Ugandan economists and industrialists are attributing the recent decline in sugarcane prices to the global decrease in sugar prices. Major sugar factories in Uganda, including Kaliro, Lugazi, Mayuge, GM, Bugiri Sugar, and Kinyara, have announced a reduction in sugarcane prices from over Shs 210,000 per tonne to approximately Shs 160,000 – Shs 170,000 in the past two weeks. Kaliro Sugar, on January 29, 2024, communicated to outgrowers about the revision, stating that the drop in sugar prices compelled them to adjust sugarcane rates.

Moses Aturinda, a Ugandan economist, highlighted that January witnessed a global sugar surplus of around 0.5 million tonnes, primarily due to increased sugar production in Brazil. Aturinda emphasized that the decrease in international sugar prices is the primary factor influencing the local market, mentioning that the reopening of the Kenyan sugar industry after a four-month shutdown also contributes to the surplus.

Global sugar prices are currently at an eight-month low, with Brazil achieving record sugar production in November 2023. In contrast, India’s focus on increasing sugar production, rather than ethanol, is expected to contribute to the surplus. This decline in sugar prices has raised concerns among farmers in Busoga and Bunyoro, who heavily rely on bank loans to cultivate large quantities of sugarcane. The chairperson of the Uganda Sugarcane Growers Association (USGA), Isa Budhugo, expressed worries about the new sugarcane price falling below the breakeven point for farmers at Shs 210,000.

Jim Kabeho, chairperson of the Uganda Sugar Manufacturers Association (USMA), attributed the drop in sugarcane prices to the surge in illegal sugar imports through eastern Uganda’s porous border points. Kabeho emphasized the negative impact of low sugar consumption on both the industry and sugarcane outgrowers. Smuggling cases, particularly through the Kenyan route, have been on the rise, with a recent incident in December 2023 where Uganda Revenue Authority customs officials seized 800kgs of smuggled sugar at Mutukula porous border points. This illicit activity not only harms the sugar industry but also jeopardizes the livelihoods of sugarcane outgrowers.