Factories to pay farmers less for cane after sugar prices drop to sh5000
Kampala, Uganda | THE INDEPENDENT | The price of sugar on the Ugandan market has dropped from Sh5,500 to Sh5,000, bringing a smile to consumers but sleepless nights to sugarcane farmers.
The now low price of sugar has compelled sugar factories in Uganda including Kaliro, Lugazi, Mayuge, GM, Bugiri Sugar and Kinyara to reduce prices for sugarcane.
Kaliro Sugar on January 29, 2024 informed outgrowers that, “As we plan to start the factory after shutdown, management is hereby informing you all that the sugar prices in the market have continued to go down which has forced us further revise our sugarcane prices.”
The notice added: “The purpose of this note is therefore to inform all the stakeholders that as we start the plant, our sugarcane prices will be Shs 170,000 with effect from 30th January 2024. (7:00am). We also promise all our stakeholders that management will continue to review the sugarcane prices depending on the sugar prices on the market.”
This development has unsettled farmers in Busoga and Bunyoro.
The chairperson of Uganda Sugarcane Growers Association (USGA) Isa Budhugo said the new sugarcane price is below the break-even point for a farmer at Shs 210,000.
“We have taken out loans from the banks to grow sugarcane; we are worried banks will come after our collateral if the sugarcane prices don’t rise in the coming weeks.”
Why sugar prices have dropped
Moses Aturinda, a Ugandan economist, says January witnessed a global sugar surplus of approximately 0.5 million tonnes, driven by Brazil’s increased production
“The main reason for low prices of sugar in Uganda is that the international price of sugar has come down,” said Aturinda.
He added: “The Kenya sugar industry is producing again after being shut for four months.”
Global sugar prices are currently at an eight-month low, influenced by factors such as increased sugar production in Brazil, a key player in the global sugar market.
Brazil set a new record for sugar production in November 2023, marking the highest monthly output ever recorded.
On the other side, India is focusing on producing more sugar and less ethanol this year, hence a potential increase in production.
Uganda Sugar Manufacturers Association (USMA) chairperson Jim Kabeho also attributed the drop in sugarcane prices to increased illegal imports of sugar in Uganda.
“There is too much sugar being illegally brought into the country through the eastern Uganda porous border points,” said Kabeho, adding, “Consumption of our sugar is very low; so, once its prices go down, cane prices will also be at risk.”
Cases of smuggling large quantities of sugar into Uganda via Kenya have been on the rise in recent months.
In December 2023, Uganda Revenue Authority customs officials impounded 800kgs of sugar which had been smuggled into Uganda through porous border points in Mutukula.
Smuggling of duty free sugar not only hurts the sugar industry but also the outgrowers of sugarcane whose livelihoods entirely depend on supply of sugarcane to the factories.
Source Link: https://www.independent.co.ug/factories-to-pay-farmers-less-for-cane-as-sugar-prices-drop/
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