Uganda: Sugar millers want issuance of sugar licenses halted

The Uganda Sugar Manufacturers Association (USMA) wants an amendment of the Sugar Act, 2020, halting all the sugar licenses currently issued by the Ministry of Tourism, Trade and Industry, pending establishment of the Uganda Stakeholder Sugar Council.

Led by their chairperson, Jim Kabeho, the association is concerned that some of the licenses were illegally issued, alleging that they neither complied with the 2010 Sugar Policy nor the 2020 Sugar Act.

The Sugar Council would, therefore, intervene in making recommendations to the minister before the issuance of licenses.   

“We agree that the minister would continue to issue licenses but with recommendations from the council; once the Council is in place, it can put into place some regulations,” said Kabeho.

Kabeho and a group of other sugar millers including Kakira Sugar Ltd, Kinyara Sugar Works and Sugar Corporation of Uganda (SCOUL), appeared before the Committee on Tourism, Trade and Industry, on Monday, 15 January 2024 where they submitted on the Sugar (Amendment) Bill, 2023.

He opposed the requirement in the current law for sugar millers to share proceeds from sugarcane by- products with farmers at a rate of 50 percent, terming it impractical and a deterrent to investment.

“It should be noted that this percentage gives a minimum price and parties are free to agree to a higher sugar price; if we are to keep the sugar industry in Uganda competitive, the 50 percent is already higher than the world wide industry standard,” said Kabeho.

The association complained that the sugar market in Uganda is already low and uncompetitive in the region following low sugar prices in Kenya and Tanzania.

The committee noted that sugar cane price paid to the farmers in Kenya and Tanzania per tonne is an equivalent of Shs155,000 and Shs150, 000 respectively.

In Uganda, a tonne of sugarcane ranges between Shs235, 000 to Shs240,000.

As a result, the committee was informed that for 2024 and henceforth, Uganda will not be able produce sugar for export.

The sugar millers said sharing of by-products with farmers at a rate of 50 percent complicates the already troubled market.   

“Our view is that such a statement should be removed from the Bill because it is impractical to implement and would be a grave error resulting in huge losses to millers utilising by-products and benefiting who do not utilise sugar cane by-products,” said Kabeho.

The Kinyara Sugar Works Director, Rajbir Rai, was equally concerned about the sugar industry’s declining production, causing price rises.    

“Our cane price is not competitive even regionally, we are not saying farmers should not benefit from the by-products but the industry costs are going higher and higher, the percentage to be shared from by-products should not be considered for any increments,” he said.

The association said the sugar levy slapped on millers to finance the activities of the Sugar Council should rope in farmers too. They argued that burdening only manufacturers with the levy is unfair.   

The group also reintroduced the proposal of zoning of millers, suggesting that an individual miller should be at least 25 kilometres from the next miller, which MPs said is not in the Bill.

“Whenever the discussion on zoning starts, farmers fight it regardless whether it is good or bad. I encourage the manufacturers to find out other ways of stabilising the industry without zoning, “said Hon. David Isabirye (FDC, Jinja North Division).

Committee chairperson, Hon. Mwine Mpaka wondered if manufacturers who are adding value to sugarcane by-products were paying more for sugarcane than those who do not utilise the by- products.

“The ideal would be to consider the by-products but the question is how do you apply the 50 percent? Will you say that a company making more by-products should pay more for sugarcane?” wondered Mwine Mpaka.

MP Godfrey Were (Indp., Samia Bugwe County South) said farmers were not happy with the 50 percent profit share from by-products because some companies are earning a lot from products like ethanol and bioelectricity.

Distributed by APO Group on behalf of Parliament of the Republic of Uganda.