High sugar prices in Uganda to persist into 2023

High sugar prices in Uganda to persist into 2023
Sugar price increments usually have effects on other products where sugar is the major input.

Kampala, Uganda | URN | Sugar manufacturers and cane growers have warned that the increased retail sugar prices in Uganda are to persist, with no hopes of decreasing soon.

On average, sugar prices at retail now stands at 5,500 shillings a kilogram, up from an average of 4,000 shillings three weeks ago. This price according to manufacturers is expected to persist or even increase.

Wilberforce Mubiru, the immediate past Secretary for the Uganda Sugar Manufacturers Association, and the deputy general manager of the Sugar Cooperation of Uganda Limited-SCOUL, says that these prices are a result of the reduced sugar cane supplies from the growers, at a time when the number of processors has increased hence competition for the raw material which constitutes 70 per cent of the production utilities.

According to Mubiru, this situation has mainly affected manufacturers in the Busoga and Buganda regions where up to 33 per cent of the growers gave up on the trade due to the then reduced cane prices, as a result of oversupply two years ago.

This move by the growers, lowered cane growth, leading to little supplies against a high demand, resulting in high cane prices, then reductions in sugar, and/or processing it expensively, hence the high retail prices.

He adds that this competition for the cane raised its prices to 175,000 shillings per tonne from 104,000 shillings two months ago. This couldn’t keep the product price unhampered. He says this was not the issue two years ago when a tonne of cane was reduced to as low as 60,000 shillings.

Though Uganda so far has 39 licensed sugar manufacturers, only 16 are operational, and according to Mubiru, the Uganda Sugar Manufactures Association projected production of 700,000 tonnes for this year, against Uganda’s annual consumption of 400,000 tonnes.

However, he says many of the companies are producing at half capacity and the set target will not be hit. He adds that the sugar prices in Uganda are yet to reduce until 2024, when the currently planted cane is ready.

Due to the cane supply shortage, the sugar manufacturers associate official says that SCOUL with a capacity of 5,000 tonnes a day now mills 3,500, and Kakira of 9,000 tonnes, now does 5,000 tonnes.

Part of the problem, Mubiru says, is the lack of regulations in the sugar industry. He says that growers are doing the business at will, since Uganda is a free enterprise economy, with farmers entering and leaving the trade at will, and this is why the issues of over and undersupply of cane always come in.

“When farmers are coming in to grow, some are not registered with anybody, yet the nature of the industry is that when you are to grow cane for sugar production, you must register with a miller because the cane is perishable,” Mubiru says. “It must be cut when it reaches maturity and has to be processed not exceeding 48 hours when cut, it’s not like coffee where one can keep and wait for a better price.”

In 2020, Parliament enacted the Sugar Act, which was accented to by the president, with its regulation already drafted, but it has since not been operationalized, and according to Mubiru, the government promised to do this next financial year.

Though Uganda’s annual sugar consumption is 400,000 tonnes, Mubiru says the 16 operating millers have the capacity of producing more than 1 million tonnes annually but are always challenged mostly by cane supply fluctuations. He adds that irrespective of this, Uganda would have readily available cheap sugar on the market.

If the prices are to be tamed, Mubiru says export management would be the immediate solution.

“We have to manage export, such that whatever little we produce is specifically for the local market, however, this can be hampered because we are in a free market economy,” Mubiru says.

Some of the growers URN talked to confirmed the situation, and they highlighted the absence of a regulatory body in the sugar sector, as the major problem in the entire sector.

Micheal Mugabira, the project coordinator of the Greater Busoga Sugar Cane Grower’s Cooperative Union limited, says in the past three to four years, they suffered as their cane was not bought, and they ended up in losses. He says part of the problem was the millers’ decision to work with middlemen instead of the growers themselves.

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According to Mugabira, many growers are now scared of reinvesting in cane growing, adding that the crisis can take four to five years for it to be fully resolved.

David Kafuko, another sugarcane farmer says that right now, due to cane scarcity, the trade is becoming more unprofessional, and the situation will take a long time to normalize unless the required legal framework is operationalized.

“As of now, millers are forcing the farmers to harvest young cane and whenever you do that, you slip into poverty because an acre where you can get 40 tonnes you get less, and they pay you at the price of commercial or mature cane, yet what you sell them is still seed which is supposed to be more expensive,” he says.

As all this is going on among the players from whom the sugar value chain starts, the end users have started to feel the pinch as an effect of this confusion. Miriam Namakula, a tea vendor in Kampala says that her business is now operating at a thin margin, sometimes in losses due to increased sugar prices.