adminAs Ugandan consumers celebrate the lowest retail prices for sugar in five years, the industry is in a state of turmoil.
Outgrowers are protesting falling prices of cane amid a glut millers blame on rapidly shrinking regional markets, which has resulted in domestic stocks rising to unprecedented levels.
This week, growers in the eastern district of Buikwe resolved to halt supplies of cane to Lugazi-based Sugar Corporation of Uganda Ltd (Scoul) in protest against the fall in the price of cane from Ush250 000 (US$67,72) per tonne, just over a year ago to Ush140 000 (US$37,92) today.
The millers say they are hamstrung and warn of further declines unless clogged regional markets open up to Uganda.
“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 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.”
Recently, retail prices have fallen sharply in Uganda, averaging Ush3 300 (US$0,89) per kilo. That is less than half the peak price of Ush7 000 (US$1,90) a kilo three years ago. The Covid-19 shutdowns in 2020-21 hurt demand for sugar in Uganda, leading to many farmers abandoning sugarcane farming.
But subsequent dry conditions in the region as markets opened up amid disruptions to international shipping saw a spike in demand, sending retail prices sky-high.
Prices rebounded strongly, creating a new normal that encouraged more people to plant cane. Now, some millers are predicting a further price decline. — Business Insider Africa
Online Reporter