What you need to know:
- The entry of multiple investors in sugar production has greatly affecting the price tag for sugarcane.
- Irene Abalo looks at the unpredictable market that has given rise to ruthless middlemen, who have enforced an extortionist cartel permit system, pushing farmers to the edge.
Sugarcane plantations, which spread across tracts of land in Busoga are the economic pulse of the sub-region that holds more than 50 per cent of the country’s milling sugar factories.
Almost every parcel of land is utilised to the extent that of the 11 districts in the sub-region, 10 are engaged in large-scale sugarcane farming.
In this part of the country, the price of sugarcane determines the wellbeing of communities.
Mr House Mawuluba, a local, says sugarcane farming is an economic activity that has been inherited from older generations.
“My father was a businessman and sugarcane farmer, the money from this business paid my tuition, I decided to enter into this business to pay fees for my kids, I have got good things and bad things, I came to Kaliro, and I am the chairperson of the cooperative society. I have about 400 farmers,” he says.
As Uganda’s domestic demand exponentially grew in the early 2000s driven by consumption in emerging urban centres and in the neighbouring countries such as South Sudan and DR Congo, so did sugarcane plantations sprout across fields in Busoga.
With a lot of sugarcane on the market, this prompted the entry of multiple investors in the sugar production business that set up new factories in Busoga.
Mayuge Sugar factory, Kamuli, Kaliro, and GM Sugar were also attracted by the sugarcane, which they could instantly crush to produce sugar whose demand was rising.
Kakira Sugar Works and Lugazi Sugar Factory that once monopolised the market couldn’t keep up with the demand.
However, disruptions in exports and dumping of cheap smuggled sugar onto the market began to creep into the sector.
This sent prices into volatility as the price of sugarcane crashed, steeply dropped from Shs180,000 to Shs120,000 and to Shs110,000 in July last year.
By July this year, prices once again fell from shs110,000 to Shs104,000 and later there was a steep decline to Shs96,000 at which it is selling now.
Even at that low price, the millers in Busoga don’t have the capacity to consume the sugarcane, partly because of limited production capacity.
The unpredictable market has given rise to ruthless middlemen, who have enforced an extortionist cartel permit system, which has pushed farmers towards the cliff.
Those who buy the sugarcane from the farmers usually pay them as little as Shs60,000 per tonne, Shs36,000 less than the market value.
When the farmers do not sell their sugarcane to the permit brokers, they are compelled to supply their sugarcane to the factory through a permit holder who takes a commission off each trip delivered.
The commission off each trip is usually Shs100,000 per trip. With such an exploitative system, many households have been left in a state of abject poverty.
Mr James Wako, who is an outgrower, told said: “There is a level of corruption exhibited in that area. Getting a permit, is a struggle, you must give money. Getting a vehicle is also another hustle, you must also give money.”
The current domestic demand for sugar in the country is estimated at 380,000 metric tonnes, which remains below the prevailing production surplus of 550,000 metric tonnes, per year, being produced by the entire 15 sugar factories located across the country.
Kenya, which was previously consuming Uganda’s sugarcane in July last year, briefly banned the importation from the neighbouring country.
More than 100 trucks from Uganda carrying about 6,000 tonnes of sugarcane were stranded at Busia border. Kenya later lifted the ban in December 2021.
As prices remain unpredictable, so are household incomes.
The Uganda National Household Survey released on June 2, 2021, indicates that although there is significant reduction in poverty levels in Busoga, the sub-region still contributes the largest percentage of poor people in the country at 14 per cent.
According to the 2016 Demographic Health Survey, it indicates that up to 50 per cent of the children admitted in Busoga’s hospitals are severely malnourished as households cultivate sugarcane on their parcels in the place of food.
Figures from the Health ministry, suggests that 53 per cent of the children in Busoga are anaemic and that a majority of them are born weighing less than 2.5kgs.
Now farmers want to build robust cooperative societies at the grassroots to give them bargaining power against exploitative blue-chip factories.
“We now have 77 cooperatives in greater Busoga and we have farmers who have registered at the sub-county and they have subscribed in the union,’’ Mr Felix Nangabo, who is a cooperative society leader, says.
In February 2019, an estimated 600 acres of sugarcane near Atiak Sugar Factory in Amuru District was razed in a fire.
The factory is owned by Horyal Investment Holdings Company Ltd belonging to businesswoman Amina Hersi, in partnership with the local community and the government.
Through the National Agricultural Advisory Services (Naads), government agreed to support farmers to grow sugarcane to supply the factory through cooperatives in Amuru and Lamwo districts.
As Busoga’s surplus sugarcane went to waste, farmers offered to fill the void at Atiak Sugar Factory.
“We asked for help and we got a subsidy [from government] to take the sugarcane to Atiak. Before that, we had a problem in Busoga, we were stuck with sugarcane worth three million tonnes, we have so far worked for six months and we are reaping and about 7,000 homes have benefitted.
