The Uganda Sugar Manufacturers Association (USMA) is advocating for amendments to the Sugar Act of 2020, urging the cessation of all currently issued sugar licenses by the Ministry of Tourism, Trade, and Industry, reported Africa.com.
This proposal is contingent upon the establishment of the Uganda Stakeholder Sugar Council. The association, led by chairperson Jim Kabeho, expresses concern about the potential illegality of some licenses, alleging non-compliance with both the 2010 Sugar Policy and the 2020 Sugar Act.
The envisioned Sugar Council would play a crucial role in providing recommendations to the minister before the issuance of licenses. Kabeho stated, “We agree that the minister would continue to issue licenses but with recommendations from the council; once the Council is in place, it can put into place some regulations.”
Appearing before the Committee on Tourism, Trade, and Industry on Monday, January 15, 2024, Kabeho, alongside representatives from sugar millers such as Kakira Sugar Ltd, Kinyara Sugar Works, and Sugar Corporation of Uganda (SCOUL), presented their views on the Sugar (Amendment) Bill, 2023. Kabeho contested the current law’s requirement for sugar millers to share 50 percent of proceeds from sugarcane by-products with farmers, deeming it impractical and detrimental to investment.
He emphasized, “If we are to keep the sugar industry in Uganda competitive, the 50 percent is already higher than the worldwide industry standard.” The association lamented the already low and uncompetitive sugar market in Uganda, attributing it to reduced sugar prices in Kenya and Tanzania.
The committee acknowledged that sugar cane prices paid to farmers in Kenya and Tanzania per tonne are significantly lower than in Uganda. Consequently, the committee was informed that Uganda may not be able to produce sugar for export in 2024 and beyond.
Kabeho asserted that sharing by-products with farmers at a 50 percent rate complicates an already challenging market, suggesting the removal of this requirement from the bill. Rajbir Rai, the Director of Kinyara Sugar Works, echoed concerns about declining sugar production and rising costs within the industry.
The association also argued that the sugar levy imposed on millers to fund the Sugar Council’s activities should include farmers, deeming it unfair to burden only manufacturers with the levy. Additionally, they reintroduced the proposal for the zoning of millers, suggesting a minimum distance of 25 kilometers between individual mills.
Committee chairperson Hon. Mwine Mpaka questioned whether manufacturers adding value to sugarcane by-products were paying more for sugarcane than those not utilizing the by-products. MP Godfrey highlighted farmers’ discontent with the 50 percent profit share, particularly when companies benefit significantly from by-products like ethanol and bioelectricity.
