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Uganda: New Sugar Companies Blocked Out
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New Vision (Kampala)
8 May 2008
Posted to the web 9 May 2008
David Muwanga
Kampala
THE trade ministry has written to the Uganda Investment Authority to suspend the licensing of new sugar factories.
"The suspension stands until a solution to the milling zones problem is found," said Dr. Bruno Emwanu, the acting executive director at the Uganda Manufacturers Association.
Last year, Kakira Sugar Works in Jinja, protested the establishment of Mayuge Sugar Industries, arguing that the move would comprise its out-grower investments.
Sources said at the time that some out-growers with contractual obligations to supply sugarcane to Kakira were allegedly taking the cane to the new firm because of the high pay.
Old firms claimed that their new counterparts had not developed any sugarcane supply chain and would 'poach' sugarcane from contracted farmers.
However, the Mayuge factory was later sanctioned after a court order quashed Kakira Sugar's pleas to block its operations.
Emwanu explained that sugar manufacturers were faced with raw material shortages because some companies buy sugarcanes from out-growers they never invested in.
Sugar manufacturers usually support out-growers with improved seeds, road repairs and transport.
Emwana said the manufacturers want the Government to create sugar milling zones within a radius of 35kms of each other.
They also want jaggery millers encouraged to operate in their own zones.
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"We also recommended that the Government updates the feasibility study on ethanol production and provide incentives for investment in establishing distilleries in the next financial year," Emwanu said.
He said the Government should not permit illegal jaggery mills including sugar mills without proper feasibility studies to operate.
Emwanu also asked the Government to improve infrastructural in the sugarcane out-grower areas.
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