It’s wrong to have sugar factories near each other

Wednesday May 15 2019


By Jim Mwine Kabeho

Uganda Sugar Manufactures’ Association (USMA) agrees with the Trade and Industry Committee report on regulating and zoning of sugar factories as a long-term national issue and not a regional matter as has been misconceived.
Uganda’s climate is suitable for sugarcane growing in the entire country and for 12 months of the year. It is for this reason that the sugar mills should be spread all over the country, which will result in development of the whole country.

For example, the government has licensed more than 20 sugar factories in Uganda. If all these factories choose to come to one region, it would be a disaster and chaotic and cause food insecurity and poverty in that region.

Similarly, if you ask the sugar companies who have gone to their own areas, started their nucleus estate and develop their own farmers, you would fully understand the necessity for zoning. It is totally wrong to allow factories to be set up in close proximity to each other as it will hinder expansion and diversification of these industries. It is also not viable in the long-term industrialisation of the country.

We have emphasised time and again that zoning is not for farmers, but is meant to regulate the sugar industry for sustainable development. Farmers are free to sell their cane anywhere unless they have binding contracts with a specific sugar factory.
The regulation and Zoning allow the growth of a fruitful partnership and collaboration between mills and farmers.

However, what is now being promoted by those against Zoning, is to isolate farmers from millers. They want farmers independent of millers and vice versa. This will mean farmers no longer obtain extension services and assistance like loans, seedlings, fertilisers, ploughing, etc, and also no guarantee that any one factory will take farmers’ cane. This is a very dangerous setup, farmers and millers must work together for a sustainable sugar industry.

Lack of regulation has seen the sugar industry collapse and the best example is our neighbour in Kenya, where many factories were licensed in western Kenya without due consideration of available cane. Sugar production has dropped by more than 50 per cent in a period of five years.

Why should we reduce the production on one factory by licensing a new factory in the same area? Since 2015, Uganda sugar production has gone down despite having more factories on board. It is, therefore, not the number of factories, but how these factories operate and are managed.

We have also seen cane yields go down (20 tonnes per hectare) in the fields while sugar recoveries have dropped from 10 per cent to 6 per cent. This is a lot of sugar lost in production and loss in corresponding revenues, including government tax. Cane prices and sugar prices depend mainly on regional and world sugar markets. In Uganda, we have had high prices for consecutive seasons but this will soon change and prices will drop like we have seen before.

Uganda is currently the only country in East Africa with sugar surplus which we can export to our neighbours, we must remain competitive to sustain this. This calls for good agricultural practices in the field to improve our yields, which cannot take place where there is not sufficient cane for the sugar factories.

The closure of European Sugar Quotas to SADC and Comesa countries in 2017 will mean stiff competition for our sugar. These countries are now looking to East African market yet they are low-cost producers. Similarly, our East African countries that would take on sugar will look down to those countries for their deficit sugar.

In conclusion, sugar industry is one of the few agricultural sectors that has seen success in Uganda. There are challenges that we must address to keep the industry stable while millers/farmers must work together to improve production and remain competitive in the market.

Mr Kabeho is the chairman -USMA,