Sugarcane growers protest new tax, demand sugar law

By Moses Kyeyune

Parliament- Barely a week after the government reversed tax on Mobile Money, sugarcane growers have petitioned Parliament protesting the newly introduced withholding tax on their sales.
The government recently slapped a 1 per cent levy on sugarcane worth more than Shs1 million with effect from July 1.

The outgrowers, under the Uganda National Association of Sugarcane Growers, asked the Speaker of Parliament, Ms Rebecca Kadaga, on Monday to stop the tax.

“Previously, withholding tax was not charged on sugarcane,” reads the petition in part.
The petition presented by Mr Isan Budugo also stated that the new tax was presented without consultation and risks collapsing the industry.

“We cannot compete in the region where inputs and other land preparation equipment are subsidised,” Mr Budugo said.

“The industry is already threatened by cheap sugar imported from SADC (Southern African Development Community) countries uncontrollably because the unit cost of producing sugar in Uganda is high,” he added.

The farmers want an exemption, arguing that it will not only reduce the general cost of production but also reduce the price of sugar.

They say they do not make profits from the sugarcane because of low market prices as well as high interest rates from commercial banks.

The price of sugarcane ranges between Shs100,000 to Shs131,000 per metric tonne.
Daily Monitor has established that Kakira prices were at Shs175,000 but have since dropped to Shs128,000.

“We have been negotiating with millers to increase the prices for the whole of last year [in vain],” Mr Budugo said.

Ninety per cent of the cane processed is provided by outgrowers, implying that millers rely on the farmers for their produce.

The farmers have also asked the Speaker to expedite the Sugar Bill, which they hope will create order in the industry.

Dr Ibrahim Okumu, a development economist and development specialist from Makerere University, told Daily Monitor that there has been untold political influence in the sugar sector, coupled with the absence of a legal undertaking, which risks the industry’s survival.
Dr Okumu said Parliament should address the farmers’ question.

Ms Kadaga emphasised the need for an agricultural bank to extend affordable loans to the farmers.

“The money for farmers cannot come from commercial banks, we have been asking for an agricultural bank but there are no answers,” she said.
She promised to organise a meeting between farmers and sector ministers.

Sugarcane prices
Factory Price/metric tonne
Kinyara Shs100,000
Kakira Shs128,000
Kamuli Shs130,000
Mayuge Shs130,000
Kaliro Shs131,000

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