New sugar and sugarcane law to tackle poverty in cane-growing regions

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OPINION

By Hon. Daudi Migereko

The Sugar (Amendment) Act, 2025, signed into law by His Excellency President Yoweri Kaguta Museveni on May 30, 2025, represents a major milestone in the NRM Government’s commitment to fighting poverty, especially in sugarcane-growing regions such as Busoga and Bunyoro.

This landmark legislation is expected to revitalise the sugarcane value chain, improve household incomes, and contribute meaningfully to national development.

The main assumption here is that if the law and its related regulations are successfully operationalised, along with complementary interventions such as improved farming inputs, extension services, and access to affordable credit, the new law will catalyse a transformation in sugarcane farming.

Contribution of sugar and sugarcane to Uganda’s economy

The sugarcane industry is among the fastest-growing sectors in Uganda. Currently, 14 sugar factories are operational, including Kakira, SCOUL (Lugazi), Kinyara, Mayuge, GM, Sezibwa, Kaliro, Kyenjojo, Bwendero, Kamuli, Kiryandongo, Hoima, Bugiri, and Victoria Sugar. These collectively crush over eight million tonnes of cane annually, with 70% of it sourced from out-growers and the remaining 30% from factory estates.

Uganda produces over 600,000 tonnes of sugar each year, of which 420,000 tonnes is consumed domestically, and about 100,000 tonnes of industrial white sugar is sold locally. The surplus is exported within the East African Community (EAC), saving Uganda approximately $650m annually in imports. The sector contributes an estimated 5–7% to GDP, generates sh350–550b in tax revenues, and supports over 135,000 jobs directly and indirectly. For thousands of smallholder farmers, sugarcane remains a vital source of income and economic resilience.

The Busoga paradox: Cane wealth amidst poverty

Despite its economic potential, many individuals believe the widespread poverty in Busoga is largely due to the region's primary economic activity of growing and selling sugarcane as the major cash crop.

Ironically, the Madhvani and Mehta families, known as the wealthiest in the region and country for nearly a hundred years, have built their fortune primarily on sugarcane, sugar manufacturing, and marketing.

Their thriving sugarcane and sugar business has not only allowed them to generate substantial capital and resources but has also paved the way for them to venture into other manufacturing sectors, tourism, etc.

Furthermore, they have actively supported numerous corporate social responsibility initiatives and programmes in the country. 

The success achieved by the Madhvani and Mehta families has fueled the belief that anyone can effortlessly become a billionaire by concentrating on sugarcane and sugar production.

Madhvani, Mehta (SCOUL), and Kinyara achieve impressive sugarcane yields of 120 tonnes per acre on their factory estates, due to their easy access to all the necessary inputs.

In contrast, local farmers in the same ecological zone, adjacent to Madhvani or Mehta Estate, who lack these essential resources, typically harvest only 20 to 40 tonnes per acre.

However, if these farmers receive support to access the required inputs and adopt modern sugarcane farming techniques based on research recommendations, we can expect a significant increase in their yields per acre.

This improvement will not only enhance land productivity but will also eliminate the need to expand land for sugarcane cultivation. As such, optimal land utilisation will be realised.

Past challenges: A sector in need of policy direction and law

In line with the above contrast, it is important to note that the sugar industry has been riddled with challenges stemming from weak governance, poor farmer–mill relations, and political sensitivities.

For years, the proposed Sugar (Amendment) Bill remained in abeyance due to conflicting interests between farmers and factory owners, mistrust and lack of a formal dispute resolution mechanism, lack of stakeholder coordination, and weak regulatory oversight.

This stalemate created a vacuum in policy enforcement, farmers became disillusioned, sugarcane prices plummeted, and many uprooted their cane fields without viable alternatives.

Ironically, more sugar factories were set-up in the sugarcane growing regions. All of them were operating below capacity due to inconsistent cane supply and inability to support farmers with critical services such as supply of high-yielding planting materials, fertilisers, mechanisation, or credit.

A consultative breakthrough and Presidential Assent

Faced with an industry in distress, all key actors—including farmers, factory owners, and the Ministry of Trade, Industry, and Cooperatives—rallied behind the need for decisive reform. The resulting consultations and consensus led to the successful passage of the Sugar (Amendment) Act, 2025.

President Museveni’s engagement with the farmers, factory leaders, and ministry officials, and the positive validation from the Deputy Speaker of Parliament, Thomas Tayebwa, along with insights from ministers Francis Mwebesa and David Bahati, and the Commissioner of Industry, was instrumental in persuading the President to assent to this law.

This participatory process helped address longstanding grievances and has given the new law strong legitimacy. The engagements that took place effectively addressed the sticking points that had previously hindered both the Government and Parliament from moving forward with the enactment of the new law.

A new governance structure: Establishment of the Sugar Council and a transparent pricing mechanism

Key among the reforms introduced by the law is the establishment of a Sugar Council that comprises key industry stakeholders, including sugarcane farmers, sugar factory owners, and representatives from the ministries of industry, agriculture, and finance.

This multi-stakeholder Council serves as a platform for discussing all matters impacting the industry and generating viable solutions.

To ensure success, the calibre, integrity, and business acumen of the Council representatives must be top-notch. The law specifies that permanent secretaries will represent the Government on the Council, while sugar factories and farmers are also required to choose representatives of similar standing.

This structure aims to ensure that the Council operates effectively, sets a positive course for the future, and secures its sustainability.

Additionally, the ongoing debate regarding sugarcane pricing, as stipulated by the Sugar (Amendment) Act, will now be approached in a scientific and transparent manner. A new formula will be used to determine prices, taking into account the diverse range of products generated from sugarcane processing, including sugar, bagasse, electricity, ethanol, molasses, fertilisers, and animal feed.

Biofuels Blending Act: A game-changer.

The Biofuels Act 2020 provides for blending of petroleum products sold in Uganda with locally produced ethanol, up to a maximum of 20%. On July 1, 2025, the Minister of Energy and Mineral Development, Dr Ruth Nankabirwa, launched Uganda’s Biofuels blending programme. Blending facilities are being set-up at Busia by Modern Energy, at Malaba by Bukona Processors, at Kawuku by Lake Victoria Logistics and at Mutukula by Afro Kai and Jinja. This will not only reduce dependence on fossil fuel imports but will also create a reliable and long-term market for sugarcane-based ethanol producers.

At the same time, the new focus by the Government of drastically reducing the use of firewood and charcoal and popularising the use of ethanol and ethanol stoves for cooking in homes and institutions, will greatly increase the demand for ethanol; hence sugarcane.

The biofuels policy presents a massive boost for sugar and ethanol producers. It also creates price stability and off-take certainty for ethanol, which in turn increases cane demand and income for farmers, given the enactment of the Sugar (Amendment) Act, 2025.

With the Sugar Act institutionalising fair governance and the biofuels policy unlocking new market frontiers, Uganda’s sugarcane sector stands on the cusp of an agricultural and industrial revolution as has happened in Brazil, India and Mauritius.

Conclusion: A promising future for farmers and the economy.

The Sugar (Amendment) Act 2025 is a landmark transformation of the industry, and the future holds promise. It is for the industry to take advantage of the new la,w and our leaders to use the same to combat poverty.

The writer is the Chairman,National Biofuels Committee.

Chaired, Industry Stakeholder Meetings.