Rédaction Africa Links 24 with The Observer
Published on 2024-02-01 15:56:45
The price of sugar in Uganda has seen a significant decline, dropping from Shs 5,500 to Shs 5,000. This decline has brought relief to consumers but has also caused concern among sugarcane farmers, who are now facing sleepless nights due to the impact on their livelihoods.
Moses Aturinda, an economist, explained that the drop in sugar prices can be attributed to a global surplus of approximately 0.5 million tonnes of sugar, which occurred in January. This surplus was largely driven by increased sugar production in Brazil, a major player in the global sugar market.
Aturinda further pointed out that the resumption of sugar production in Kenya, after a four-month shutdown, has also contributed to the low prices of sugar in Uganda. Additionally, factors such as Brazil’s record-breaking sugar production in November 2023 and India’s shift towards producing more sugar and less ethanol have all had an impact on the global sugar market, leading to the current eight-month low in sugar prices.
As a result of the low global price of sugar, all sugar factories in Uganda, including Kaliro, Lugazi, Mayuge, GM, Bugiri Sugar, and Kinyara, have been compelled to reduce the prices they pay for sugarcane. For example, Kaliro Sugar informed outgrowers that the prices for sugarcane would be revised to Shs 170,000 effective from January 30, 2024. The notice also reassured stakeholders that the management would continue to review sugarcane prices based on the market prices for sugar.
The drop in sugarcane prices has caused distress among farmers in Busoga and Bunyoro. The chairperson of the Uganda Sugarcane Growers Association (USGA), Isa Budhugo, expressed concern that the new sugarcane prices are below the breakeven point for farmers, which stands at Shs 210,000. Farmers who have taken out loans to grow sugarcane are particularly worried that the low prices could result in financial difficulties and put their collateral at risk.
The drop in sugarcane prices has been attributed to increased illegal imports of sugar into Uganda, according to Jim Kabeho, the chairperson of the Uganda Sugar Manufacturers Association (USMA). He stated that the smuggling of large quantities of sugar through porous border points in eastern Uganda has become a significant issue. This not only hurts the sugar industry but also impacts the livelihoods of sugarcane outgrowers.
In December 2023, Uganda Revenue Authority customs officials impounded 800kg of smuggled sugar at the Mutukula border. These cases of smuggling duty-free sugar have become a growing concern and are contributing to the decline in sugar prices.
In conclusion, the drop in sugar prices in Uganda has had a significant impact on both consumers and sugarcane farmers. While consumers are benefiting from lower prices, farmers are facing financial difficulties and uncertainty about their future. The increase in illegal sugar imports has also added to the challenges faced by the sugar industry and outgrowers. It is clear that concerted efforts are needed to address these issues and stabilize the sugar market in Uganda.
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