Review calls for overhaul of sugarcane sector

Assessment Proposes Creation of Independent Oversight Council

Kampala, Uganda| THE INDEPENDENT | A regulatory impact assessment of the sugar industry has called for a significant overhaul in the management of the sugarcane sector. The assessment has also recommended a shift towards a more comprehensive approach that goes beyond sugar as a product to unlock the full potential of the industry.

The regulatory impact assessment, whose findings have been presented for validation, was carried out by the Economic Policy Research Centre (EPRC) with support from a 47-member technical group. This group included representatives from farmers, millers, policymakers, experts, and other key stakeholders.

Dr. Sarah Ssewanyana, EPRC Director, noted that the review highlighted a narrow focus on sugar within the sector, despite the broader potential of the sugarcane industry. She emphasized that the sector extends far beyond sugar production, encompassing a range of products and by-products, including bioenergy, bio-based materials, and other value-added uses that have yet to be fully explored.

While presenting the report in Kampala on Thursday, Dr Swaibu Mbowa also said that sugarcane, as a perennial crop, undergoes various stages including growth, processing, value addition, and the use of different inputs and services.

“The focus has largely been on sugar, rather than the broader sugarcane industry, which holds significant untapped potential. This narrow focus has caused a missed opportunity, as the ongoing debate remains centred around sugar alone. Ultimately, farmers, millers, and the government are losing out on the bigger picture,” he noted.

He also noted that the industry is big and encompasses several key areas beyond sugar production, including ethanol and power generation, as well as molasses production, bio-based products, biochemicals, animal feed, and carbon sequestration among others.

The draft report, which is divided into three key areas of the sugarcane sector—growing, processing, and value addition—identifies over seven critical issues that need to be addressed through amendments to the national sugar policy and Sugar Act, as well as the enforcement of existing mechanisms.

Among the issues highlighted are unhealthy competition among sugar companies over land acquisition, and inequitable pricing mechanisms for sugarcane. A major concern is the unclear mandate of the Ministry of Agriculture, as sugarcane is currently overseen by the Ministry of Trade.

Dr. Ssewanyana emphasized that for future improvements, the Ministries of Trade, Finance, and Agriculture must collaborate more closely. She also stressed the urgent need to define the Ministry of Agriculture’s mandate, particularly to enhance sugarcane research and other critical areas.

The report also provides guidelines and recommendations to address the root causes of the identified issues within the sector, including revising the pricing formula, improving governance in the sugarcane sub-sector, and regulating the licensing of new mills and the location of weighbridges.

To enhance coordination and ensure broader stakeholder involvement, the report suggests the establishment of a council with representation from all concerned parties. This council would be responsible for overseeing key matters in the sector, including the implementation of the revised pricing formula and other critical reforms.

However, this is not the first time a council or a similar body has been proposed. The idea has been a key feature since the first Sugar Act of 2018, where it was introduced in the form of a board.

In the current amendment, it is proposed as a council. However, outgrowers have opposed it, as the bill suggests that the council would be funded by the millers. Farmers argued that without proper representation, the council would favour millers, and they have since called for a portion of the proposed levy to be paid by them to ensure their voice is heard.

The report also calls for a review of the pricing structure for the various products derived from sugarcane. Currently, farmers receive a percentage only from sugar, while millers retain the revenue generated from other byproducts.

Michael Mugabira, the project coordinator of the Greater Busoga Sugarcane Growers’ Cooperative Union, emphasized the need for a more practical formula that shares the proceeds not just from sugar but also from these other products.

At present, out growers receive 50 percent of the proceeds from sugar. However, Mugabira pointed out that this 50 percent is relatively low compared to other countries, where farmers typically receive between 60 and 65 percent of the total proceeds, including revenue from byproducts.

He added, however, that while the report is strong in many aspects, the “big elephant in the room” remains its implementation. He noted that all eyes are now on how the report’s recommendations will be put into practice.

Wilberforce Mubiru, Deputy General Manager in charge of Administration at Sugar Corporation of Uganda Ltd (SCUOL), speaking on behalf of the millers, acknowledged that the impact assessment addresses many of the concerns they have long raised with the government, particularly regarding licensing standards. He argued that the licensing process should be more structured, rather than permitting multiple mills to operate in the same areas.

Mubiru further emphasized the need for more research to develop improved sugarcane varieties and called for the establishment of a regulatory body, such as a board or council, to better organize and oversee the sector.

The sugar subsector is one of the most controversial and debated areas. Before 2005, the sector had limited players, including outgrowers and three millers—Kinyara, SCOUL, and Kakira. However, the government liberalized the sector in 2005.

In 2010, a national sugar policy was developed, addressing seven key areas such as governance, cane pricing, market zoning, and coordinated cane production. Despite this, the policy was never operationalized due to the lack of a supporting act.

Dr. Mbowa pointed out that the policy, which was hastily drafted and passed in just two weeks, overlooked key issues, and no regulatory impact assessment was conducted. He believes these oversights are fundamental causes of the ongoing challenges in the sector. He added that there have been regulatory failures because no proper regulatory impact assessment was conducted to address the real issues, rather than just the symptoms, in the sugarcane sub-sector.

“In 2018, a law was enacted to operationalize the policy, with three main components: the establishment of a regulatory board, zoning (which was highly contested), and pricing,” he noted. “However, challenges in the sector continued to escalate, and just two years later, a new act was passed that excluded zoning and a pricing formula—both of which were contested by out growers.”

With the 2020 Sugar Act becoming a point of contention for outgrowers, an amendment was proposed in 2023, which included the creation of a council to coordinate and provide oversight for the sector. The millers offered to provide a levy to support the council, but this proposal was met with resistance from out growers, among other concerns. As a result, the amended bill has yet to be passed.

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URN