THE reduction in the price of beer will benefit farmers who supply raw materials to the breweries, the deputy secretary to the Treasury has said.
Uganda Breweries (UBL) reduced the price of Senator Lager from sh1,200 to sh1,000 and Pilsner Lager from sh1,500 to sh1,300. This is due to a reduction in the excise duty on beer made from local raw materials from 30% to 20%.
Keith Muhakanizi said: “That was the intention of the budget. We want to encourage drinking of beer made from local raw materials.”
Muhakanizi dismissed talk that reducing beer prices only passes the tax relief benefits to consumers instead of the farmers it was intended for.
He argued that reducing beer prices would increase the demand for this beer, which in turn would increase its production.
“The brewers will then have to buy more sorghum and barley from the farmers,” he explained, adding that this will raise the incomes of the poor rural farmers.
UBL’s head of corporate affairs, Marion Muyobo, said when the excise duty was increased from 20% to 30%, the beer prices were increased, leading to a drastic fall in the demand for beer because consumers turned to cheaper local brews. “This drop in sales led to a massive reduction in production.”
