Parliament Resolves Revenue Sharing Between Sugarcane Farmers and Millers Under New Sugar Bill

Sugarcane millers will share proceeds from sugar and its bi-products with farmers once the Sugar (Amendment) Bill, 2023 is passed into law.

This resolution was reached at a meeting of millers and farmers chaired by the Deputy Speaker, Thomas Tayebwa at Parliament on Tuesday, 28 January 2024.
The meeting was meant to settle disagreements between millers and farmers over the provisions of the Sugar Bill.

The meeting resolved that millers upon the sale of bi-products such as molasses, manure, spirits and biogas, will deduct 45 per cent of production costs and then share 55 per cent of the balance with farmers who supply sugarcane.

The Chairperson of the Uganda Sugar Manufacturers Association, Jim Kabeho said the 55 per cent is simply the minimum that should be provided in the law and that the percentage can be negotiated.
“We are saying this is the minimum you can pay a farmer at a given time; it can go upwards depending on the market prices and sugarcane being an agricultural product that fluctuates,” Kabeho said.

The Chairman of Greater Mukono Sugarcane Growers Cooperative Society Ltd, Julius Katerevu said farmers had made calculations and that the above figure is welcome saying, ‘with this, the farmers can now survive. Many have not been breaking even due to the costs of production. This has been the humble cry of farmers’.

Sugarcane farmers who were in attendance repeatedly stated how they have been cheated and mistreated in the sugar industry, and pleaded that the new law does not lean towards the millers.
“The proposed grace period in which the millers will start implementation of 55 per cent share is too long. Three years is not necessary for the sugar factories which have been operating for decades in Uganda,” said David Byensi, Treasurer of the Masindi Sugarcane Growers Association.

The meeting resolved to give millers two years in which they will start implementation of the 55 per cent cognisant that those intending to invest in generating bi-products such as biogas require time to prepare.
“I think the grace period of two years is realistic; any new investor would require at least one year to get verified and approved and for those intending to generate power from sugarcane need another year to get the license. Let us not press the millers so much,” said Hon. Henry Bagiire, (NRM, Bunya County West).

The General Manager, Kinyara Sugar Ltd, Ravi Ramalingam made a case for the grace period that farmers had rejected, noting that he has been pressing for a license to generate power for two years in vain. His fellow millers said that the long process they go through to import machines is also long.

Similarly, the meeting resolved to impose nine per cent as the minimum recovery rate a miller should make on a ton of sugarcane.

Both farmers and millers agreed that this rate will reduce the tendency of harvesting immature sugarcane since it yields low returns.
“The millers will not accept immature sugarcane anymore. They will say this does not give me the minimum recovery rate. As Parliament, we are going with this percentage which is based on a study done by the World Bank,” Tayebwa said.

The Bill seeks to amend the Sugar Act 2020 to establish the Sugar Council which would comprise three millers and four farmers that will be charged with regulation of the Sugar Industry.

Its operations will be funded by levies charged on millers and farmers will only finance15 per cent of its operations.