1. Uganda’s Sugar production & Consumption prediction

Factory Break down of sugar costs incurred;

Issues to note;

·         Current factory Gate Prices for Sugar per Bag of 50kgs; 112,400/=

·         Current factory Gate Prices for Sugar per kg = 2,250/=

·         Current Global sugar prices on the London stock exchange is at roughly 820 US$ / Tonne FoB UK

·         Government Excise Duty which was cut by 50% stands at 1,250/= per bag of sugar.

·         Therefore the tax cut on sugar during the budget reading was 25/= down from 50/=

·         Plus Transport & Taxes in Kampala, its at 1,200 US $ / Tonne

·         Uganda’s sugar consumption currently stands at 350,000 metric tonnes.

·         Kakira Sugar works Ltd produces just over 50% of all locally produced sugar.

·         SCOUL & Kinyara produce roughly 30% of locally milled sugar.

·         The balance of roughly 19% is imported which is a deficit of 20,000 metric tonnes

·         The others such as Sango Bay, Mayuge Sugar & GM sugar produce less than 1%

Reasons why there is a rise in Sugar prices;

·         The closure of SCOUL & Kakira for their annual repairs & maintenance schedule creating less supply…..though they have recently resumed productions but at a less scale than normal.

·         Global shortage due to less production in Brazil, India & Thailand due to massive flooding last yr.

·         The growing middle class & increasing urban settlements that’s demanding more sugar for domestic consumption.

·         The fast growing rate of food / agro processing industries that are using large amounts of sugar e.g. Juices, Bakeries / Confectioneries,

·         The current supply of immature cane by out growers due to low standards maintenance

·         Over 60% of sugarcane grown in Uganda is from out-growers who easily switch to whatever crop they like thereby leaving factories with a raw cane deficit needed for production.

·         The high level of undocumented / informal trade  of sugar exports to South Sudan & DR Congo further reduce the supply creating a bigger demand gap.

·         Shortage of land to increase acreage under cane cultivation.

·         Cane takes ling to mature (18 months) which is further affected by heavy / prolonged droughts (more sunshine days)

·         Cane rotes very fast when exposed to long periods of rainfall.

·         Sugar stocking at domestic & commercial scale due to the fast / daily rising of prices on an unpredictable rate.

·         Hording of sugar stocks by traders as an opportunity to cash in on the big demand.

Policy Solutions towards the current Sugar crisis.

1. Expedite plans by Madhvani to put up a Sugarcane plantation & factory in Amuru District (West Nile) and other regions that have large tracts of idle land.

1. Hold immediate direct talks between UMA and the Sugar Manufacturers with Government on the issue of the planned sugar importation such as quantities, duration, who to import.

1. Importation of sugar if not tightly regulated might leading to dumping of sugar from countries that subsidize their farmers.

1. Research on the possibility of establishing a Maximum Retail Price (price ceiling) for commonly used / basic commodities / none luxury items like Sugar, Salt, Medicines, and Scholastic materials (like in India & other Asian states) so as to reduce middlemen and price exaggeration & to boost sugar consumption which in turn promotes local production.

1. Commission a study on the possible future sugar production out of sugar beet root since it accounts for roughly 38 - 40% of the world’s sugar production.

1. The budgeted fund of 30 billion shillings towards agriculture shouldn’t be channeled through commercial banks. This is to avoid the high interest rates and bureaucratic procedures in place and to benefit the commercial and large scale agriculture farmers more directly.

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