16 April 2019

Uganda: Farmers Express Mixed Views On Museveni's Rejection of Sugar Bill

Jinja — President Museveni's recent refusal to assent to the Sugar Bill has drawn mixed reactions from sugarcane farmers and manufacturers in Busoga Sub-region.

Addressing the NRM Parliamentary Caucus retreat at the National Leadership Institute in Kyankwanzi District last month, Mr Museveni said he refused to sign the Sugar Bill into law in order to protect the sugar industry.

"The way you are behaving, you are antagonising our old sugar people and I don't know the relationship you have with small sugar people," the President said.

But speaking at the weekend, the spokesperson of Busoga Sugarcane Out growers Association (BSGA), Mr Godfrey Naitema, expressed displeasure with the President's decision, arguing that Uganda is a liberalised economy where all investors are free to compete.

"Mr Museveni wants to favour only big investors yet he previously said he wants Uganda to be an industrialised country. We shall not accept monopoly in the country because we are already a liberalised economy," he said.

Mr Naitema said the current factories in Busoga, including Old Kakira Sugar Works Limited, cannot consume all the available sugarcane due to low demand from millers.

"President Museveni's refusal to assent to the Bill means farmers from Busoga will be the most affected because sugarcane farming is their main source of income. We have educated our children up to university using proceeds from sugarcane; so, limiting the number of sugar companies in an area will reduce on the market for our sugarcanes," he said.

According to Mr Naitema, if Parliament reinstates Clause 22 of the Sugar Bill [zoning], it will give old sugar companies a chance to reduce on the sugarcane prices because competition for raw materials will be eliminated.

Key amendments in the Bill include deleting Clause 22, which had provided that the Sugar Board would not license more than one miller in an area within a radius of 25 kilometres from another.

It also includes a new formula for paying sugarcane out growers, notably that the minimum prices will be a product of the weight in tonnes of the cane and the amount of sugar to be squeezed out of every 100 tonnes times 50 per cent.

The 50 per cent is to compensate the out growers for the additional derivatives that millers extract from sugar such as molasses, ethanol and bagasse for power generation.

The chairperson of Uganda Sugar Manufacturers Association (USMA), Mr Jim Kabeho, said the absence of a zoning policy compels millers to fight for sugarcane, which has killed the sugar industry.

"Since 2005 when these small factories started mushrooming, production has been going down yet ordinarily, it would have been going up because of the many factories," Mr Kabeho said. "Uganda had a capacity of producing 600,000 metric tonnes of sugar every year but we are now producing only 400,000 tonnes because there are no enough raw materials for all the existing plants," he said.

The manager in-charge of large taxpayers at URA, Mr Simon Ngabirano, while in Kakira last week, said MPs rushed to pass the Sugar bill without understanding its implication.

He said this has led to the Bill's misinterpretation.

"We can see the level of interests about the sugar Bill I think President's actions at the moment gives us chance to have another look, there is an opportunity to give the MPs time to re-table it because scarcity of materials and competition is not healthy in the Sugar sector," Mr Ngabirano said. He was speaking during a function to recognise Kakira Sugar Works Ltd for its Shs254b contribution in taxes.

About sugarcane sector

Farmers- BSGA records indicate that Busoga sub-region has 20,000 large scale sugarcane farmers and five sugar factories of Kakira Sugar Works in Jinja, Mayuge Sugar Factory, GM Sugar Factory in Njeru Town Council, Buikwe District, Kamuli Sugar Limited and Kaliro Sugar Limited.

Likelihood. If Parliament amends the Bill, sources say all small sugar mills near established sugar factories will be compensated and given a five-year tax holiday until they break even. On March 1, Mr Museveni wrote to the Speaker of Parliament, Ms Rebecca Kadaga, rejecting the Bill.

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