Why Madhvani opposes new sugar plant
Feb 06, 2011
LAST year, the trade ministry issued a national sugar policy which stipulates that sugarcane growing areas shall be planned within a radius of 25kilometres for licensing new sugar mills.
MAYUR Madhvani, the managing director of the Madhvani Group told Frank Mugabi why they are opposed to a proposed new sugar factory by the Alam Group at Mailo Mbili in Jinja town
You have written to President Yoweri Museveni protesting the setting up of a new sugar factory by Alam Group in Jinja. Aren’t you effectively challenging the liberalisation policy?
LAST year, the trade ministry issued a national sugar policy which stipulates that sugarcane growing areas shall be planned within a radius of 25kilometres for licensing new sugar mills.
30% of the area within this radius shall be used for sugarcane growing and the remainder of the land shall be reserved for food security and other activities.
Alam Group is establishing a factory only 9km from our plant at Kakira. But we have documented evidence including maps to show that we have developed a nucleus estate and outgrowers covering a radius of up to 30km from our factory.
Therefore, there is no more space for the Alam Group to grow sugarcane here if the policy is to be respected to the word.
And in that case, Alam Group is only going to infringe on resources that have taken us the last 80 years to develop.
But Alam Group officials say they won’t buy sugarcane from your registered farmers. They are making arrangements to support their own farmers. They also intend to buy the crop from non-affiliated farmers?
It’s absolutely unfeasible in both the short and long-run.
We have to date developed 8,500 outgrowers in our area to supply us sugarcane.
There is a very small number of farmers who are not registered with us.
We are already covering a radius of 30km, which means Alam Group will have to get sugarcane beyond 35km, which is not economically viable. Our experience shows that in such a case, the transport costs overwhelm returns on the supply.
It’s very important that they don’t underestimate the amount of work that is required to cultivate sugarcane.
In your petition, you asked the President to prevail over Alam Group to shift its factory elsewhere. But sugarcane doesn’t grow in just any other place?
We are not against investment. If Alam Group wants to develop and produce at a large scale like we have done, then they should be looking at other areas like Bugiri and north of Kamuli.
Personally, we are in the final stages of expanding to Amuru in northern Uganda, where we shall soon set up a new factory. It’s a sign that there is no more sugarcane available here.
If we could expand Kakira, why should we go to Amuru.
In the past, you unsuccessfully tried to block similar projects in Mayuge. You have now turned your guns on Alam Group. Are you fearing competition?
We have a running expansion programme worth $86m. This is the core of our objection.
We have spent millions of dollars assisting farmers in cultivating sugarcane which we badly need for this purpose. Our sugar production will soon expand to 185,000 tonnes per annum. We are bringing in new boilers, turbines and other equipment for this purpose.
We are also generating 22MW of electricity. This should increase to 53MW within 12-18 months. Up to 33-35MW of this will be supplied to the national grid. We shall at the same time produce 40,000-50,000 litres of ethanol/industrial alcohol per day.
Equipment for these projects has already been ordered. We took the risk based on projected future sugarcane supplies.
More factories in this zone will mean splitting sugarcane supply which is not even enough.
The sudden shift of goal posts will definitely result in losses and disruption of our expansion programme.
We will need 1.4m tonnes of sugarcane from outgrowers. That means we will be paying the farmers sh4b monthly.
Already, we are paying out sh3b and crushing 1.7m tonnes of sugarcane, which will be increasing to two million tonnes.
What’s your next move?
We are going ahead with our expansion plans.
It’s important the Government ensures strict adherence to the sugar policy whose overall objective is to institutionalise harmony in the industry to promote and sustain steady industrial growth and development, and transform and diversify the sugar sector to become competitive and modernised.
You have written to President Yoweri Museveni protesting the setting up of a new sugar factory by Alam Group in Jinja. Aren’t you effectively challenging the liberalisation policy?
LAST year, the trade ministry issued a national sugar policy which stipulates that sugarcane growing areas shall be planned within a radius of 25kilometres for licensing new sugar mills.
30% of the area within this radius shall be used for sugarcane growing and the remainder of the land shall be reserved for food security and other activities.
Alam Group is establishing a factory only 9km from our plant at Kakira. But we have documented evidence including maps to show that we have developed a nucleus estate and outgrowers covering a radius of up to 30km from our factory.
Therefore, there is no more space for the Alam Group to grow sugarcane here if the policy is to be respected to the word.
And in that case, Alam Group is only going to infringe on resources that have taken us the last 80 years to develop.
But Alam Group officials say they won’t buy sugarcane from your registered farmers. They are making arrangements to support their own farmers. They also intend to buy the crop from non-affiliated farmers?
It’s absolutely unfeasible in both the short and long-run.
We have to date developed 8,500 outgrowers in our area to supply us sugarcane.
There is a very small number of farmers who are not registered with us.
We are already covering a radius of 30km, which means Alam Group will have to get sugarcane beyond 35km, which is not economically viable. Our experience shows that in such a case, the transport costs overwhelm returns on the supply.
It’s very important that they don’t underestimate the amount of work that is required to cultivate sugarcane.
In your petition, you asked the President to prevail over Alam Group to shift its factory elsewhere. But sugarcane doesn’t grow in just any other place?
We are not against investment. If Alam Group wants to develop and produce at a large scale like we have done, then they should be looking at other areas like Bugiri and north of Kamuli.
Personally, we are in the final stages of expanding to Amuru in northern Uganda, where we shall soon set up a new factory. It’s a sign that there is no more sugarcane available here.
If we could expand Kakira, why should we go to Amuru.
In the past, you unsuccessfully tried to block similar projects in Mayuge. You have now turned your guns on Alam Group. Are you fearing competition?
We have a running expansion programme worth $86m. This is the core of our objection.
We have spent millions of dollars assisting farmers in cultivating sugarcane which we badly need for this purpose. Our sugar production will soon expand to 185,000 tonnes per annum. We are bringing in new boilers, turbines and other equipment for this purpose.
We are also generating 22MW of electricity. This should increase to 53MW within 12-18 months. Up to 33-35MW of this will be supplied to the national grid. We shall at the same time produce 40,000-50,000 litres of ethanol/industrial alcohol per day.
Equipment for these projects has already been ordered. We took the risk based on projected future sugarcane supplies.
More factories in this zone will mean splitting sugarcane supply which is not even enough.
The sudden shift of goal posts will definitely result in losses and disruption of our expansion programme.
We will need 1.4m tonnes of sugarcane from outgrowers. That means we will be paying the farmers sh4b monthly.
Already, we are paying out sh3b and crushing 1.7m tonnes of sugarcane, which will be increasing to two million tonnes.
What’s your next move?
We are going ahead with our expansion plans.
It’s important the Government ensures strict adherence to the sugar policy whose overall objective is to institutionalise harmony in the industry to promote and sustain steady industrial growth and development, and transform and diversify the sugar sector to become competitive and modernised.