19 May 2017

Uganda: Workers to Lose Jobs As Cane Shortage Hikes Sugar Prices

Kampala — Sugar producers have blamed the sharp increase in the prices of the commodity on sugarcane shortages that have more than doubled the cost of the raw material compared to what it used to be paid for seven months ago.

The chairman of the Uganda Sugar Technologies Association (UTSA), Mr Mwine Jim Kabeho, told Daily Monitor in a telephone interview on Tuesday that the price of sugarcane has risen from Shs80,000 per tonne in October/November last year to Shs175,000 per tonne this year.

"The cost of production went high so the producers had to adjust the prices of the commodity accordingly," he said.

Sugar prices have been on the rise since last year. The price of the commodity shot up from Shs3,500 to Shs5,000 per kilogramme in December last year, which was blamed on Christmas.

But the price had by early this week hit the Shs7,000 mark, the highest amount that sugar has cost in seven years.

Mr Kirunda Magoola, the corporate communications manager of Kinyara Sugar Limited, Uganda's second biggest sugar producer with production capacity of 120,000 tonnes per day, says that the shortages have not affected the firm since President Museveni banned the transportation of sugarcane from Bunyoro.

"Some people had been stealing cane produced by farmers who are contracted to us under the sugarcane outgrowers scheme," he told Daily Monitor on Wednesday.

However, the story is different at Kakira Sugar Limited, which is Uganda's biggest producer with a production capacity of 180,000 metric tonnes per year and the Sugar Corporation of Uganda Lugazi (SCOUL), with an installed production capacity of 85,000 tonnes per year. Production at both places has shrunk.

Kakira Sugar, with an installed crashing capacity of 7,500 tonnes per day is now crashing less than 3,000 tonnes of sugarcane per day.

"Kakira is now thinking of laying off workers. It has been operating three shifts, but that is no longer possible. It is going to reduce to a single shift per day," Mr Kabeho said.

SCOUL, with an installed crashing capacity of 4,000 tonnes per day is reported to be crashing less than 3,000 tonnes presently.

Matters are said to have been complicated by the fact that mills are now forced to buy immature sugarcane in order to remain operating, but this has meant that Uganda is producing much less than it should be producing.

"Ten tonnes of sugarcane should ordinarily give you one tonne of sugar, but now the 10 tonnes are giving these mills about half a tonne. You have to keep fighting for the cane because you cannot say that you are waiting for the cane to mature," Mr Kabeho said.

Following the hike in prices, some consumers have made it daily business to check prices in several retail outlets for purposes of comparing prices.

"I try to compare prices at three or four different places before buying. Sometimes there is no difference in prices, but in one supermarket here (Jinja), it is usually about Shs300," says Ms Nuliat Nambi, a consumer.


The hike has also affected businesspeople. Mr Malijan Mwaka, a trader who buys in bulk, says that the drop in production at the two mills means that he cannot buy sugar as regularly as he would like.

"It is not good for business. Previously, I would pick sugar and take it to Kampala at least twice a week, but that has not been the case for the last few months," he said.

Bad decision

Mr Kabeho said this is the effect of poor decision making on the part of the ministry of Trade and Industry. First, he said, was the licensing of small firms such as Mayuge Sugar Industries and GM Sugar to operate within the same zones as the bigger mills like Kakira Sugar Limited and SCOUL.

"The licensing contravened the National Sugar Policy which prohibits the opening of new sugar mills within a radius of less than 25km of an existing plant," he said.


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