Fight over sugarcane business

President Museveni supports exports to Kenya 

Kampala, Uganda | ISAAC KHISA | On June 11, President Yoweri Museveni held a closed door meeting with the sugarcane farmers in Busoga sub-region at the Jinja state lodge a head of his planned Operation Wealth Creation campaign.

Among those who attended the meeting included the Minister in charge of Presidency, Esther Mbayo, and Issa Badhugo, the chairperson of Busoga Sugarcane Out-Growers Association, who headed a delegation of 28 farmers.

Sources privy to the meeting said Museveni agreed with the farmers that the excess cane supplies can be exported so that farmers do not incur losses and that it does not hurt local millers.

Michael Mugabira, the coordinator for Uganda Sugarcane Growers Association confirmed to The Independent on June.15 that the two parties agreed that excess cane be exported to the neighbouring Kenya.

“We are currently cutting the cane and expect our first sugarcane consignment to Kenya in a few days, to come” he said, adding that cane production has been on the upward trend since 2017 when prices shoot up.

Mugabira said the sugarcane farmers are also waiting for a response from Uganda Revenue Authority over their request to grant them a temporary customer’s exit and entry point along Busia-Malaba border to facilitate quick export owed to perishability of the crop.

The farmers wrote to the URA Commissioner General, Doris Akol, and copied in the trade ministry on July 03, according to documents that The Independent has seen.

Similarly, Badhugo said Museveni promised to consult cabinet prior to making a final decision on cane exports.

Reports indicate that on average, the six sugar milling companies in Busoga have installed capacity of crushing between 1,000 to 7,000 tonnes of sugarcane daily.

However, cane production is in excess of 500,000 tonnes annually.

This development comes three weeks  since Busoga Sugarcane Out growers Association signed an agreement with West Kenya Sugar Company Limited’s  Olepito Unit located in Busia, Kenya,  to supply it with at least 600 tonnes of cane per day for an initial  three months.

In the agreement, a copy that The Independent has seen, also shows that the sugar firm will purchase mature cane at Ksh4,055 (Shs143,000) per tonne payable within two-three days upon delivery.

This is far higher than the offering from local sugar producers who have since lowered their price from Shs128, 000 Shs120, 000 per tonne.

The sugar company will also deduct 1% as administrative cost, currently, Ksh40 (Shs 1,400) per tonne to facilitate operations of the Busoga Sugar Cane Out growers Association. The Association will also not sign a contract with another Kenyan sugar producer.

The decision to export raw cane comes in the wake of delayed cane harvests beyond the recommended 18-month maturity period and drying up in the gardens.

This new step, however, places the sugar millers especially those in Busoga sub-region including Kakira and the Sugar Corporation of Uganda Limited (SCOUL) in an awkward position.

The millers have previously claimed that there was inadequate cane to enable them mill enough sugar to meet the growing demand for the product locally and within the East African region.

For that, the sugar millers have been pushing the government to pass the Sugar Cane Zoning Bill 2016 that seeks to limit establishment of new sugar processing firms in the already existing ones within a radius of 25 kilometres.

The proposed law also seeks to force sugar cane farmers or out-growers to supply their cane to the sugar processing firm within their zone, a proposal that the farmers vehemently opposed.

Though Parliament had in November last year passed the proposed law, Museveni refused to assent it into law.

He, instead, returned it to Parliament arguing that certain clauses, specifically sugarcane zoning had been omitted.

However, in his tour to Busoga sub-region, President Museveni did not give his position to the farmers with regard to the proposed law.

Instead, he said sugarcane prices will continue going down and that “there is nothing government can do.”

He also said sugarcane milers need to grow their own cane, a view that contradicts the government’s usual position that local farmers need to become out growers for agro-processing firms to boost their incomes.

“I have always told Madhvani (Kakira Sugar Limited managing director) to grow his own sugarcane and leave these out growers,” he said during a press briefing at the Jinja state lodge.

He said that Busoga residents need to reduce on the subsistence farming and adopt commercialised farming of coffee, fruits, and other food for their families. They should also grow pasture for animals; do poultry for eggs and fish farming.

He said sugarcane should be grown by an individual with at least six acres of land.

“Sugarcane takes 18 months (almost two years) to be ready, and if it is grown on small acreage, one earns about Shs2million. When you deduct costs you are left with Shs1m. But with 10 acres or more, the returns are much bigger,” he reportedly said.

Jim Kabeho, the chairperson of the Uganda Sugar Manufacturers Association told The Independent in an interview on July 15 that they are comfortable with nay decision that farmers will take and that the farmers have a right to sell their cane anywhere.

Sugar firms operational

He said there shouldn’t be complaints related to milling going forward as factories that have been on maintenance are now operational.

“The factories are now into operation and within the shortest time possible, there will be no more excess cane supplies,” he said.

On the other hand, the Minister of Trade, Industry and Cooperatives, Amelia Kyambadde, said she is opposed to exports for unprocessed raw materials like sugarcane as the move would hamper industrial growth.

Kyambadde, who met legislators on July 03, said Uganda’s industrial policy encourages value addition on products produced locally.

She argued that although Busoga sub region has recorded excess sugarcane in the last two months, the local sugar millers can process all the mature sugarcane.

She said the excess cane supply was caused by the suspension of sugarcane processing by Sugar Corporation of Uganda Limited (SCOUL) and Kakira Sugar Works as they carried out annual routine maintenance of their machinery.

She also said Mayuge Sugar, Kamuli Sugar and G.M Sugar Ltd factories reported machine breakdowns, leaving farmers with an option of exporting their sugarcane to Kenya.

Uganda’s sugar industry that started way back in the 1920s, now boasts of nearly 20 licensed companies majority of which are located in the south-eastern Busoga region.

The annual sugar production had increased from 140,000 in the 1960s to 240,000 tonnes in 2008 and 400.5 tonnes in 2014, it dropped to 365 metric tonnes in 2017, according to data from the ministry of trade.

Local consumption of raw sugar stands at around 350,000 tonnes per annum, according to USMA. The rest of it goes to the neighboring markets.

****