Overview:
Ugandan sugar farmers and industry leaders warn that a government proposal to double the excise duty on sugar will depress cane prices and slash growers' incomes.
LUWEERO, Uganda — Sugar industry stakeholders have expressed concern over a government proposal to double the excise duty on sugar to 200 shillings per kilogram, warning the move could depress sugarcane prices and strain farmers.
The 200-shilling rate is a concession after farmers and industry leaders successfully lobbied against an initial proposal to raise the duty to 300 shillings per kilogram. However, growers maintain that even the revised rate will harm their livelihoods.
Julius Katerevu, chairperson of the Uganda National Association of Sugarcane Growers, said any tax increase directly affects farmers because millers deduct taxes before calculating the farmers’ share. Katerevu, who also chairs the Greater Mukono Sugarcane Growers Cooperative Society Ltd., urged the government to introduce interventions to protect incomes and address a controversial 5% sugarcane trash deduction imposed by some factories.
Isa Budhugo, a member of the Uganda Sugar Stakeholders Council, said the proposed hike risks shifting the financial burden onto farmers because sugarcane prices are directly tied to final sugar prices. He noted that the tax proposal comes as farmers face rising costs for fertilizers, agrochemicals and fuel.
The average farm-gate price of sugarcane currently stands at about 125,000 shillings per tonne, down from around 175,000 shillings a decade ago.
Robert Atugonza, chairperson of the Masindi Sugarcane Growers Association Limited, explained that the formula used to determine cane prices is based on the net sugar price after taxes. He said the proposed increase of 100 shillings per kilogram means farmers stand to lose about 9,000 shillings on every tonne of cane supplied.
David Christopher Mombwe, chairperson of the Busoga Sugarcane Growers Association, said farmers are effectively bearing the cost of both value-added tax and excise duty through the current pricing formula, despite selling raw cane rather than processing sugar.
Godfrey Biriwali, chairperson of the Greater Busoga Sugarcane Farmers’ Union, warned that growers could abandon the crop entirely if pricing concerns and the 5% trash deduction are not addressed by the government.