Assist sugarcane out-growers
THE Madhvani Group has written to President Yoweri Museveni protesting the establishment of a new sugar plant in Jinja by Alam Group.
THE Madhvani Group has written to President Yoweri Museveni protesting the establishment of a new sugar plant in Jinja by Alam Group.
The Madhvanis argue that the setting up of the new factory just nine kilometres away from their plant in Kakira, does not only contravene the national sugar policy, but that the new investor was likely to infringe on the out-growers that the Madhvani group has developed over the past 80 years.
While Alam Group has denied targeting out-growers registered with the Madhvani Group, the squabble between the two investors presents a complex situation, especially in light of the economic liberalisation policy on one hand and the need to protect investors on the other.
Although the liberalisation policy is assumed to bring in healthy competition, certain key sectors still need some kind of regulation to avoid investor frustration. The national sugar policy adopted last year was a direct response to the then conflict between the Madhvani Group and another investor, Mayuge Sugar factory.
To protect companies that have heavily invested in out-grower schemes and to guarantee adequate supplies to the players in the sugar manufacturing industry, the policy stipulates that new sugar factories could only be licensed outside a 25-kilometre radius from an existing one. It also says only 30% of the land within the catchment area could be put under sugar cultivation to reserve enough land for food crops.
To avoid frustrating both investors, the Government should engage in talks with the two companies to find an amicable solution that at the same time allows fair competition. The Government should also put in place mechanisms to assist out-growers to avoid their being dependent on individual companies.
The Madhvanis argue that the setting up of the new factory just nine kilometres away from their plant in Kakira, does not only contravene the national sugar policy, but that the new investor was likely to infringe on the out-growers that the Madhvani group has developed over the past 80 years.
While Alam Group has denied targeting out-growers registered with the Madhvani Group, the squabble between the two investors presents a complex situation, especially in light of the economic liberalisation policy on one hand and the need to protect investors on the other.
Although the liberalisation policy is assumed to bring in healthy competition, certain key sectors still need some kind of regulation to avoid investor frustration. The national sugar policy adopted last year was a direct response to the then conflict between the Madhvani Group and another investor, Mayuge Sugar factory.
To protect companies that have heavily invested in out-grower schemes and to guarantee adequate supplies to the players in the sugar manufacturing industry, the policy stipulates that new sugar factories could only be licensed outside a 25-kilometre radius from an existing one. It also says only 30% of the land within the catchment area could be put under sugar cultivation to reserve enough land for food crops.
To avoid frustrating both investors, the Government should engage in talks with the two companies to find an amicable solution that at the same time allows fair competition. The Government should also put in place mechanisms to assist out-growers to avoid their being dependent on individual companies.