“We are not at war with factories in Busoga, we are in business,” reveals Mr Wako.
Cooperatives continue to register names of farmers who send their sugarcane to Atiak Sugar Factory whose payments are sent to their bank accounts.
The Greater Busoga Sugarcane Growers Cooperative Union wants to engage Uganda Development Corporation (UDC) a state-owned investment vehicle to provide funding for commercial projects.
Mr Patrick Birungi, who is the executive director of UDC, says his institution focuses on job creation and other aspects.
“We look at the transformative impact of the intervention and how does a community benefit from the intervention. It must be reducing the trade balance, so meaning that you are either aiming at import substitution or export promotion and the other is local entrepreneurship development,” he says.
Sugarcane farmers want UDC to sustain supplies to Atiak for another two years.
Supplies to Atiak Sugar Factory is estimated to generate nearly Shs15 billion revenue over a yearlong period. Farmers are to supply more than three million tonnes of sugarcane to the miller in northern Uganda.
The perspective, however, is most of this sugarcane would have gone to waste, if fires had not razed plantations in Amuru.
“We had to kill two birds with one stone, ferry out the excess sugarcane from Busoga because farmers are suffering but also help the factory in Atiak,” reveals Mr Birungi.
Mr Taaka Mugogo, who is a member of the Greater Busoga Sugarcane Growers Cooperatives Union, says government has partly salvaged Busoga farmers, but this is a short-term solution.
“So far more than 80,000 tonnes have been carried, and we expect to carry 120,000 tonnes for the Shs16b that has been approved. We expect to take a total of 240,000 tonnes, however, we have had a few challenges. We are paid through the bank and yet most of our peasant farmers don’t have bank accounts. We have sensitised most of them and they are now getting bank accounts,” says Taaka.
Mr Wilson Namwiso, a sugarcane farmer in Kaliro District, says the poor communities cannot afford to transport sugarcane to Atiak.
“We ask government to consider the long trip to Atiak and it helps us to hire vehicles so that we shall benefit. The transport charges are high,” he says.
Mr Fred Isabirye, an outgrower, is concerned about delays in payment.
“Another main problem is about payment. At first, we used to take three to seven days [to be paid], but now it’s taking a month and above. So we pray that the management of Atiak should at least improve on that,” Mr Isabirye says.
The poor road network in the backwaters is another impediment in regard to transporting sugarcane from the fields across Busoga.
But how sustainable is this? “It’s not sustainable, sustainable solutions are to grow the sugarcane in Lamwo and Atiak efficiently and supply the factory and to construct farmer’s factories in order to increase on the crushing capacity,” argues Mr Birungi.
The cooperative society says one of the methods government can uplift farmers is to establish a modern power ethanol plant, which can consume a lot of the sugarcane that could have gone to waste in the sugar-belt and improve incomes across households.
In April 2020, President Museveni assented to the Sugar Bill.
Amongst the key objectives of the Sugar Act, is to sustain sugarcane production directly linked to milling to avoid a glut.
Sugarcane bill 2016
Background: In the Bill, government proposes zoning of 25 kilometres, which will essentially not allow establishment of a sugar mill within such a distance as well as proposing that outgrowers in particular areas should only supply sugarcane to mills within that area.
Athough MPs, especially from the Busoga Sub-region had rejected the proposals, arguing that small scale farmers cannot be left out as long as they can find factories where they can sell their cane, Parliament subsequently passed the Bill before it was resent to be signed by the President. The Bill was gazetted into an Act after the President signed it in last year.
Mr Jim Kabeho, the Uganda Sugar Manufactures Association chairperson, later said Parliament should have considered the issue of zoning to enable farmers deal with particular factories. Farmers attached to a factory, he reasoned, enable quality assurance through continuous monitoring and training.
What they said...
- “We expect to carry 120,000 tonnes for the Shs16b (to Atiak Factory) that has been approved. We expect to take 240,000 tonnes, however, we have had a few challenges. We are paid through the bank and yet most of our peasant farmers don’t have bank accounts,” Taaka Mugogo, member of the Greater Busoga Sugarcane Growers Cooperatives Union
- “My father was a businessman and sugarcane farmer, the money from this business paid my tuition, I decided to enter into this business to pay fees for my kids, I have got good things and bad things, I came to Kaliro, and I am a chairperson of the cooperative society. I have about 400 farmers,” Mr House Mawuluba, sugarcane farmer
- “There is a high level of corruption exhibited in this business (to be a permit holder who takes a commission off each trip of sugargane). Getting a permit, is a struggle, you must give money. Getting a vehicle is also another hustle, you must also give money,” Mr James Wako, sugarcane outgrower
- “We look at the transformative impact of the intervention and how does a community benefit from the intervention. It must be reducing the trade balance, so meaning that you are either aiming at import substitution or export promotion and the other is local entrepreneurship development,” Mr Patrick Birungi, the executive director of UDC