Sugar manufacturer’s association explains price hikes

Sugar prices has gone high -Kakira Sugar
Our random random survey confirms that Kakira Sugar is sold at a range of 4,500 to 5,000 shillings per kilogram in most parts of the country's supermarkets.

Uganda Sugar Manufacturers Association (USMA) says the increase in sugar prices has been prompted by the increase in cost of production and the deprecating shillings against major currencies.

The Association’s Chairperson, Jim Kabeho says sugar millers were forced to announce what he called a paltry 4 percent increase on each 50-kilogram bag on ex-factory price.

The increase according to Kabeho saw a 50-kilogram bag of sugar trading at one hundred and eighty five thousand shillings up from one hundred and seventy thousand shillings.

Kabeho in a letter dated 10th June 2017 was responding to a letter by Trade, Industry and Cooperatives Minister, Amelia Kyambadde demand an explanation why there has been an increase in ex-factory and retail prices of sugar.

Sugar prices have since mid-March been in the increase. In some part of the country a kilogram of sugar is going for up to five thousand shillings.

This is the second time a kilo of Sugar has hit the 5000 shillings mark. In 2011 a kilo of sugar for the first time hit the 5000 shillings mark leading to the infamous opposition leaders under the Walk-to Work slogan.

Kabeho says some whole sale traders have started adding on a margin of 20,000/- per bag of 50 kg as compared to a routine margin of 2,000/- per bag thus pushing up resale price to two hundred thousand shillings per bag.

He says supermarkets like Shoprite, Game and Nakumatt that deal in branded sugar are selling at 4,500/- per kg.

This publication has however found that they were actually selling a kilo of sugar at 4800 shillings per kilo. In Kampala, small retail shops were selling non-branded sugar at four thousand five hundred  shillings per kilogram.

Meanwhile the Uganda Sugar Manufactures’ Association which comprise of big sugar players like Kakira Sugar, Kinyara Sugar and Sugar cooperation Lugazi says there is cane shortage in areas where they operate.

Kabeho explains that sugar production is below half of the capacities thus increasing the cost of per unit for those factories.

Uganda Sugar Manufacturers Association or the so-called “big players” in the sugar industry are trying to wage off stiff competition with over twenty small players operation with in their zones.  The biggest fight has been over sugarcane, the biggest raw material in sugar manufacturing.

The association says due to lack of implementation of zoning policy, small mills have established in close proximity of the old mills.

These new mills, according to Kabeho without any investment in out-grower schemes, started offering various incentives to farmers and this led to harvesting of immature cane hence the current experience of the extremely low recoveries and loss of production/output.

Kabeho does not rule out the possibility of speculation saying the general increase in the prices of sugar both in the region and on the world market and this will definitely make people speculate, and increase price.

In Kenya there is currently debate over the need to protect some of the big sugar mills like Mumias and Nzoia that have virtually collapsed due to small millers competing with them for cane.

Meanwhile a source at the Ministry of Trade Industry and Cooperatives who asked for anonymity says the Ministry suspects that the big players like Kakira could have decided not sell its sugar to the market so as to increase production at the ethanol its ethanol plant.
The sources says sugar mills with ethanol plants are finally making money on sugar through on co-generation of power, alcohol and ethanol.

Trade, Industry and Cooperatives Minister, Amelia Kyambadde Could not be reached on her mobile to respond to the Sugar Manufacturer’s Association. The Association has been pushing her ministry to establish the Uganda Sugar Board to provide a regulatory framework for the sugar industry.

The Bill for establishment of Sugar Board was approved by Cabinet last year but is yet to be considered by Parliament.

URN