Cane Outgrowers Decry Exploitation

By Nelson Mandela Muhoozi

Sugarcane out growers in Busoga and Buganda sub-regions have decried exploitation by sugar factories, saying the factories are paying them low prices for their sugarcane, which is not enough to cover their costs of production.

They also say that the sugarcane millers no longer provide them with adequate support services, such as access to credit, equipment, among others, and yet they are making the biggest profits from the business.

Appearing before the Members of Parliament on Tourism, Trade and Industry Committee on Tuesday, farmers said that because of the exploitation, many sugarcanes outgrowers are struggling to make ends meet.

They said some farmers have even been forced to abandon their farms, further noting that for a peasant or a small-scale farmer, it is now very hard to invest in even one acre of sugarcane as the costs are so high.

David Christopher from the Busoga Sugarcane Outgrowers Association said that all the sugarcane millers combined in the region cannot even consume all the sugarcane in the region and yet they decry a saturated market.

“We hardly make profits as every factory dictates its own price. For the farmers need aid to be able to plant more acreage for sugarcanes. We are being paid about sh200 per kilo gram of cane, this is the crop that earns the least,” he said. 

According to the farmers, the sugarcane industry is not regulated properly as the current players are operating in alliance against farmers.

They alleged that bureaucratic tendency by the millers causes fluctuations in the sugarcane prices which heavily affects the farmers. They said that they are being highly exploited while the factors enjoy a lion’s share of the business.

The meeting followed a petition by the millers, alleging that farmers whom they supported in terms of providing seed cane and loans, doge paying back in terms of supplying cane, thereby causing the factories to operate under capacity.

In their petition, the old players under their umbrella association, Uganda Sugar Manufacturers Association (USMA), reasoned that when many new players are allowed to join a sector that is already saturated, the problem of insufficient raw materials will persist.

Miran Dobaria, the Director of GM sugar limited said that there is need proper synchronization of the industry between farmers and millers, production capacities, milling capacities to avoid situations of influx in the supply of sugar cane that cannot be consumed.

The presiding chairperson of the meeting, Richard Gafabusa (Bwamba County, NRM), questioned the stakeholders what is motivating the many entrants in the sugarcane industry which the old millers are petitioning to bar from entering the sector.

Amon Kakama, the Director of Shakti Sugar said that he was an out grower for about ten years and noted the old players, including are just forming a cartel to disrupt the industry and favour themselves.

“Most of the big players in the industry have tens of thousands of hectares with less than half of the land developed. This is because it is cheaper to depend on outgrowers who have cane than to set up your own estate which is so costly to maintain,” he said.

He added, “You would make more losses if you were depending on your own estate than if you are getting cane from outgrowers. So, this caused the boom in the industry and caused the millers to depend on the farmers other than expanding their estate.”

For this reason, he said that he is not sure if part of Mabira forest that was given away to plant cane, and another land in Hoima District is being developed, deducing that it is cheaper to depend on outgrowers than to maintain your own estate.

The MPs questioned if the factories are not then cheating the farmers by paying them peanuts and yet they are helping to reduce the cost of operation for factories.

Brenda Namukuta (District Woman Representative, Kaliro, NRM) said the millers are continuously exploiting the farmers, adding that, “this situation will become worse if new factories are blocked.”

The Sugar Act

The Sugar Act, 2020 stipulates that at least 50 per cent of the proceeds should go to farmers. However, a section of farmers from Mukono, Kayunga and Busoga said this is not the case, noting that exploitation by millers is a serious problem that needs to be addressed.

They called on the government to intervene and regulate the sugar industry. They want the government to set a minimum price for sugarcane and to ensure that factories provide outgrowers with adequate support services.

Mid-November this year, the members of the Committee learnt that some sugar millers acquired licenses to establish factories but had not adhered, contrary to the Sugar Act, 2020.

According to Section 21(7) of the Act, a company granted a license shall commence business within three years.
 
The legislators made the discovery during an oversight visit to consider a petition by the Uganda Sugar Manufacturers Association (USMA) against new millers in Busoga and Buganda sub regions.

Petition

The petitioners state that the Ministry of Trade, Industries and Cooperatives licensed new millers who have not adhered to the Sugar Policy which puts a restriction of a 25KM radius.

The Regional Director SCOUL, Suresh Sharma said that they have not denied other players the opportunity but are concerned about the failure to adhere to the 25KM radius.
 
He cited the new miller, Shakti sugar, saying the company has not adhered to the 25KM radius and is likely to poach cane from Mehta’s out growers, since Shakti’s crushing capacity is still low.

“Once the 25KM radius requirement is adhered to, there will be no complaints. The Ministry of Trade should always verify the radius before licensing new millers,” said Sharma.