies (Amcos) in Mbigiri, the site of one of the proposed plants, to buy inputs for sugarcane production.
The cane was to be sold to Mkulazi Holding Company Limited which plans to set up a factory to boost local production of the sweetener.
However, none of the two plants - one at Mkulazi and another at Mbigiri - is operational although the government is keen to see them take off.
Prof Mkenda said he would soon meet the Azania Bank CEO to have the loan repayments rescheduled - thus saving the farmers from being taken to court.
"The outgrowers have not earned anything from cane production. The factories have not started sugar production," he pointed out.
Mkulazi Holding Company was established in 2017 as a new sugar manufacturer in the country, with a planned production capacity of 200,000 tonnes annually.
It was set to become the largest sugar producer in Tanzania. Besides filling the gap of sugar deficit in the country, it would create another 100,000 tonnes of surplus sugar for export.
But four years down the road, the joint venture between the National Social Security Fund (NSSF) and the Public Sector Social Security Fund (PSSSF) is still grounded.
The minister met the management of the holding company before addressing the farmers and company officials, promising sugar production would commence "very soon".
Farmers who spoke on the matter faulted the company for delayed production, warning that this may force them to opt for cultivation of crops other than sugarcane.
"Why delay the launching of the plant?" asked Ms Salome Mbilinyi, saying she and fellow growers have produced hundreds of tonnes of the cane, yet to be purchased.
Isaac Cheyo said through the loan, they have been supplied with inputs such as seeds, fertilizers, pesticides and machinery.
"With delayed repayment of the loan, suppliers have now threatened to take us to court. In this regard, the government has abandoned us," he said.
Godfrey Filipo and James Ndagile said they were told that the sugar processing plants would start production in 2018.
They said the tiff between the farmers/Amcos and the Azania Bank was worsening, and is likely to further cripple the ambitious project.
Mr Saidi Mazumbe proposed that the Mkulazi Holding Company has to shoulder the debt burden as it has delayed sugar production in violation of a contract entered earlier.