Sugar stockpiles reduce as export markets return

What you need to know:

During February, according to Bank of Uganda, sugar exports increased by 43 percent, growing to 21,541 tonnes up from 12,203 tonnes in January.

Sugar manufacturers have started to record a drop in stockpiles as previously blocked export markets return.

Speaking to Daily Monitor in an interview yesterday, Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman, said official exports have started going up, noting they are now exporting to Burundi, DR Congo, South Sudan and Kenya, though with some restrictions.

“We have seen our March numbers go up.  We have registered a change in consumption both at the local market – schools have opened - and at the regional level,” he said, but could not reveal by how many tonnes the stockpiles have reduced.

However, according to data from Bank of Uganda, during February sugar exports increased by 43 percent, growing to 21,541 tonnes up from 12,203 tonnes in January.

Sugar exports had by December fallen to just 8,833 metric tonnes, which signalled that damage that was being caused by blockades against Uganda’s sugar in countries such as Kenya and Tanzania.

The increase in volumes saw Uganda earnings from sugar increase to $13.1m (Shs47b) compared to $7.59m (Shs23.7b) in January.

In December, earnings stood at $5.45m (Shs19.6b), the lowest in over years.

However, Mr Kabeho noted that the earnings could have been more than what was recorded due the illegal exports, especially at all border markets.

“Because most of our borders are porous, some traders are exporting illegally. We have witnessed this around border points in Kenya and South Sudan,” he shared.

The growth has mostly been seen among large producers, which include Kakira Sugar Works, and Sugar Corporation of Uganda Limited and Kinyara Sugar Works.

Kakira has an annual production capacity of 180,000 tonnes while Kinyara and Sugar Corporation of Uganda Limited produce 120,000 and 100,000 toones, respectively.

According to Ministry of Trade, Uganda produces 510,000 tonnes of sugar out of which 360,000 tonnes are consumed locally.

The surplus, which had now grown to 170,000 tonnes, is exported within East Africa, Comesa and DR Congo.

However, much of the exports had been locked out, especially in Kenya and Tanzania, which have now partially opened up their markets. Rwanda only opened up its market last month.

Sugar blockades       

Uganda has suffered multiple sugar export blockades in the region in last three years with the most documented being Kenya and Uganda’s on-and-off talks to agree on the market of origin.

Kenya had in 2019 blocked Uganda’s sugar exports from entering its market, claiming that dealers were importing sugar from third party countries before it is dumped in Kenya.

 However, the blockade has for now been lifted.

 During various meeting in both Kenya and Uganda, government delegations from the two countries agreed that sugar exports from Uganda should not be restricted if they meet required standards.

The two countries have previously agreed that Uganda exports 90,000 tonnes of sugar to Kenya.

 However, the implementation of the 90,000 tonnes deal was severally delayed until late 2020 when only 20,000 tonnes of the 90,000 tonnes were allowed to be shipped into Kenya.

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