Uganda: Sugar Price to Drop Further

Sugar Bag

There is good news for Uganda's sugar consumers in the coming months owed to the projected sugar in production volumes amidst increase in imports.

Statistics from the Uganda Sugar Manufacturers Association (USMA), which consist of Kakira, Kinyara and SCOUL, shows that the industry projects to produce 388,000 tonnes of sugar this year, up from 326, 968 tonnes in 2017.

These figures exclude production from more than ten other small factories that are not members of USMA. Similarly, there is a surge in informal sugar imports, especially from Kenya into the Ugandan market, according to USMA Secretariat Manager, Wilberforce Mubiru. He, however, could not ascertain the volume of imports.

"The demand for sugar from the region has also reduced because countries are importing cheap sugar from other markets like Brazil," he told The Independent in an interview.

He said some African countries including Mauritius, Swaziland, Mozambique, Algeria and Zambia are stuck with tonnes of sugar after the European market removed the quota on sugar it was importing from them.

For that, the price of sugar has dropped by about 31% to an average of Shs 3, 500 per kilogramme at the beginning of 2018 compared with Shs4, 600 in April last year.

Though the actual amount of sugar on the market remains sketchy, the country's sugar demand in the previous year stood at Shs 369,000, according to the Ministry of Trade.

Uganda witnessed a record surge in sugar price in 2013 when a kilogramme went for as high as Shs 7,000.

"We expect a further decline (in sugar) price this year," Mubiru said, adding "Maybe in 2019 is when we will have an increase (in price)."

He said factories are now selling a 50kg bag of sugar at Shs134, 000, down from Shs190, 000 last year.

At the end of last year, government through the Ministry of Trade recommended that the price per kilo be sold at not more than Shs 4,000 due to public outcry.

However, Mubiru said the target for sugar production in Uganda should increase to match the anticipated growth in number of industries and population -the potential buyers of the product.

White sugar demand

Due to lack of capacity in terms of output and technology, local producers within Uganda and East Africa continue to lose millions of dollars to outside markets as industries import the raw material from Europe and other markets.

According to the East African Gazette produced early last month by the East African Council of Ministers, Uganda's industrialists were allowed to import the largest amount of refined sugar at subsidized duty totaling to over 324, 555 tons followed by Kenya with 19, 700 tons, Burundi 1, 701 tons and Rwanda 23.4 tons. In total, the four countries would record 345, 979.4 tons as white sugar imports from outside East Africa.

"The Council of Ministers has approved the following manufacturers to import the specified quantities of raw materials at the specified duty rate under the Duty Remission Scheme," Al Hajj Kirunda Kivejinja, the chairman of the Council of Ministers wrote.

Some of the 15 Ugandan companies under this arrangement include Century Bottling Company Ltd, Britannia Allied Industries, Nile Breweries and Uganda Breweries. In Kenya, eight companies are benefiting from this move. Some of the companies include Excel Chemicals Limited, Patco Industries Limited and Highlands Mineral Water Limited among others. In Rwanda only one company, Nyanza Milk Industries Limited was granted permission while Burundi also had one company - Burundi Brewery given the incentive.

Patrick Oyuru, the director sales and marketing at Coca-Cola, told The Independent that the imports they record for the white sugar support their industrial activity and that EAC producers have no capacity to supply the quantities needed to them. "We note that this importation is well regulated," Oyuru, whose company is importing 22, 165 tons said, adding they continue to engage the local producers on the possibility of having a refinery for white sugar in Uganda.

Mwine Jim Kabeho from USMA said that local producers in Uganda would need to increase production by one million tonnes to be able to meet the demand from the likes of Coca-Cola in addition to building a high-tech refinery which no other EAC country has at the moment apart from Kenya that is eying one in the near future.

The average white sugar price index for 2017 quoted in London was US$432.10 per tonne; the highest was US$ 556.25 and the lowest was US$359.05.