Sugar export earnings have suffered a 54 per cent decline as neighbouring countries lock the commodity out of their markets.
According to Bank of Uganda, for the month ending June, sugar export earnings declined to $7.4m (Shs27.3b) down from $11.4m (Shs42.3b) in May.
During the period, Uganda exported a total of 14,991 tonnes down from 23,212 tonnes in May.
This was a decline of almost 8,221 tonnes, which represented a 54 per cent fall.
Industrial experts have indicated that the exports might decline further if the impasse with neighbouring countries, which are some of the key sugar export destinations, are not resolved.
For instance, Kenya last month cancelled all permits for sugar exporters from Uganda, noting its market was being flooded with cheap sugar.
In issuing the ban against Ugandan sugar, Kenya’s agriculture cabinet secretary Peter Munya, reasoned the country’s sugar millers were being rendered uncompetitive.
Until recently, Kenya was the only market that had been importing Uganda’s sugar.
The ban meant that at least 35,000 tonnes of sugar exports from Uganda were locked out.
Before the ban, Uganda had been seeking to increase the uptake to at least 90,000 tonnes per quarter to help reduce stockpiles that currently stand at about 150,000 tonnes.
Tanzania, which had reopened its market for Ugandan sugar in June after a ban of almost a year, has since not taken in more sugar after just taking in 20,000 tonnes in June.
The country has since applied to import sugar outside the East African Community to close a deficit of about 90,000 tonnes.
In June, Uganda exported sugar worth $12m (Shs44b). However, no other exports of the commodity to Tanzania have since been recorded.
Therefore, the developments across the region have forced a drastic decline in Uganda sugar exports falling by more than a half.
Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman, said whereas things are not bad now, the industry expects a further decline if Kenya and Tanzania continue to lock out Uganda’s sugar exports.
“New players (Atiak Sugar factory) have come on board [while] existing producers have stockpiles. This is a big challenge we are experiencing,” he said, noting that it is time players and government search for other markets as they wait to resolve the issues in not only Kenya and Tanzania but also Rwanda.
“We are targeting DR Congo, South Sudan, and Zambia which are supporting the industry,” he said.
According to Mr Kabeho, Uganda is seeking new markets in DR Congo, South Sudan, and Zambia to support sustained exports growth. On Wednesday [August 12], he said, sugar producers had also held a meeting with an Ethiopian delegation in Kampala for trade negotiations, among which included the possibility of exporting sugar to the country.
Ethiopia has an annual sugar demand of over seven million quintals.