Low Sugar Prices Blamed on Illegal Sugar Imports, Says Manufacturers

A sugarcane field.

Summary:

  • Sugarcane prices in Bunyoro and Busoga, Uganda, have declined due to an increase in illegal sugar imports, according to the Uganda Sugar Manufacturers Association (USMA).

Following complaints about the decline in sugarcane prices in Bunyoro and Busoga, major sugarcane-growing regions in Uganda, the Uganda Sugar Manufacturers Association (USMA) attributes this decrease to an influx of illegal sugar imports into the country.

Mr. Jim Kabeho, the USMA Chairperson, points out that excessive amounts of sugar are illicitly entering the country through porous border points in eastern Uganda. This surge in illegal sugar supply has saturated the market, resulting in a drop in sugar prices and consequently adversely impacting sugarcane prices.

Mr. Kabeho notes that the current cost of sugar has decreased from Shs5,500 to Shs5,000 per kilogram. With low sugar consumption, the decline in sugar prices poses a threat to sugarcane prices as well.

The chairperson’s concerns align with grievances from sugarcane out-growers in Bunyoro and Busoga, who have experienced a decline in sugarcane prices.

Kinyara Sugar Ltd, addressing the economic challenges posed by external factors, including illegal sugar imports, has reduced the price of a tonne of sugarcane to Shs160,000, down from Shs181,000 as of December 2023. The company acknowledges the need for stability and emphasizes the interim nature of this price reduction.

In a press statement released on January 25, 2024, Kinyara Sugar Ltd explains that the decision to lower the sugarcane price is a response to the volatile market conditions in the sugar sector. The company commits to maintaining the interim price until the end of the financial year, when a final price will be determined.

Meanwhile, in eastern Uganda, Kaliro Sugar informs out-growers of further revisions to sugarcane prices due to the continuous decline in sugar prices. The revised sugarcane price is set at Shs170,000 from January 30, 2024, with a commitment to ongoing reviews based on market dynamics.

Mr. Isa Budhugo, Chairperson of the Uganda Sugarcane Growers Association (USGA), expresses concern that the new sugarcane price falls below the breakeven point for farmers at Shs210,000. He highlights the anxiety among sugarcane growers who have borrowed funds for cultivation, fearing potential repercussions if prices do not rise in the coming weeks.

With extracts from Agencies

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