The bitter taste of cane leaves the sugar industry on the brink

Late last month, it emerged that Uganda’s sugar industry was on the verge of a crisis triggered by a shortage of mature cane.

Kakira Sugar and Sugar Corporation of Uganda, Lugazi, (Scoul) would operate below capacity.

Figures from the Uganda Sugar Manufacturers Association (USMA) indicate that Uganda produced 620,000 metric tons of brown sugar and consumed 390,000 metric tons in 2021, leaving a surplus of 230,000 tons.

Mr. Mwine Jim Kabeho, President of USMA, said if the country is sure to have enough sugar for everyone, it will not have surpluses for export and will not meet the targets production scheduled for this year.

“Estimated sugar production for 2022 is 822,000 tonnes, of which 720,000 tonnes is expected to be brown sugar and 60,000 tonnes is expected to be industrial sugar. The shortage of cane means that it is highly unlikely that we will achieve these targets,” says Mr Kabeho.

The shortage of sugar cane is accompanied by mixed fortunes. Farmers will laugh all the way to the bank because of the increase in the price of their produce, but it also means an increase in the cost of production, an increase in the cost of a kilo of sugar and an increase in the cost of living. How did we come here?

Dr. David Babi Kamusaala, a sugar cane farmer, who also teaches psychology at Mbarara University of Science and Technology (MUST), declares the opening of Mayuge Sugar Industries (MSI) and GM Sugar factories in the districts of Mayuge and Buikwe respectively, coupled with a drought that hit the Busoga sub-region in 2014, triggered an increase in the price of the crop.

“The situation has led to a high demand for sugar cane and inevitably a price hike from Shs 73,000 per tonne to an all-time high of Shs 187,000 per tonne,” says Dr Kamusaala.

This triggered an exodus to the cultivation of sugar cane.

Even those who had not been hired by the established mills went there in hopes of finding a way to sell the cane. This influx meant that Busoga had accumulated so much raw cane by early 2018 that existing mills could not consume it.

With the market flooded, the price of raw cane initially fell from Shs180,000 to Shs120,000 per tonne before dropping to Shs110,000 per tonne in 2019.

The price of raw cane fell twice in July 2021 alone. It first fell from Shs 110,000 per tonne to Shs 104.00, before falling to Shs 99.00 a fortnight later.

But even when prices were at their lowest, Kakira Sugar, the biggest sucker, could only take about 30% of the available cane and that was always going to come from the farmers entrusted to him.

The rest of the cane was now left to the smaller factories – Kamuli, Kaliro, Mayuge and GM Sugar – but they could not take it back due to limited installed crushing and production capacities.

The installed crushing capacity for Kaliro Sugar, like Kamuli Sugar, is 2,000 metric tons of cane per day. Mayuge’s installed crushing capacity, like that of GM Sugar, is 3,500 tonnes of cane per day. Taken together, that simply wasn’t enough to gobble up all the cane available.

In June 2019, farmers started exporting cane to Kenya. Trade disputes, combined with the outbreak of the Covid-19 pandemic and the government’s imposition of lockdown as a containment measure, however, made this option unviable.

This meant that farmers had to find a way to supply their cane to existing mills. But, first, a farmer had to have a permit to do so.

Mr. Eria Desire Thabaire, whose family has dabbled in sugarcane cultivation, said the insistence on permits was a deliberate move aimed at excluding sections of the population from the sugarcane cultivation business. sugar cane.

“There was a pre-Covid government effort to deliberately evict cane growers with the requirement to have permits for cane deliveries to mills,” he told the Sunday Monitor in an e -mail, adding: “The big men in government have served the permits to themselves and their cronies.

Mr. Kabeho, who is also a non-executive director of the Madhvani Group, disputes this. He says the permits were introduced long before the pandemic hit and were intended to ensure a steady and orderly supply of cane to mills.

Whatever the purpose, permits soon proved both too difficult and too expensive to obtain. While farmers could not access it, a group of army officers, security personnel, businessmen and, in some cases, politicians, became intermediaries. Either they bought the cane from the farmers and sold it to the mills, or they insisted that the farmers supply the cane to the mills on behalf of the middlemen.

The Sunday Monitor has learned that the paper pusher would, in this case, be entitled to a commission of Shs 100,000 per trip the farmer provides.

Mr Thabaire says each acre produces at least 40 tonnes of cane, which at the current cost of Shs 106,000 per tonne works out to Shs 4,240,000. Now, if those tons are supplied using an eight-ton truck, that means the middleman – who has invested nothing in terms of labor, inputs and waiting 18 months for the cane to mature – pocketing Shs 500,000 in less than a month. The same cannot be said for farmers like Mr. Thabaire’s family.

“My old man, who has invested in over 50 acres of sugar cane, having invested at least 20 million shillings from his retirement benefits, has not even reaped a dime. And he is not alone,” says Mr. Thabaire.

Such results left a bitter taste of cane in the mouths of many farmers.

“People rushed in and planted cane without making contracts with the millers. This caused cane prices to fall to their lowest. Others couldn’t even sell to one of the factories. They were frustrated and most of them ran away from the sugar cane [growing]said Mr. Kabeho.

This is what has caused the severe cane deficits.

So can the industry recover? Mr. Kabeho thinks so. This will, however, require revising the Sugar Act 2020 to introduce clauses that will force farmers to deal with particular factories, restrict the movement of cane and regulate the establishment of sugar factories.

Whether the country is ready to make the trip is another matter.

Rachel J. Bradford