Sugar prices drop to Sh5000 in Uganda, farmers get less returns

Kampala: Sugar prices in Uganda have witnessed a decline from Sh5,500 to Sh5,000, eliciting satisfaction among consumers but concern among sugarcane farmers, who now face a challenging economic landscape, according to independent.

The diminished price of sugar has prompted various sugar factories across Uganda, including Kaliro, Lugazi, Mayuge, GM, Bugiri Sugar, and Kinyara, to adjust their sugarcane prices accordingly.

On January 29, 2024, Kaliro Sugar informed out-growers, stating, “As we plan to resume operations after the shutdown, management wishes to inform you all that the prevailing downward trend in sugar prices has compelled us to further adjust our sugarcane prices.”

The notification added, “This communication aims to inform all stakeholders that as we recommence operations, our sugarcane prices will be Shs 170,000 starting from January 30, 2024, at 7:00 am. We also assure all our stakeholders that management will consistently review sugarcane prices based on the prevailing sugar prices in the market.”

This development has caused unease among farmers in Busoga and Bunyoro. Isa Budhugo, the chairperson of the Uganda Sugarcane Growers Association (USGA), expressed concern, stating that the new sugarcane price is below the break-even point for a farmer at Shs 210,000. He voiced worries about potential challenges in repaying bank loans if sugarcane prices do not rise in the coming weeks.

Economist Moses Aturinda attributed the drop in sugar prices to a global surplus of approximately 0.5 million tonnes in January, driven by increased sugar production in Brazil.

“The primary reason for the low prices of sugar in Uganda is the decrease in the international sugar price,” explained Aturinda, highlighting the resumption of sugar production in the Kenyan industry after a four-month shutdown.

Global sugar prices are presently at an eight-month low, influenced by factors such as heightened sugar production in Brazil, a key player in the global sugar market. Brazil achieved a record sugar production in November 2023, marking the highest monthly output ever recorded. Additionally, India’s focus on producing more sugar and less ethanol this year could contribute to an increase in global production.

Jim Kabeho, chairperson of the Uganda Sugar Manufacturers Association (USMA), attributed the decline in sugarcane prices to an influx of illegally imported sugar in Uganda.

“There is an excessive amount of sugar being unlawfully brought into the country through the porous border points in eastern Uganda,” Kabeho stated, emphasizing the adverse impact on cane prices due to low domestic sugar consumption.

Cases of sugar smuggling in large quantities into Uganda via Kenya are increasing nowadays. In December 2023, Uganda Revenue Authority customs officials impounded 800kgs of sugar smuggled into Uganda through porous border points in Mutukula. This smuggling not only harms the sugar industry but also jeopardizes the livelihoods of sugarcane out-growers, whose income depends entirely on supplying sugarcane to the factories.


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