What you need to know:
- Raw materials such as sunflowers, soybeans and sheanut are scarce, forcing some factories to halt operations
Several oilseed factories in Lira City are on the verge of collapse due to shortage of raw materials.
Raw materials such as sunflowers, soybeans and sheanut are scarce, forcing some factories to halt operations.
The prolonged dry spell in the northern region, which caused poor harvest in the last two seasons, has worsened the situation.
The factories are currently operating at only 20 percent capacity.
Mr Paul Omara, the managing director of Ngetta Tropical Holdings Limited, which produces cooking oil, said their third-quarter sales have been hit significantly.
“We have about 48 factories in Lira City milling sunflower and other oils, but we don’t have enough grains. Majority of these factories are operating at 20 percent capacity,” Mr Omara said this week.
He said the managing director of Totco has already got contracts in Tanzania to supply sunflowers to the factories.
“Now you can imagine we are exporting grains where some of us need the grains to add value and we make more money,” Mr Omara said.
Mr Tonny Ayeny Otim, the general manager at Ngetta Tropical Holdings, said they decided to close the factory because of the high cost of transporting raw materials due to bad roads.
“Raw materials such as soybean, sunflowers, and shea nut for making soap and cooking oil have been in short supply for the last two planting seasons. The scarcity is due to unfavourable weather that hit most farms across the region,” Mr Otim said.
“Accessibility of our cooperatives is a big challenge. Our cooperatives are in the three main regions surrounding us; Teso, Lango and Acholi. To get the produce that our cooperatives produce, you have to access them, either they bring it here or we take our lorries and we ferry the grains. Some of our cooperatives are in remote areas and the lorries have to battle with the roads,” he added.
Mr Pius Ongom, the accounts manager at Guru Nanak Industries, said they also face high costs of electricity and fuel prices.
“We are not making soap because we have some challenges. The cost of raw materials for making soap is high due to the rise in fuel prices,” Mr Ongom said. “Our capacity of making soap is 25 tonnes per day though we used to make half of it. We stopped producing soap last year and we have not yet made any production this year due to lack of raw materials,” he added.
A kilo of shea nut has increased from Shs1,500 to Shs4,500.
Mr John Okello, a farmer in Ngetta ward, Lira City East Division, said they had poor yields in the last two planting seasons, adding that prices are also low.
“We used to produce sunflowers and we did not encounter any problem because after harvest we would reap big. But last year when we planted in plenty, we were affected by the prolonged dry spell and we ended up making losses,” Mr Okello said.
“At times when we take the grains for sale, they are bought so cheaply, which demoralises us from continuing to plant it and that is the reason the grains are scarce,” he added.
There has been a sharp increase in the prices of soap and cooking oil in the Lango sub-region following the closure of the factories.
For instance, a bar of soap costs between Shs2,800 and Shs4,500 depending on the brand while a litre of cooking oil has increased from Shs7,000 to Shs9,000.