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SUGAR BILL: Sugar millers plead with the Parliamentary Trade Committee on issuances of sugar licenses

By Muhumuza Jimmy

Parliament 

The parliamentary committee on Trade, Tourism, and Industry chaired by the MP Mbarara City South Hon. Mwine Mpaka engaged members of the Uganda Sugar Manufacturers Association (USMA) who demanded an amendment of the Sugar Act, 2020, halting all the sugar licenses currently being issued by the Ministry of Tourism, Trade, and Industry, until the Uganda Stakeholder Sugar Council is instituted.

Members of (USMA) Led by their chairperson Jim Kabeho, told the committee that the association is concerned that some of the licenses were illegally issued because they followed the 2010 Sugar Policy and the 2020 Sugar Act.

The Sugar Council would therefore intervene in making recommendations to the minister before any licenses are issued.

“We agree that the minister would continue to issue licenses but with recommendations from the council. Once the Council is in place it can put in place some regulations,” said Kabeho.

Sugar millers led by Kabeho including stakeholders from Kakira Sugar Ltd, Kinyara Sugar Works, and Sugar Corporation of Uganda (SCOUL), appeared before the Committee on Tourism, Trade, and Industry today where they made their submissions to the Sugar (Amendment), Bill 2023.

Kabeho refuted the requirement under the principal act for sugar millers to equitably share proceeds from sugarcane by-products with farmers by 50 percent as impractical and a deterrent to investment.

“It should be noted that this percentage gives a minimum price and parties are free to agree to a higher sugar price. If we are to keep the sugar industry in Uganda competitive, the 50 percent is already higher than the world wide industry standard,” said Kabeho.

Other members of the association complained that the sugar market in Uganda is already low and uncompetitive in the region following low sugar prices in Kenya, and Tanzania. 

They also told the committee that the sugar cane price paid to the farmers in Kenya and Tanzania per ton is an equivalent of Shs 155,000 and Shs150,000 respectively while in Uganda a ton of sugarcane ranges between shs 235,000 to 24,0000 which will affect the production of sugar for exportation by nearly years.

The sugar millers said the market is being worsened by the requirement to share proceeds from by-products with the farmers.

“therefore we think that such a statement should be removed from the bill because it is impractical to implement and would be a grave error resulting in huge losses to millers utilizing by-products and benefiting who do not utilize sugar cane by-products,” said Kabeho.

The stakeholders from Kinyara Sugar Works led by Rajbir Rai Director, were equally concerned the sugar industry is declining with declining production and high prices. 

“Our cane price is not competitive even regionally, we are not saying farmers should not benefit from the by-products but the industry costs are going higher and higher, the percentage to be shared from by-products should not be considered for any increments,” said Rajbir Rai.

They also proposed that the sugar levy on millers to finance the activities of the Sugar Council should also be extended to farmers, saying that if the tax is left only to manufacturers, they will be seen to influence the mandate of the council and that farmers will not be comfortable to sit on the council they do not own.

MPs giving their views during the committee

The group also reintroduced the proposal of zoning of millers, suggesting that an individual miller should be at least 25 kilometers from the next miller, which MPs said has not been considered in the bill.

 “Whenever the discussion on zoning starts farmers fight it, regardless whether it is good or bad, I encourage the manufacturers to find out other ways of stabilizing the industry without zoning, “said Hon. David Isabirye (FDCJinja North Division).

Members of the committee wondered if manufacturers that are adding value to sugarcane bi-products were paying more for sugarcane than those who do not utilize the by-products.

“The ideal would be to consider the by-products but the question is how do you apply the 50 percent? Will you say that a company making more by-products should pay more for sugarcane?” Mwine Mpaka.

Other members revealed that during the tour farmers were not even happy with the 50 percent profit share from by-products, saying some companies such as Kakira are earning a lot from products such as ethanol and bioelectricity. 

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