Uganda’s sugar sector grapples with stockpile amidst dwindling export market

UGANDA – According to Uganda Sugar Manufacturers Association, Uganda is currently grappling with stockpiles of about 150,000 tonnes of Sugar following a number of hiccups hindering the export market especially in the East Africa Community.

Uganda produces 510,000 tonnes of sugar with its biggest producers to include Kakira Sugar Works with an annual production of 180,000 tonnes, Kinyara Sugar Works produces 120,000 tonnes and Sugar Corporation of Uganda Limited produces about 100,000 tones.

From the production 360,000 tonnes are consumed locally with the surplus which has now grown to 170,000 tonnes exported within East Africa, Comesa and DR Congo, reports Daily Monitor.

However, much of the exports have been locked out with Tanzania and Rwanda, according to details captured in the East African Community gazette, seeking permission to import sugar outside East Africa in the 2020/21 financial year.

The move, if granted will see substantial amounts of Uganda’s exports locked out of the two countries.

Tanzania had previously completely banned sugar exports from Uganda on claims that dealers where dumping cheap sugar on its market but in May signed a deal allowing in about 20,000 tonnes.

Other export destinations such as South Sudan and DR Congo, have challenges of infrastructure and insecurity.

Uganda’s hopes of increasing her exports further hangs in balance as Kenya takes a move to ban importation of brown sugar into the Country.

Kenya has also suspended sugar import permits and pre-shipment approvals until further notice, in a move to curb influx of the cheap sweetener in the domestic market, which has negatively impacted the local sector.

Last year in March, President Museveni signed a deal with Kenyan President Uhuru Kenyatta, in which Uganda would increase its sugar exports to Kenya to between 36,000 and 90,000 tonnes. However, by the time of the ban, nothing had been achieved in this direction.

Kenya has been importing 350,000 tonnes from within the East African Community and the Common Market for Eastern and Southern Africa due to an increasingly widen deficit in the local market.

Data from the Sugar Directorate of Kenya indicates that the volumes from Uganda fell to 43 tonnes in June from 1,180 tonnes in May.

The 96% fall was on account of higher cost for the commodity as traders opted for cheaper alternatives from other regional countries.

The cost of a tonne of sugar from Uganda was Ksh64,574 (US$600), compared to Ksh56,463 (US$520) and Ksh57,129 (US$530) from Malawi and Swaziland, respectively.

Mr Jim Kabeho, the Uganda Sugar Manufacturers Association chairman said, “We are in a crisis. Local sales are low and now exports are being locked out. It is a big problem. If we can’t sell then factories are going to close.”

He noted that the crisis is expected to spread out to farmers, who can no longer sell their cane and efforts to sell it to countries such as Kenya have also faced challenges.

According to Bank of Uganda data, Uganda earns an average of at least US$98.92m from sugar exports annually.

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