When many Ugandans took to the streets of Kampala in April 2007 to protest the government’s intention to degazette 7,100 hectares (17,540 acres) of Mabira rainforest for expanding sugar production, it may have taken many by surprise. More so, when the protest assumed racial tones, became violent and subsequently targetted the Asian community.
However, if one is to closely look between the lines of what could be called the Mabira saga, it is possible to see the wide-ranging influence of the sugar industry in the economic and social life of Uganda. According to a study carried out by D. P. S Ahluwalia, Plantations and Politics of Sugar in Uganda, the origins of the industry can be traced to the 1920s when the colonial administration was promoting peasant production of cash crops for export as raw materials for the factories in Britain. For sugarcane growing, it was developed along the lines of plantations by Asians, thus explaining their link to, expertise and capital in the business up to date.
There are three dominant players; of which two are owned by Asians or Ugandans of Asian origin. Kakira belongs to the Madhvani Group, Sugar Company of Uganda Limited (SCOUL) in Lugazi is owned by the Mehta Group. The third sugar estate, operated by Kinyara Sugar Works Limited, was established much later in 1964, through an agreement between the governments of Uganda and India. In addition to this historical background, these enterprises have maintained their presence in the market owing to government support via rehabilitation after years of little or non-production in the 1970s and 1980s.
Because of this, likely competitors have been kept at bay, this is reinforced by their lobbying the Ministry of Trade and Industry to table a bill in parliament. The outcome of which will set guidelines along which new players will operate while taking care of the concerns of the “big three”. The concerns include new firms and jaggeries buying from outgrowers who are already contractually bound to them. The jaggeries are small-scale businesses that crush cane for the making of wagari.
Thus, the crux of the current competition is expansion at less cost rather than directly targetting the consumers. There is a shortfall in production—there is a need to expand from the current 190,000 tonnes per year to 220,000 tonnes to meet demand. The gap is met by imported sugar, which is cheaper. Yet another headache is the cost of production, which is highest in East Africa: US$ 480 per tonne compared to US$ 390 in Kenya and Tanzania. Even then, there is the challenge of consumption—while for Uganda, it is 9 kilogrammes per person, in Kenya and Tanzania, it ranges between 14-15 kilogrammes.
There are thousands of farmers—known as outgrowers—contracted to supply the factories. Statistics from Uganda National Sugarcane Growers Association (UNASGO) put the number at 20,000 and indirectly benefitting 50,000. But Ethical Sugar, a civil society organisation, puts the number at 7,000, who in turn employ 20,000 people, and 15,000 directly employed by the factories. Either way, production of the white crystals, which are an essential part of our diets, is the livelihood of a significant part of the population.
This extends to the business opportunities to local entrepreneurs such as those who transport cane, the wholesalers and retailers who sell the products. Even the by-product of the process known as bargasse is used to generate power in an environment-friendly way and at a cheaper cost than burning of diesel. Besides this, there are industries that use sugar as input, ingredient or preservative—breweries in making beer, soft drinks and packed fruit makers and confectioneries in producing sweets, bread, biscuits. However, the type used is industrial sugar, most of which is imported. On estates such as Kakira, there are social services such as a hospital, nursery, primary and secondary schools. With expansion in the near future, the benefits will definitely spread, and with it the impact of the sector.
Despite revenue of billions of shillings and annual taxes amounting to over Shs. 62 billion, the sugar industry is a source of disaffection and dissatisfaction. This probably from the feeling that the industry gains more from the people than the latter should be getting from it. For instance, neither do the producers have say in setting price nor do the outgrowers determine how much they get per tonne. There are different rates for the three factories; Lugazi pays its outgrowers Shs. 24,000 per tonne, the rate for Kakira is Shs. 38,000 while Kinyara sets it at Shs. 32,600. Even the land owners that lease their land for planting of sugarcane claim the fees they are paid are not commiserate with the market. Even the consumers feel they are paying a lot; ranging from Shs. 1,700 to Shs. 2,000 per kilogramme depending on where they buy it.
So, is it still surprising that during the Mabira saga, the protest tried to introduce boycott of Lugazi sugar as one of the weapons? In spite of this backdrop, we can hardly do without that sugar in our cup of tea.
This was published in The Manager, a weekly newspaper, Kampala, Uganda, in the week of 16th March 2009
Note: I posted this here because many of the facts are pertinent in light of the current crisis in sugar supply going on in Uganda. However, because of a number of factors, the figures quoted here have changed over time.
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