Summary:
- The Economic Policy Research Centre (EPRC) estimates that Eastern Uganda, particularly Busoga, accounts for 35% of the country’s sugarcane milling capacity, yet questions persist about whether the sector is truly benefiting local farmers.
KAMPALA: A report by the Leader of Opposition, Joel Ssenyonyi, has revealed that sugarcane prices have drastically fallen, plunging from UGX 200,000 per ton to just UGX 98,000 hence severely impacted farmers in the Busoga sub-region.
While presenting the report on the floor of Parliament on Thursday, Ssenyonyi highlighted the findings from a recent oversight visit to Busoga. He noted that despite the significant role sugarcane plays in the economy, farmers in the region face numerous challenges that threaten their livelihoods.
According to the report, farmers often sell sugarcane to millers at prices far below production costs.
“In 2023, the price per ton was UGX 98,000, a significant drop from previous prices, which sometimes exceeded UGX 200,000. Even then, the farmers’ earnings are negligible after deducting operational costs such as harvesting, cutting, and loading,” Ssenyonyi said.
The report also pointed out delays in fulfilling a Presidential pledge to construct two farmer-owned sugar mills.
“In 2021, the government pledged to construct sugar factories in Buyende and Luuka districts to empower farmers. However, to date, no construction has taken place. Uganda Development Corporation has been back and forth on the matter, despite releasing over UGX 8 billion for land acquisition,” Ssenyonyi noted.
Another pressing issue is delayed payments by millers, which leaves farmers cash-strapped. Some farmers reported waiting for up to six months to receive payment for their sugarcane.
Additionally, the report highlighted millers’ practice of charging farmers 9% per ton as recovery costs for milling, coupled with the deduction of an 18% Value Added Tax (VAT) on raw sugarcane.
“VAT is meant for finished products, not raw materials, yet millers are deducting it. Worse still, it’s unclear whether the collected VAT is even remitted to Uganda Revenue Authority,” Ssenyonyi said.
He also identified poor road infrastructure as a major problem, causing delays in transporting harvested cane to mills, resulting in losses in both weight and quality. Furthermore, inadequate support from cooperatives or unions has left farmers without strong advocacy for fairer conditions.
Recommendations
Ssenyonyi outlined several recommendations to address the challenges faced by sugarcane farmers:
Fast-track Construction of Factories
The government, through Uganda Development Corporation, should expedite the purchase of land in Luuka District to pave the way for the construction of the promised sugar factory.
Timely Payments
The Ministry of Trade should investigate delayed payments and establish a maximum payment period for farmers supplying sugarcane.
Strengthen Cooperatives
Support sugarcane farmers’ cooperatives to help them negotiate better terms with millers and facilitate bulk purchases of inputs.
Fair Pricing
Ensure sugarcane prices reflect the value of at least five major by-products, such as molasses, ethanol, spirits, and bagasse, rather than being based solely on sugar.
Stop VAT Deductions
Prohibit millers from deducting VAT from payments to farmers for raw sugarcane.
Calibrate Weighbridges
The Uganda National Bureau of Standards should ensure weighbridges are accurately calibrated to prevent cheating farmers on the weight of their sugarcane.
Busoga is Uganda’s leading sugarcane-growing region, contributing significantly to the country’s sugar production. The sugar industry is a vital part of Uganda’s economy, generating over UGX 300 billion in taxes annually, directly employing over 100,000 people, and producing over 150 megawatts (MW) of electricity, of which 70MW is fed into the national grid.
Despite these contributions, poverty remains rampant in Busoga. According to the Uganda Bureau of Statistics (2020), the region is home to 1.2 million poor people, with 400,000 experiencing food poverty.
The Economic Policy Research Centre (EPRC) estimates that Eastern Uganda, particularly Busoga, accounts for 35% of the country’s sugarcane milling capacity, yet questions persist about whether the sector is truly benefiting local farmers.
