UGANDA – Plans to export sugar to the Kenyan market have hit a snag following a production shortfall by Kakira Sugar Works.
During his visit to Uganda in August, Kenyan President Uhuru Kenyatta and his Ugandan counterpart Museveni struck a deal under which Ugandan made sugar would be exported to Kenya.
The deal drew immediate criticism from the opposition in Kenya, which argued that it would kill the sugar industry and hit the economy hard.
However, it now appears that the deal will be affected more by developments in Uganda and not those in Kenya.
Speaking to Daily Monitor in Kakira last week, Kakira Sugar Works joint managing director Mayur Madhvani blamed the production shortfall on the ongoing El Nino rains and government’s insistence on licensing “small sugar farms” to operate within the same zone as his firm.
The licensing of such small operators, he said, contravenes the National Sugar Policy which, prohibits the opening of new sugar mills within a radius of less than 25km of an existing plant and requires new factories to own at least 500 acres of sugarcane before commencement of operations.
Quality of sugar
The heavy rains, on the other hand, have meant that sugarcane being supplied to the company is very poor in terms of sugar concentrate volumes of between 15 and 18 percent, the small sugar mills have been taking sugarcane that should have ordinarily gone to Kakira yet they do not have the capacity or efficiency to crush such volumes of sugarcane.
This, he said, means that the company could lose between $20m (Shs71b) and $25m (Shs89b) which the firm had projected to earn from exports this year.
“We were hoping to produce 180,000 metric tonnes and export between 80,000 and 100,000 metric tonnes, but it now looks like we shall have for Uganda alone and none for export. Just Kakira alone to lose about $20m to $25m is very sad,” he said.