COMMENT: By Michael Mugabira
Problem is the group advocating protectionist zoning in production but free market pricing
Currently, the local media is awash with stories depicting a sugar crisis in this country. Possible solutions being fronted by Ministry of Trade, Industry & Cooperatives (MTIC) in the forth-coming meeting is possibly to issue licenses for importation in order to alleviate the rising sugar prices. Some sugar barons known in the industry keep blaming MTIC and especially the current minister, Amelia Kyambadde, for allegedly failing to implement the zoning policy.
Although, the proponents of the zoning policy cite countries in which it is being implemented, they deliberately fail to shed light on how governments in those countries get involved through legislation to ensure that there is an equitable sharing of revenue from sugar proceeds and its by-products between millers and growers for industry sustainability and competitiveness. This has been a major contentious issue during the deliberations so far held in the crafting of the Uganda Sugar Act 2015. The same group advocates zoning for ‘protectionism’ but when it comes to the sugar price formulae; they say they prefer ‘free market’ i.e. a demand and supply-driven market environment.
It turns out to be ironical how a free market economy would operate in a protectionism regime, whereby farmers have no alternative markets for their cane supply and without a sound pricing regulatory regime?!
This is a question where the proponents of zoning have failed to provide plausible answers during the consultative meetings. It should be noted that inequitable sharing of investment resources is an on-going global debate and currently it is the one re-shaping the geo-politics of Brexit, Trumpism, and the Italy referendum. As per now, France and Germany are headed in the same direction because citizens have continuously witnessed dwindling incomes and loss of jobs due to ‘greedy’ corporate firms, investors, and entrepreneurs.
Reflecting on the status of Uganda’s sugar industry crisis, Bunyoro region offers insights into failed policies as it is occupied by one ‘investor’ through ‘ring-fencing’ policies. This region has cane that cannot be crushed with the existing mill and its now being transported approximately 600Kms return journey as raw material for Busoga sugar mills. Therefore, what lessons does the sugar crisis and policy failure offer to us:
- If Bunyoro region with its favorable climate for sugarcane growth could be gazetted as a cluster for the sugar industry development model; then integrated factories involving sugar mills, ethanol plants, chip board processing plants from sugar bagasse could be located in this region with the involvement of Uganda Development Corporation (UDC) with a purpose of building production capabilities of indigenous entrepreneurs;
- Sugar importation strategy means the country paying out foreign currency yet as a country our imports are still more than exports; creating a trade imbalance.
- The current cane in Bunyoro region if crushed at source, would ensure there would be no need for sugar importation which implies exporting jobs to out-side countries yet Uganda is burgeoning with unemployed youth;
- The key stakeholders in Uganda’s sugar industry, including national legislators from the sugar growing areas and the media industry could arrange an exposure visit to countries such as Mauritius, India, Thailand so that provisions in the proposed Draft Sugar Act 2015 are not debated in Parliament under information asymmetry.
- Can the sugar barons in Uganda offer plausible explanations why a small-scale sugarcane farmer (less than 8 ha) in Thailand is well equipped with Knowledge, Skills and appropriate Technology which has translated into the so called ‘Asian Miracle’ development model yet our sugarcane farmers in Uganda are still wallowing in mass poverty, despite the sugar industry being in existence for decades?
In summary given the above brief facts, if Amelia Kyambadde has been able to withstand serving the greedy interests of the few sugar barons in this country then her efforts should be applauded.
The Bible says ‘a Nation Perishes due to lack of Knowledge and Vision’.
Michael Mugabira is PhD-Candidate at the Graduate School of Business – University of Cape Town, South Africa.