What Kenya’s ban on brown sugar, cane means for Uganda

The sugar industry in Uganda is headed for a crisis after the Kenyan government last week ordered for an immediate ban on the importation of brown sugar and cane.

The directive, contained in a July 2 statement by Mr Peter G Munya, the Cabinet Secretary for Agriculture, Animal Industries and Fisheries, has left more than 150 trucks carrying raw cane stuck at the Busia border.
Mr Munya also ordered the suspension of pre-shipping approvals and extension of all sugar import permits until further notice.
Mr Munya, in his press release, said: “Government was moving in to revive the sugar industry with the aim of making the sector competitive, which had huge potential to regain its lost glory and flourish.”
Mr Jim Kabeho, the chairperson of Uganda Sugar Manufactures’ Association, on Wednesday described the move as a crisis for Ugandan sugar.
“We are in trouble, we used to export sugar to Rwanda but Rwanda is closed; we tried South Sudan but Juba doesn’t respect some regional protocols; and now Kenya, which was a market for both cane and sugar is closed.
“I don’t know what we are going to do. We have about $50m in stock and I’m afraid we are going to close. We have written to almost everyone but nothing has borne fruit,” Mr Kabeho said.
He added: “This is a crisis because we have never experienced this. We have never had stock in excess of $50m. What this also means is that sugar is going to get spoilt because some companies have no stores for keeping excess stock.”
However, Mr Isa Budhugo, the chairperson of Busoga Sugarcane Outgrowers Association, has called for retribution against Kenya for their move.
“Of course Kenya has the right to ban the importation of our sugar, but our government should also temporarily ban their goods from entering so that they also feel the pain,” Mr Budhugo said.
He also wants the government to buy all excess sugar and store it in warehouses such that when there is a market, it can sell.

Why Kenya imposed ban
Kenya has suffered turbulent times in its sugar sector leading to the closure of several major sugar manufacturers.
Mumias Sugar, the biggest sugarcane miller, where the government owns up to 20 per cent shares, is heavily indebted.
Other sugar manufacturers such as Nzoia, West Kenya, Olepito, West Sugar, Butali and Busia Sugar are under-performing due to limited supply of raw materials.
The underproduction in the sugar sector has been unable to match the increase in local market demand, which has more than doubled in the last decade.

In 2016, for example, sugar production in Kenya increased to 639,741 metric tonnes from 523,652 in 2010 while in 2019, the production slumped to 440,717 metric tonnes against the national consumption, which stood at 1,038,717 resulting in huge sugar deficits.
This means that Kenya had to rely heavily on imports from Brazil and the Common Market for Eastern and Southern Africa (Comesa) bloc market, particularly Uganda.
According to the statistics from the Ministry of Agriculture, Animal Industry and Fisheries, between January and March, Kenya imported 157,529 metric tonnes of brown sugar from Comesa, while the agriculture and food authority had additional requests to import another 586,000 metric tonnes, which are yet to be approved.
But it had to resort to the importation of raw cane from Uganda, with the main destination being Busia Sugar Industries, a move aimed at cutting the sugar deficits in Kenya.
Competition
Mr Lambert Lwanga Ongochi, the national coordinator for small scale sugarcane farmers in Kenya, said the decision to ban the importation of raw cane from Uganda had been long overdue, saying many farmers in the sugarcane belt of western Kenya had been pushed out of business by the cheap sugarcane from Uganda.
“Can you imagine Uganda was selling a tonne of sugar to Kenyan millers at less than KShs3,000 (about Shs105,000), while we are demanding for at least Kshs3,700 (Shs120,000) per tonne for a Kenyan farmer?” Mr Ongochi said.
Mr Ongochi, a farmer with two acres of sugarcane in Bumutiru Village, Nambaale in western Kenya, said the new policy would motivate farmers and revive sugarcane farming in the country.

He added that sugarcane growers in Busia and Siaya counties had 32,000 hectares with the capacity to expand to more than 50,000 hectares.
Mr Ongochi further revealed that of the 32,000 hectares, 12,000 hectares had sugarcane which were ready for harvesting but had not been bought by millers because of the competition from the neighbouring Uganda.
But as Kenya moves to protect her farmers and the under-performing sugar sector, many players believe the country lacks capacity to produce enough raw materials to feed their sugar industries.
Mr Kenneth Otieno, a Kenyan national and a transporter, said: “We know they are demanding a ban on sugarcane importation but they lack capacity to produce enough sugarcanes needed by the various industries.”

Way forward
The traders and farmers, through the national cross border trade chairperson, Mr Godfrey Oundo Ongwabe, have petitioned the Ministry of Trade and EAC over the issue.
The July 13 petition says the decision by the Kenyan government was hurriedly undertaken without any communication to the Ugandan government.

“The traders got an immediate stoppage which was aimed at stifling trade in sugarcanes across the border,” the letter reads in part.
Last year, President Uhuru Kenyatta and his Ugandan counterpart Museveni, signed a bilateral agreement that allowed Ugandan farmers to import sugarcanes to Kenya for three months, which agreement expired last December.
Traders speak out
Mr Godfrey Barasa, a Ugandan trader, said close to 6,000 tonnes of sugarcanes were rotting away after they were stopped from crossing into Kenya last week.
“I have six trucks waiting to cross into Kenya but they are wasting away because of their high rate of perishability,” Mr Barasa said.
Mr Barasa wondered why Kenya had targeted sugarcanes and yet continued to import cereals, tomatoes and fruits from Uganda.
Ms Angela Odongo, another sugarcane trader at the border, said the ban was abrupt.
“I got permits, paid farmers and transporters, but without any communication. I am being told that there is a ban on sugarcane importation into Kenya,” she said, adding that the ban was ‘in bad spirit’ and in violation of the East African Community protocol.
Under the common market protocol, East African Community allows free movement of people, goods, services, labour and capital.

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