By Philomena Matsiko
Kampala — The price of sugar has steadily risen across East Africa, leaving producers and consumers with a sour taste in the mouth.
In Uganda, it has risen from $0.98 (Shs3,560) to settle between $1.21 (Shsh4,395) and $1.41 (Shs5,122) per kilogramme over the past year, with producers blaming the high cost of producing sugarcane for the increase.
Mwine Jim Kabeho, chairman of Uganda Sugar Manufacturers Association, in a letter to the Ministry of Trade, Industry and Co-operatives, said that the average cane price has almost doubled, from $23.8 per tonne in April 2016 to $44.8 per currently. “The wholesale prices have continued to rise, so we are forced to increase the retail prices,” said Mr Abdul Lwanga, a wholesale sugar trader in downtown Kampala.
The USMA said the adjustment was due to the higher production costs and to sustain the value chain. However, some traders have taken advantage of the changes, with some raising their margins from $0.6 per 50kg to $5.6 per bag.
Cost per unit
The industry also notes other challenges as being shortage of cane. “Sugar production is below half of the installed capacity, thereby increasing the cost per unit; this will automatically be reflected in sugar prices,” the association said.
Harvest of immature cane is another factor that the industry attributes to failure to implement a zoning policy. “The USMA has constantly drawn the attention of the ministry to this, small mills have continued to be established in close proximity to old mills” without investing in out-grower schemes. They instead offer incentives to farmers to lure them away from the established factories, leading to harvest of immature cane. Inflation, speculation and high taxes are cited as the other causes.
The association was responding to a note from the ministry that demanded an explanation for the price increase.
Trade and Industry Minister Amelia Kyambadde has long been locked in a battle with the sugar manufactures over price and production figures. While established manufacturers want exclusion zones to protect their outgrowers, the government has looked on and in some cases encouraged the opening of new factories, some of which do not even grow their own cane.