(Bloomberg) -- Uganda's sugar producers are sitting on stockpiles worth $30 million which are at risk of rotting due to “unfair competition” from cheaper foreign supplies of the sweetener which should be re-exported, according to an industry lobby group.
Bonded sugar -- which is exempt from taxes -- is imported into Uganda with the intention of re-exporting it. However, the product is currently being illegally sold to Uganda's domestic market, local millers told the Kampala-based Parliament in a meeting on Wednesday.
Importers from neighboring countries are opting to buy sugar from bonded warehouses within Uganda, without waiting for it to be shipped to their countries. This means Uganda's local millers are losing out and stockpiles are building up.
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Jim Mwine Kabeho, a director of Madhvani Group, which owns the country's biggest miller, said importers from neighboring South Sudan and Democratic Republic of Congo are buying the bonded sugar -- instead of from local producers -- because there's no levy to pay.
“Currently, the markets of Sudan and DRC no longer buy our sugar,” Kabeho said. “They buy from sugar bonds yet our sugar is rotting. We now have stocks of sugar worth $30 million in various companies.”
Uganda's parliament wants countries within the region to adhere to the East African trade protocols which will eliminate curbs that deter exports of Uganda's commodities, including sugar, in the wake of curbs in shipments to Kenya, Tanzania and Rwanda.
Uganda's millers are expected to produce a total of 510,000 metric tons of sugar this year. Meanwhile, domestic demand is about 350,000 metric tons, according to the Uganda Sugar Manufacturers' Association.
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