Two sugar factories in the Busoga sub-region of Uganda, Shakti Sugar and Bon Sugar Mill Ltd (C.N Sugar Ltd), are facing imminent closure due to licensing disputes and concerns over an unstable supply of sugarcane.
The Uganda Sugar Manufacturers Association (USMA) has urged the closure of these factories, accusing them of violating the Sugar Policy. This move has sparked a controversy, drawing attention from both industry stakeholders and political figures.
Since the implementation of the Sugar Act in April 2020, the Ministry of Trade has issued licenses to seven millers in the Busoga sub-region, including Shakti Sugar Limited and Bon Sugar Limited.
The President, Yoweri Museveni, expressed discontent with the Ministry’s decision, questioning the issuance of licenses to factories without an assured supply of sugarcane.
The Sugar Act aimed to regulate the industry by introducing zoning, preventing the establishment of mills within a 25-km radius and restricting outgrowers to supply cane only to mills within that radius.
The USMA’s accusations
The USMA argues that Shakti Sugar and Bon Sugar Mill Ltd are in violation of the Sugar Policy, being in proximity to already licensed and operational mills. Shakti Sugar is accused of being too close to Kamuli Sugar and the nucleus farms of Kakira Sugar and Lugazi Sugar, while Bon Sugar Mill Ltd is said to be 19km from Bugiri Sugar Ltd.
The USMA claims that the excessive licensing of factories in one sub-region has led to an unpredictable supply of sugarcane, affecting the industry’s stability.
Protests and ministry’s response:
In response to these licensing disputes, millers, including Shakti Sugar and Bon Sugar, petitioned the Ministry of Trade in July 2022, expressing concerns about the potential negative impact on the sugar industry’s growth. The Ministry issued notices halting new millers from undertaking any development until a sugar board is established. USMA Chairperson, Jim Kabeho, emphasized the need for a council to regulate the licensing of new sugar factories, citing the unplanned nature of most newly licensed factories.
Cane shortage and economic impact
The sugar industry in Busoga is currently grappling with a shortage of sugarcane, impacting millers’ operations. Millers are not operating at optimal crushing capacities due to cane shortages resulting from what is termed as “poaching.” This shortage has led to a rise in the cost of sugarcane to Shs240,000 per ton, affecting farmers who have been frustrated with declining offers from millers since 2017.
Isa Budhugo, the chairperson of the Uganda Sugarcane Growers Association (USGA), countered the claims, stating that factories between 20 and 30 percent completion cannot be relocated. He emphasized the need for more sugar factories in Busoga, citing the vast available land and the comparatively small acreage occupied by sugarcane.
While some argue in favor of zoning to prevent oversaturation of mills in a particular area, David Mombwe, the General Secretary of the Busoga Outgrowers Association (BSGA), decries zoning, citing past instances of surplus cane between 2017 and 2021. Mombwe emphasized that zoning should not be included in new legislation, pointing out the economic benefits of surplus cane sales to neighboring regions.
The closure threat to Shakti Sugar and Bon Sugar Mill Ltd underscores the challenges faced by the sugar industry in Busoga.
The ongoing debate between industry stakeholders, government authorities, and farmers highlights the need for a comprehensive and sustainable solution to ensure the sector’s growth while addressing concerns about cane supply stability.