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Uganda Sugar Traders Rip Big in Crisis

Friday, 5th August, 2011

PRESIDENT Yoweri Museveni has said the Uganda Government will allow controlled sugar imports of up to 40,000 tonnes for six months to address the current scarcity of sugar.

He was yesterday touring the sugar factories of Kakira in Jinja and the Sugar Corporation of Uganda (SCOUL) in Lugazi during a fact-finding mission on the causes of the rising sugar prices.

The president also revealed that no more sugar exports would be allowed. “Sugar importation will be regulated and controlled and will be stored in bonded warehouses. We should not allow exportation because this has been part of the problem,” he said.

According to reports, Uganda exported between 270,000 and 280,000 metric tonnes of sugar in 2010 and this shot up in the last six months to 420,000 metric tonnes. Sugar prices have currently soared up to sh10,000 a kg in some upcountry stations.

Uganda has three major sugar manufacturing industries, including Kakira in Jinja owned by the Madhvani Group, the Lugazi-basedSCOUL owned by Mehta Group and Kinyara sugar works. According to a State House press release, Kinyara sugar production fell drastically due to malicious damage, after disgruntled workers set part of the sugar plantations on fire. The factory was later shut down for routine maintenance.

Museveni has now directed that newly licensed sugar companies stick to the issues under the sugar policy, including constructing factories up to 25kms away from an existing sugar factory, not poaching on out-growers already supported by other sugar companies and desisting from diversifying into other projects not specified under their licenses.

He further instructed the companies which received investor licenses in error to have them cancelled, adding that the zoning policy must be strictly adhered to.

According to Mayur Madhvani, the Kakira Sugar Works Group managing director, prior to the close of their factory for the one-month routine maintenance recently, they had produced 300,000 bags of sugar in surplus stock, equivalent to 2,300 tonnes, which they got stuck with and could not sell.

“We eventually found market in Europe and Sudan for it,” he said. This sale, however, has been stopped because of the current situation.

Madhvani said the recent drought reduced the weight of canes resulting in less yields.

The two leading sugar producers, however, maintained that the factory price for their sugar has not been affected and is still at sh2,240 per kg for Kakira sugar and sh2,248 per kg for Lugazi Sugar. They insisted that their prices had not changed and blamed the rising costs on speculators and political saboteurs.

At Lugazi, the President, who was accompanied by the Minister for Trade and Industry, Amelia Kyambadde, the minister of State for Industry, James Mutende and that of lands, Daudi Migereko, met the chairman and managing director, M.N. Mehta who said although their company had increased payments to workers and out-growers, the high costs of production had greatly affected them.

The President pledged to work with the sector industries to ensure that SCOUL got land for expansion to boost production. He also said he would revisit the issue of land in Amuru for sugar production in a bid to expand the industry.

Museveni added that government was looking into other areas such as tourism, fish exports, beef exports, fruits, tea, coffee and processed maize as some of the avenues that could bring in quick dollar returns.

“We will look into handling the bad publicity that the country faced recently and that in turn scared away potential investors and tourists, denying the country the much needed revenue,” he promised.

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