Kinyara works stuck with 'costly' industrial sugar

Kinyara Sugar Works has said it has experienced lower than expected demand for industrial sugar, a year after President Museveni commissioned its manufacturing plant in Masindi. 

“I have the stock but no buyers,” Mr Ramalingham Ravi, the Kinyara Sugar managing director told Monitor, adding that despite lower than expected demand Kinyara is increasing production capacity from 60,000 tonnes to 75,000 tonnes annually. 

Data from Uganda Sugar Manufacturers Association indicates that GM Sugar is also producing 13,000 metric tonnes while Mayuge Sugar expected to add 30,000 tonnes.  

However, some off-takers have cited high prices, inconsistency in quality and volumes as some of the reasons that have forced them to depend on imports.  “The demand for industrial sugar reached 130,000 tonnes last year, but only 35,000 tonnes was available for off-takers,” Mr Paddy Mulamirah, the Crown Beverages chief executive said in an interview, adding: “Sometimes the quality is good and other times it’s bad.”

However, Mr Wilberforce Mubiru, the Uganda Sugar Manufacturers Association general secretary, challenged concerns raised on quality, noting that Uganda’s white sugar manufacturers source their machines from the same sources.

Additionally, he said, the high cost results from the cost of sugarcane, which now cost between Shs180,000 and Shs190,000 per tonne. 

“This is a cycle of high sugarcane prices. We expect the prices of sugarcane to drop next year when production increases,” he said. 

Comparatively, details indicate that locally produced industrial sugar costs Shs3.8m ($1,015) per tonne compared to Shs3.37m ($900) when imported.

Uganda negotiated at the East African Community Secretariat for duty reduction to enable ongoing production of finished goods that use industrial sugar as raw material, in the absence of locally produced industrial sugar.

Mr Simon Kaheru, the East African Business Council vice chairman, said in an interview that they had held discussions with off-takers, producers, and potential producers of industrial sugar as well as government to address the concerns. 

“Uganda is the focus because it is the only country in the region producing industrial sugar, and there was a point when the duty remission was removed. We had to arrange dialogue because that caused disruptions to production,” he said, noting that: “Now that there is sugar available locally, removal of the tax remission is certainly welcome but the changes need to take into account the availability of the right quantity and quality .” 

Through EABC intervention, government has agreed to a hybrid arrangement where imported industrial sugar continues to come in as producers build local capacity.

Mr Patrick Ocailap, the deputy secretary to the Treasury and deputy permanent secretary in the Ministry of Finance, said the production of industrial sugar locally answers government’s push for import substitution, creation of jobs, and industrial linkages.

“Industrial sugar manufacturers should be looked at positively so that we find out what is hindering them to produce,” he said. 

Six licensed companies 

By last year, the Trade ministry had licensed six other companies to produce refined industrial sugar. 

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