The government has stepped in to stabilise Uganda’s sugar sector after a sharp drop in sugarcane prices triggered complaints from farmers and raised fears of deeper disruptions in one of the country’s most politically and economically sensitive value chains.
At a high-level meeting bringing together sugar millers, government officials and sector regulators, it was agreed that factories should not pay farmers below Shs125,000 per tonne of sugarcane.
The engagement followed reports that some millers had slashed prices to as low as Shs90,000, a move growers said had made production unsustainable amid rising input and transport costs.
Speaking after the meeting, Daudi Migereko, chairperson of the National Biofuels Committee and former Energy Minister, said all sugar factories were represented, alongside officials from the Ministry of Trade, Industry and Cooperatives and technical experts.
He said discussions focused on understanding the reasons behind the price cuts and their impact on out-growers.
‘We wanted to understand why there had been a reduction in sugarcane prices by a number of factories,’ Migereko said. ‘After a productive engagement and exchange of views, it was agreed that factories should not go below Shs125,000 per tonne.’
Migereko acknowledged that while some millers were already paying between Shs128,000 and Shs130,000 per tonne, others had lowered prices sharply, creating tension in the sector.
He said the agreed price floor was intended to restore balance and protect farmers who form the backbone of sugar production.
‘In our view, this should help create harmony in the sector,’ he said, warning that persistently low prices risk discouraging out-growers and undermining long-term production.
He reminded millers that government has historically worked closely with them to maintain stability in the industry, urging them to revise prices as the Sugar Industry Stakeholders Council reviews the matter.
The meeting was chaired by the Minister of Trade, Industry and Cooperatives, Francis Mwebesa, who said his ministry had been swamped with complaints from sugarcane farmers over what they described as ‘arbitrary pricing.’
He noted that low prices directly affect farmer livelihoods, mill supply stability, and, social and political stability in sugarcane-growing areas.
According to the ministry, most complaints were directed at GM Sugar, Kaliro Sugar, Bugiri Sugar and Kamuli Sugar. Farmers accused the mills of offering prices far below those provided for under the pricing formula in the Sugar Amendment Act 2025.
They also raised concerns about a five percent deduction for trash that some millers continue to impose, despite guidance from the Sugar Industry Stakeholders Council scrapping the charge.
Mwebesa warned that if farmers continue to earn returns that do not match their costs, the sector faces long-term risks, including reduced investment and declining production.
He questioned the timing of the price cuts, noting that they came during a ‘politically sensitive period’ ahead of the 2026 General Election, and cautioned millers against practices that could erode farmer incomes and fuel discontent in rural communities.
‘Sugarcane pricing should be determined by the Sugar Industry Stakeholders Council as clearly stipulated in the Sugar Amendment Act 2025,’ Mwebesa said.
While the Shs125,000 price floor offers temporary relief, officials said further consultations are expected as the council reviews pricing structures, leaving open the question of whether deeper reforms will be needed to prevent similar disputes.
The Minister of State for Cooperatives, Frederick Ngobi Gume, said his intervention was informed by firsthand observations from the field, where farmers have been grappling with steadily falling sugarcane prices.
He described the timing of the cuts as sensitive, noting that they had triggered anxiety among out-growers who rely on cane sales as their primary source of income.
‘We had to come in after hearing the cry from the farmers,’ Gume said, adding that the meeting helped restore a workable status quo.
He confirmed that the agreed Shs125,000 per tonne is a floor, not a ceiling, and that millers able to pay more are free to do so.
Those that had lowered prices were asked to revise them upwards for at least two months as a broader review is conducted.
Sugar millers operating in the Busoga sub-region unanimously agreed to apply the minimum price for the two-month period. The resolution was reached with the consensus of millers led by GM Sugar’s Akash, Yogesh Agri and Ismail Nasifu of Kamuli Sugar.
The chairperson of the Sugar Industry Stakeholders Council, Rajbir Singh Rai of Kinyara Sugar Works, urged millers to comply with the Sugar Amendment Act 2025, saying adherence to the law is critical to restoring stability.
However, millers raised concerns about the practicality of uniform pricing.
Henry Kata of GM Sugar said production costs vary across factories, making it difficult for all millers to offer identical prices despite the existence of a formal pricing formula.