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COMMENT: Bitter truth about sugar

Kenya produces more sugar than Uganda at 520,000 metric tons. Two years ago, it was producing 580 metric tons. But Kenyans consume 850,000 metric tons per year today compared to 819,000 metric tons two years ago. Since Kenya has a population of 46 million, it means each Kenyan on average consumes 18kgs of sugar each year or about 50 milligrams (one teaspoon divide by eight) per day. To cover its sugar deficit, Kenya imports 320,000 metric tons per year today compared to 254,000 metric tons two years ago. According to projections by the United States Development Agency (USDA), Kenya will in the long-run be able to meet only 60% of its sugar demand.

The point is Kenya faces a situation of low local sugar production against rising local sugar consumption mainly because it failed to strategically plan for it. Strategic planning is critical because declining production might correct in the short-term as sugar cane matures between 12 and 24 months but matching supply and demand is more complex because of myriad variables; local and regional.

Uganda has recently seen a jump in sugar supply to over 500,000 metric tons against local demand of about 320,000 metric tons. But production sustainability is threatened as established millers fight newly set-up smaller plants over limited cane supply. The big players who have factory estates and supported out-growers are calling for the enforcement of the 25km radius rule between millers to curtail cane poaching but in a sellers’ market, growers are rushing to the highest bidder.

If this persists, sugar production is likely to slump and the big players appear determined to give Ugandans a bitter taste of what that will be like by doing as little as possible to abate the current crisis. In fact, they appear determined to ensure it persists to 2019.

It is significant that sugar from the two biggest producers, Kakira Sugar Ltd, Sugar Corporation of Uganda Lugazi is in least supply and at highest price compared to Kinyara Sugar which is readily available and at lowest price. Kakira and Lugazi sugar factories are privately owned while Kinyara is a public-private partnership venture.

The stance taken by the big millers and President Yoweri Museveni against the small newcomers and the attempt to fix the demand side of sugar instead of the supply side indicate a lack of long term appreciation of the sugar challenge. More millers should be encouraged not ostracised.

The good news is that amidst the bitter battle between buyers begging for better bargains and suppliers seeing higher profits amidst souring sugar sales, the government is drafting a new law, the Sugar Bill, 2016. This Bill is the perfect indicator that although Uganda appears to be sugar secure, it is in fact playing catch up with regional peers on many fronts. The Bill seeks to set up a government-led sugar board which Kenya and Tanzania already have. It also aims to create industry-wide platforms for research, pricing, and licensing. Giving it a regional perspective would improve it.




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