What you need to know:
- The stockpiles, Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman, said at the weekend have been building up since last year but have now worsened with decrease in exports due to lack of market.
With most export markets closed out to Uganda’s sugar and a decline in local consumption, sugar stockpiles have now grown to $45m (Shs168b).
The stockpiles, Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman, said at the weekend have been building up since last year but have now worsened with decrease in exports due to lack of market.
Data from Bank of Uganda indicate that cumulative exports for the year ended August 2020, dropped to $95.7m (Shs359b) from $114.3m (Shs428b) in the same period between August 2018 and August 2019.
The decline represents an annual decline of 19 per cent during the period.
However, Mr Kabeho, said the decline could now have grown further with a number of export markets such as Kenya and Tanzania still locked to Uganda.
For instance, he said, Uganda, after being closed out in Tanzania before it was allowed back and then closed out again, had hoped that Kenya would increase sugar export permits held by Ugandans from 35,000 tonnes to 90,000 per quarter.
However, Uganda, according to Mr Kabeho, has not traded sugar with Kenya since February after the country announced it would close out sugar imports to protect its industry.
In July Kenya cancelled all sugar export permits held by Ugandan sugar traders, noting its market was being flooded with cheap sugar.
In issuing the ban, Kenya’s agriculture cabinet secretary Peter Munya, said the country’s sugar millers were being rendered uncompetitive.
The ban at the time increased sugar stockpiles to about 150,000 tonnes in July but have since grown to more than 155,000 tonnes.
Tanzania and Rwanda were the first to close out Uganda’s sugar. However, although Uganda had resumed exports to Tanzania, they have since February been closed out with the country applying for permission to import sugar outside East Africa.
The situation, Mr Kabeho said, has been made worse by sugar imports, which are stacked in various bonds, thus increasing local stockpiles.
“Even when the President issued a directive in 2018 for these bonds to close because they are killing local industries, nothing has been done and on top of this they [bonded sugar] owners don’t pay taxes,” he said, noting the sugar imports have not only eaten into their exports market but have encroached on their local market in some parts of the country such in northern Uganda.
According to Kabeho this year they expect a production capacity of about 550,000 tons of this 370,000 tones is sugar destined for the local market and the 150,000 tones surplus.
However all is not lost, as sugar manufacturers are casting their net to countries like Ethiopia and Zambia.
According to Uganda Sugar Manufacturers Association this year the industry is expected to produce about 550,000 tonnes, of which 370,000 tonnes will be consumed locally. With the export market remaining unstable, the association has noted an increase in stockpiles to about 155,000 tonnes, which are expected to have increased by close of the year.
However, he said, sugar manufacturers have been searching for markets to regional neighbours such as Ethiopia and Zambia.