Uganda: Sugar Crisis - a Recurrent Accident

It was an accident waiting to happen. But when it did, the scale was unimaginable.

Sugar has grown from being simply an ingredient for the world's favourite beverage to a political issue.

Over the years Uganda has had sugar but it was never enough. The little deficit left by insufficient production was always bridged by importation. Until April this year, nobody imagined that sugar shortage would reach such alarming levels.

A history of shortage

Sugar shortage has always been hanging around but somehow, Ugandans had got used to the intermittent shortages which would last for a few weeks before the situation would stabilize.

Shortage dates back to dictator Idi Amin's regime after the expulsion of Asians in 1972 in the infamous 'economic war'. The two main sugar factories - The Sugar Corporation of Uganda Limited (SCOUL) owned by the Mehta family and Kakira Sugar Works owned by the Madhvani family, closed or significantly reduced production.

Amin tried to bridge the gap by building Kinyara Sugar factory but it failed to resolve the problem.

Amin, under sanctions from the international community, found it had to keep the factories running since key ingredients and technical expertise were lacking.

But locals found a way of smuggling in sugar mostly from Kenya because of the huge market scarcity creates.

Others went creative and started making their own 'sugar'. The process was simple. Just crush cane in a wooden mortar, squeeze the juice, add some water and boil and you have something close to tea. Only a few could do that and only who grew cane.

Some friendly Arab Muslim countries, however, got sugar into Uganda evident during the Organisation of African Unity (OAU now African Union) summit which Uganda hosted in 1975. Then sugar was given to a few traders in town who were under strict instructions not to sell to locals.

The idea was that those who thought Uganda had failed would be 'impressed' that the country was moving forward inspite of the sanctions. This was the beginning of politicizing the sugar problem in Uganda.

Sugar was, however, availed specifically to Muslims during Ramadhan. But because identity was not an issue, a simple mention of a Muslim name would enable you to get a kilogramme or two.

It was not surprising therefore that after the overthrow of Idi Amin, sugar was the most notable commodity looted from beverage factories in industrial areas.

"We could ignore commodities like cement and rush for sugar and fabric," said Mr Benedict Kakande, a resident of Kawempe, an industrial area eight kms north of Kampala. "The idea that at last you could get some sugar in your tea after a long time was too tempting to ignore."

It was no wonder that the first post Amin president, the late Yusuf Kironde Lule, who was forced to resign after 68 days in office, was referred to as the President who 'returned sugar in our tea'.

The demonstrations that followed his overthrow though filled with political sentiments protesting the slow but steady restoration of the Obote rule, had undertones of a population that thought harmony had returned to their meals.

It was not surprising therefore that after Yoweri Museveni seized power in 1986, he used sugar as a tool to get people to accept his Local Council (LC) political system (then Resistance Councils). Only those who attended LC meetings would be sold sugar, at the time a state supplied commodity. This way sugar became as much an ingredient of politics as it is in our tea or coffee.

It is not only successive regimes that have politicized sugar in Uganda. In 2008, the Madhvani group wanted to buy land and set up a sugar factory in northern Uganda but politicians decampaigned the move despite the fact that along sugar would come jobs, extra income and infrastructure.

For a region that is recovering from a 20-year war, you would expect projects such as this to be welcome. It was not to be and as such we are now paying the price.

Sugar and protests seem to go hand in hand.

In 2007, the infamous Mabira riots in Uganda were sparked off after the government attempted to lease a part of the few remaining natural tropical forests - Mabira Forest - located in Central Uganda, to the Mehta Group to grow cane for sugar. Five people died.

Come 2011 and more protests this time led by the opposition demanding that government address the high cost of living. Again sugar was among major food items mentioned, the other , the usual suspect being fuel.

The land issue

The problem of sugar scarcity is not unique to Uganda. What is unique, however, is that companies that deal in the commodity do not have enough land to grow cane to produce sugar.

According to an official of Kakira Sugar Works (KSW), the main three sugar companies (the other being Kinyara) depend on outgrowers for 90% of the cane they need. This is simply because there is land shortage in the main sugar growing areas in Uganda which include the eastern region on the eastern banks of the Nile and in Masindi in North western Uganda.

The crisis this time started after the closure of the three factories in May for routine maintenance and at the same time as they waited for cane to mature.

"The closure coincided with drought and because many countries can no longer afford to export sugar, this caused a shortage in Uganda and the region," said the KSW official who chose anonymity. "Only India has sugar for export."

Asked what they are doing about land shortage , the official said they have bought some land in central Uganda but they still need a lot. "In addition, the government can mobilize more outgrowers even outside the major cane producing areas since there is demand."

There is no evidence to suggest that the government has made any efforts to moblise farmers. Instead the easy way out has been to allow imports because they bring in taxes as well.

Analysts say if the government can mobilize farmers to grow cane, the sugar shortage would be averted, jobs created and even electricity.

"Every village in Uganda complains of poverty. Cane being an easy crop to cultivate would easily be taken up by farmers who would sell to factories. This would reduce poverty, boost household income and bring in additional foreign exchange," said an official in the Finance Ministry who refused to be named. "You do not build an economy dependent on imports."

Besides sugar the industry produces electricity from bagasse and with the country facing acute energy supplies, the urge to exploit any avenues to generate power would not have come at a more opportune time.

Mr Rogers Anguzu, the PRO of the National Agricultural Research Organisation (NARO) confessed that until this crisis, they had not thought of doing research on sugar.

"What we have taken seriously is apiary. We think honey can provide an alternative to sugar and the country has high potential," Anguzu told East African Business Week.

Most critics blame the shortage to emerging markets such as those in South Sudan, the DR Congo and Rwanda and Burundi. But markets are the best thing any economy wants. What is evident is that demand has not been matched by careful and prior planning thereby creating a deficit.

In response the government reduced taxes on sugar in the June 8 budget but this did not help.

On August 7, the government announced it has removed all taxes on sugar imports until the situation stabilizes.

But a week ago, a kilo of sugar had shot from Ugshs6,000 (US$2.3) to Ushs10,000 ($4). And the only places where the sugar could be found in big supermarkets, it was rationed. The price though remained UGshs 3,000 ($1.3). But by Monday last week the stalls were empty.

By the end of the week, however, the Uganda Revenue Authority released some 40,000 tonnes of sugar which had been impounded over taxation issues. This reduced the price to near normal levels.

Traders simply found a way of beating the rationing and bought the sugar and doubled the price.

Just as petrol drives an economy so does sugar when it comes to the food industry.

The beverage sector has been hard hit with beer and soft drinks manufacturers increasing prices citing the high cost of living, high fuel prices and sugar scarcity.

"We need about 1000 bags of sugar a month but factories can only supply 100 to 200 bags, says Mr Kaleel, the finance manager of Hariss International, who manufacture confectioneries and soft drinks in Kampala. "But because they have opened the door to imports we shall consider trading in the commodity as well."

The measures in place will certainly bring relief to the country but they will not solve the real problem.

Until the government accepts that it must get the farmers to produce enough cane to sustain the factories, homes and foreign markets, the sugar problem will remain an accident that will continue to recur. Ugandans may have to get used to the idea of sweet tea cups turning sour.

source: allafrica