Uganda continues to import industrial sugar as millers experienced lower than expected demand

UGANDA – Uganda, the only country in the East Africa region producing industrial sugar, is having a liking for imported industrial sugar despite many sugarcane millers having unmoving products in the warehouses.

One of the companies in the country getting hit by the situation is Kinyara Sugar Works, which has experienced lower-than-expected demand for industrial sugar, a year after President Museveni commissioned its manufacturing plant in Masindi.

“I have the stock but no buyers,” Mr. Ramalingham Ravi, the Kinyara Sugar managing director, told Uganda Monitor, adding that despite lower-than-expected demand Kinyara is increasing production capacity from 60,000 tonnes to 75,000 tonnes annually.

Data from Uganda Sugar Manufacturers Association indicates that GM Sugar is also producing 13,000 metric tonnes while Mayuge Sugar is expected to add 30,000 tonnes. By last year, the Ugandan Trade Ministry had also licensed six other companies to produce refined industrial sugar.

“The demand for industrial sugar reached 130,000 tonnes last year, but only 35,000 tonnes was available for off-takers,” Mr. Paddy Mulamirah, the Crown Beverages chief executive, said in an interview.

Some off-takers have cited high prices and inconsistency in quality and volumes as some of the reasons that have forced them to depend on imports.

Comparatively, details indicate that locally produced industrial sugar costs Shs3.8m (US$1,015) per tonne compared to Shs3.37m (US$900) when imported.

However, Wilberforce Mubiru, the general secretary of the Uganda Sugar Manufacturers Association, challenged concerns raised on quality, explaining that Uganda’s white sugar manufacturers source their machines from the same sources.

He highlighted that high cost has a direct correlation to sugarcane supply prices, which now cost between Shs180,000 and Shs190,000 per tonne, adding that the industry expects the prices of sugarcane to drop next year when production increases.

Due to a shortage at one point, Uganda negotiated at the East African Community Secretariat for duty reduction to enable ongoing production of finished goods that use industrial sugar as raw material in the absence of locally produced industrial sugar.

“Uganda is the focus because it is the only country in the region producing industrial sugar, and there was a point when the duty remission was removed. We had to arrange dialogue because that caused disruptions to production,” Mr. Simon Kaheru, the East African Business Council vice chairman, said.

 He underscored: “Now that there is sugar available locally, removal of the tax remission is certainly welcome, but the changes need to take into account the availability of the right quantity and quality.”

Through EABC intervention, the Ugandan government has agreed to a hybrid arrangement where imported industrial sugar continues to come in as producers build local capacity.

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