Uganda: the sugar industry is in desperate straits

Uganda: the sugar industry is in desperate straits

Sugar producers are at an impasse. They are facing competition from low-priced imports on the domestic market and are losing regional customers who prefer imported food by far.
In Uganda, the sugar industry is in dire straits. Indeed, the industry is currently facing a build-up of stocks with the slump in sales due to competition from duty-free imported sugar.
While the commodity was usually purchased at low prices for re-export to neighboring countries, it is currently being sold illegally on the domestic market, which is undermining the competitiveness of the local industry.
In addition, some regional importers are now opting to purchase from customs warehouses that enjoy lower tax burdens instead of direct procurement from local suppliers.
According to estimates, these various difficulties could cause industry players to lose $30 million if the warehouses rot.
« Currently, customers in Sudan and the DRC no longer buy our sugar. They order it from bonded warehouses and yet our sugar is rotting, » said Jim Mwine Kabeho, director of the Madhvani Group, which owns the largest milling plant in Uganda.
For the Ugandan sugar industry, this situation is all the more detrimental as it needs to strengthen its regional presence to dispose of its sugar surplus. The country, which consumes about 300,000 tons of sugar, produces 510,000 tons.
While in response to the dismay of stakeholders, the parliamentary authorities have advocated for greater openness of neighboring countries through adherence to trade protocols, observers indicate that the agreements remain difficult to implement in practice. In addition to the customs duties often imposed between countries in the region despite the Customs Union, there are cumbersome administrative procedures and sometimes bans on the exchange of goods.
Uganda, for example, faced a blockade of its sugar shipments to Tanzania in 2019 on charges of replenishing Brazilian sugar before this trade restriction was officially lifted in March.

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