Ugandan consumers are celebrating the lowest retail prices for sugar in five years although the industry is currently unstable. However, Planters are objecting to declining sugarcane prices due to a glut that millers attribute to rapidly contracting local markets, which has caused domestic stockpiles to reach previously unheard-of heights.
In protest at the decline in prices from Ush250,000 ($67.72) per tonne, a little over a year ago, to Ush140,000 ($37.92) today, growers in the eastern region of Buikwe decided this week to stop supplying cane to Sugar Corporation of Uganda Ltd (Scoul), located in Lugazi.
The millers claim they are in a bind and threaten additional drops unless Uganda is allowed access to crowded regional markets.
“It is a misconception for anyone to believe that cane prices are simply a reflection of the supply of cane; they are more a reflection of the challenges in the market for refined sugar,” said Wilbur Mubiru, spokesperson for industry lobby Uganda Sugar Technologists Association.
“Whenever we face challenges in the market for refined sugar, that is transmitted backwards to the price for the cane. If we had better access to the East African market, we would be happy and outgrowers would be happy, but there is nothing we can do about it now.”
Retail costs in Uganda have recently dropped significantly, averaging Ush3,300 ($0.89) per kilogram. It is less than half of what it was three years ago when it peaked at Ush7,000 ($1.90) a kilogram. Uganda’s demand for sugar was negatively impacted by the COVID-19 shutdowns in 2020–21, which caused many farmers to give up on growing sugarcane.
However, as markets opened up as a result of disruptions to international shipping, the region saw dry conditions that led to a jump in demand and sky-high retail prices.
As prices sharply recovered, a new normal was established, which encouraged more individuals to cultivate cane. Currently, several millers anticipate more price reductions.
“We see cane prices falling even more, as the crop planted over the past two years reaches maturity,” said Albert Bituura, general manager at Bwendero Sugar, a small miller based in the western Ugandan district of Hoima.
“We are dependent on the Kenyan market, which is now flooded with their domestically produced sugar because of good rains over the past 18 months. The regional market has seized up as a result.”
Due to limited access to export markets, Uganda’s sixteen sugar plants, which have an installed capacity of 1.2 million tons annually, are only working at half of that amount. There are only 0.4 million metric tonnes consumed domestically. Kenya stands as the greatest regional market, with a one-time peak of 100,000 tonnes of Ugandan exports.
Millers have been thinking about automating the loading and harvesting process, but there has been opposition and threats of arson. Growers are the most vulnerable in an unfair status quo caused by the industry’s backtracking.
