The export is limited to the initial three months
Kampala, Uganda | ISAAC KHISA | Sugar cane farmers in Busoga sub-region have received a limited reprieve to export their excess cane to the neighbouring Kenya, even as questions on how much impact it will cause to the local sugar millers remain.
The farmers through their umbrella body, Busoga Sugar Cane Growers Association, have been at logger heads with the government and the local sugar cane millers over their proposal to export the excess mature cane to West Kenya Sugar Company Ltd located in Busia, Kenya.
Amelia Kyambadde, the minister for trade and industry, had in June this year told Parliament that no single farmers will be allowed to export raw cane with the view that the move could hurt local firms.
However, following series of meetings between farmers, trade ministry executives and President Yoweri Museveni over the past three months, the government eventually gave a green light, enabling farmers to export their cane to avoid losses.
So far, the exports have been ongoing for the past two weeks via Busia border, Michael Mugabira, the coordinator of the Uganda Sugar Cane Growers Association told The Independent in a phone interview.
Uganda Revenue Authority executive at the Busia boarder post confirmed to The Independent that sugar cane farmers are exporting raw cane to Kenyan factory for sugar processing.
“Right now, I can see only three trucks loaded with sugarcane destined to Kenya,” the official who preferred anonymity because is not authorised to speak the media said on Sept.12.
The official said they expect more trucks loaded with cane in the coming months as harvesting gains momentum.
This news comes barely three weeks after President Museveni and his counterpart, Uhuru Kenyatta of Kenya met on the side-lines of the 8th TICAD Conference in Japan and discussed issues related to the sugar business between the two countries.
In June this year, the Busoga Sugar Cane Out growers Association signed an agreement with West Kenya Sugar Co Ltd’s Olepito Unit, located in Busia, Kenya, to supply it with at least 600 tonnes of cane per day for an initial three months.
In the agreement, a copy that The Independent has seen, also shows that the sugar firm will purchase mature cane at Ksh4,055 (Shs 143,000) per tonne payable within two-three days upon cane delivery.
This is far higher than the offering from local sugar millers who have lowered the price from as high as Shs170, 000 per tonne to between Shs128, 000 and 120,000 per tonne.
The sugar company will also deduct 1% as administrative cost, currently, Ksh40 (Shs 1,400) per tonne to facilitate operations of the Busoga Sugar Cane Out growers Association, according to the agreement. The Association will also not sign a contract with another Kenyan sugar miller.
This new development comes on the wake of delayed cane harvests beyond the recommended 18-month maturity period and is drying in the gardens.
Museveni said on Sept.09 that the government has lifted the ban on the export of excess raw sugarcane to Kenya for a period of three months.
“Mature sugarcane that does not have ready buyers from local millers should be exported,” he is reported to have said.
The decision is said to have been reached at during a meeting chaired by the President at State House, Entebbe. The meeting brought together sugar millers and farmers from Busoga Sub-Region.
The meeting also emphasized and agreed that only mature cane should be exported adding that an agricultural officer should determine sugarcane maturity and its fitness for export.
The meeting also resolved that if a farmer had credit with a miller, the latter is obliged to buy all the mature sugarcane within the agreed contract period.
If not, the miller should compensate the farmer for the loss. In addition, Museveni directed that all bond warehouses should be banned with immediate effect in order to harmonize the price of sugar and root for the expansion and growth of the sugar industry.
The President also asked sugarcane millers and farmers to work together adding that the two players need each other in order to ensure the survival of the sugar industry.
He, however, cautioned sugarcane farmers on the low returns from sugarcane production saying that the venture will not get them out of poverty mostly those who have small pieces of land.
He instead urged them to diversify their production ventures and concentrate more on crops like coffee, poultry, piggery and fish farming, among other enterprises that can yield good income for their homesteads.
Kyambadde revealed that her ministry is doing all that is possible to secure licenses for farmers to sell their raw sugarcane to avert incurring losses. She also urged farmers to form a consortium for transportation of their sugarcane.
Jim Kabeho, the chairperson of the Uganda Sugar Manufacturers Association earlier told The Independent in an interview that they are comfortable and that the farmers have a right to sell their cane anywhere in the region.
Uganda’s sugar industry that started way back in the 1920s, now boast of nearly 20 licensed companies majority of which are located in the south-eastern Busoga region.
However, though the annual sugar production had increased from 140,000 in the 1960s to 240,000 tonnes in 2008 and 400.5 tonnes in 2014, it dropped to 365 metric tonnes in 2017, according to data from the Ministry of Trade, Industry and Cooperatives.
The local consumption of raw sugar stands at around 350,000 tonnes per annum, according to Uganda Sugar Manufacturers Association. The balance is exported to neighbouring countries.