Sugar factories across Uganda, including Kaliro, Lugazi, Mayuge, GM, Bugiri Sugar, and Kinyara, have collectively announced a reduction in sugarcane prices over the past two weeks, decreasing from above Shs 210,000 per tonne to approximately Shs 160,000 – Shs 170,000, according to chimpreports.
On January 29, 2024, Kaliro Sugar informed out-growers about the price adjustment, citing the continuous decline in market sugar prices as a contributing factor. The notice stated, “As we plan to start the factory after shutdown, management is hereby informing you all that the sugar prices in the market have continued to go down which has forced us further to revise our sugarcane prices.” It further announced that sugarcane prices would be Shs 170,000 from January 30, 2024, with an assurance from management to continually review prices based on market conditions.
The reduction in the price of sugar on the Ugandan market, from Shs 5,500 to Shs 5,000, has been attributed to a global sugar surplus of approximately 0.5 million tonnes in January, driven by increased production in Brazil, a significant player in the global sugar market. Ugandan economist Moses Aturinda explained, “The main reason for low prices of sugar in Uganda is that the international price of sugar has come down,” noting the resumption of production in the Kenyan sugar industry after a four-month shutdown.
Global sugar prices, currently at an eight-month low, have been influenced by Brazil’s record-setting sugar production in November 2023. In contrast, India’s focus on producing more sugar and less ethanol this year may contribute to a potential increase in production.
The declining sugar prices have raised concerns among farmers in Busoga and Bunyoro, who heavily rely on bank loans for large-scale cane cultivation. Isa Budhugo, Chairperson of the Uganda Sugarcane Growers Association (USGA), expressed worry that the new sugarcane price is below the breakeven point for farmers at Shs 210,000. He added, “We have taken out loans from the banks to grow sugarcane; we are worried banks will come after our collateral if the sugarcane prices don’t rise in the coming weeks.”
Jim Kabeho, Chairperson of the Uganda Sugar Manufacturers Association (USMA), attributed the decline in sugarcane prices to increased illegal sugar imports into Uganda. He noted, “There is too much sugar being illegally brought into the country through the eastern Uganda porous border points,” emphasizing that the low consumption of local sugar contributes to the risk of reduced cane prices. Instances of smuggling large quantities of sugar into Uganda via Kenya have been on the rise, prompting concerns about the impact on both the sugar industry and the livelihoods of sugarcane out-growers. In December 2023, Uganda Revenue Authority customs officials impounded 800kgs of sugar smuggled through porous border points in Mutukula, highlighting the challenges posed by illicit sugar trade in both sectors.
