Publish Date: Jan 12, 2014
Sugar industry competition boosts farmers
By David Mugabe
INCREASED competition in the sugar industry has created a booming sector with sugarcane farmers now reaping more from growing of the cane.
Farmers are also optimistic that if the agriculture loan scheme initiated about four years ago is restructured to reach the rural growers, the agriculture sector will grow by leaps towards full commercialisation.
There are about six major sugar firms in Uganda. These include Kinyara, Lugazi, Kakira, Kaliro, Mayuge and Sugar and Allied Industries.
The former three are all in Busoga region.
With one of the fastest growing populations in the world, a rising GDP and growing disposable income in Uganda, the consumption of sugar per head and industry is projected to grow, creating new opportunities for both farmers and investors.
Uganda’s current per capita sugar consumption is about 15kg per annum – with about 350,000 tonnes of raw sugar consumed annually. Demand is forecast to double by 2030.
The increased competition has also returned stability to the price of sugar for the household consumer, with a kilo averaging about sh2,800 from over sh10,000 about two years ago during a major sugar crisis.
Farmers in Mayuge have seen the pay for a tonne of sugarcane rise from about sh40,000 to sh80,000 because of increased competition sparked by the emergence of new players, including Kaliro and Mayuge.
“I started with three acres of sugarcane, now I have 50 acres. I pay fees for three children at university,” said Margret Musimbi, one of the farmers during a tour of his farm in Mayuge.
Sugar is a vital commodity in the economy used in major industries such as breweries, beverages and for domestic consumption.
Kakira Sugar Works produces an estimated 165,000 metric tonnes of sugar annually, while Kinyara produces over 110,000 metric tonnes annually. Lugazi produces over 60,000 metric tonnes per annum.
One of the new entrants, Mayuge Sugar Industries, started in 2010 with installed capacity of 500 tonnes of cane crashed per day. It has since expanded to 3,500 tonnes of cane crashed per day working closely with over 8,000 out growers.
The Buwaya local council chairman in Mayuge, Amos Nambago, said the factory has helped with employing the previously idle youth who were engaged in “playing ludo, gambling and petty theft.”
“I had many young people misusing leisure time. The factory has salvaged a situation of unemployment,” said Nambago.
Sugar is a commodity whose processing cycle allows for several bi-products to be attained. When the sugarcane is squeezed and juice extracted, there is the option to utilise the byproduct to produce paper.
By 2010, Mayuge was producing 1.2 megawatts of power out of the sugar factory. The firm is today generating 4MW, but has capacity to generate 9.2MW.
“We want the plant to stabilise before we can supply power to the national grid because there are penalties when you sign an agreement and fail to supply,” says Kamalesh Maheshwari, the director of Mayuge Sugar Industries.
Alongside the other firms such as Kakira, Kinyara and Lugazi, the sugar industry is always providing a much needed relief to the electricity shortage in the country.
The price of land has also skyrocketed around Mayuge as land owners are reluctant to sell their land and opt to grow sugarcane themselves.
The economy of the neighbourhood has changed, with commercial banks, butcheries and restaurants opening new branches in Mayuge area.
“The flow of money is there, that is why farmers are not doing petty work. When the first factories were being opened, they were paid very little,” said Maheshwari.
Christine Waniala, a resident worker, says opportunities have been opened for sugarcane cutters, drivers, butchers and loaders.
Concerns
Despite improved farmer earnings and growing sugar industry, farmers, however, want the Government to subsidize the price of fertilisers as a way to boost production and actualise commercial farming.
They are also concerned that the much hyped agriculture loan remains a preserve of the elite in the city and “some commercial banks are extending the money to only their peers”.
“They do not give it to us. The bankers themselves are the ones spreading to their relatives, we get commercial loans,” said Musimbi, sugarcane farmer.
Sugar policy awaits enactment
The sugar industry awaits the enactment of a new sugar policy into law.
Until the end of last year, the major players in the industry were pushing Parliament under their umbrella body, the Uganda Sugar Manufacturer’s Association, to enact the policy into an Act.
But at the heart of the new National Sugar Policy is among others the clamour for one of the most lucrative industries in the economy.
There are about eight new firms with investment licenses into the sugar industry. Another about six already established firms are operating and producing about 350,000 metric tonnes per annum. This will usher a new regime of competition.
The national sugar policy was formulated in 2010 to address the gaps that exist in the 1938 Sugar Control Act.
Among other things, the policy says there should be a 35km radius between two factories. The other concern is the poaching of staff.
Disputes have in recent years emerged, including court petitions, over the limit of radius of operation.
But court and the Government agencies have in the past explained that the spirit of the legislation is to enable competition and not a monopoly.
For sustainability, the industry should also focus on subsidising and producing fertilisers and electricity, although most of the sugar processing firms are already doing it.
Food security in sugarcane growing areas
The issue of food security is one of the most debated matters in the sugar industry. The allure of cash from the sugarcane cash crop seems to override the need to spare some land space to grow food crops.
The sugar processors have encouraged large scale farming on at least 25% of the land with the rest used for sugarcane growing.
The residents say because they are making money, they have many alternatives instead of growing small food crops that give them little income.
“There is a lot of famine in Karamoja, are they also growing sugarcane?” asked Samuel Tibenkana, the local chairman for Buvuna.
Amos Nambago, the area LC3 chairman, says it has been a challenge to encourage people to adapt best practices for food security.
“It is difficult to lead hungry people. There are those that listen and those that do not,” says Nambago, adding that the cash crop has, however, enabled the poorest people in Busoga to earn real cash and they are relatively happy.
Farmers are encouraged to undertake intercropping because it also boosts the yield of sugarcane.
An expanded road from the factory to the main Jinja-Buguri highway supported by the sugar factory will also make it easier for the people to transport their food stuffs and sell them to the main urban areas.
posted by MrK @ 4:27 PM
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