Nile Breweries met the annual quota supply for sorghum from last yearâ€™s crop. The sorghum, locally called epuripur, is used to make to Eagle Lager. James Odomel talked to the managing director, Nick Jenkinson
QUESTION: Give a brief background of the epuripur project.
ANSWER: The project started four years in collaboration with the Government to introduce high-quality beer brewed using mainly local raw materials. The Government agreed not to charge Excise Duty on the beer, yet other brands were charged 60%. We identified a new sorghum variety (epuripur) in conjunction with Serere Agricultural Research Institute.
Why havenâ€™t you bought epuripur for the next season?
For the first time during 2006â€™s first season, we received a lot of sorghum. Our agent, Afro Kai, buys sorghum at sh300 a kilogramme and develops the crop. The crop was first grown in Soroti but has spread countrywide.
Why did farmers overwhelmingly embrace this project?
Increased awareness, guaranteed market plus good agriculture seasons, which resulted into bumper harvests.
How much do you use annually?
About 4,000 tonnes because of our sales volumes. In the last season, we received about 6,000 tonnes.
Why did you issue a notice of not buying in advance. Wonâ€™t you lose the team you have built in a long time?
We thought it would be fairer to all people involved. We have a large supply and need to plan carefully for the future. We donâ€™t want them to get stuck with the crop. However, with the current season (July 2006 to February 2007), we shall buy the seed from whoever was supplied with the seed. But for the next season of 2007, we donâ€™t need sorghum because we have 6,000 tonnes and are going to add what is harvested this season. We may end up with 9,000 tonnes, which is more than two yearsâ€™ supply. We want the farmers to leave the land to fallow or grow other crops.
Since the Government increased excise duty on the brand, how have the sales been?
Eagle Lager is still the best selling brand in the country. Last year, the Government increased the Excise Duty from 20% to 30%. As a result, from July to December, sales fell by about 15% compared to the same period the previous year.
Have you lobbied the Government so that it revises the tax in the next budget?
We have been lobbying excessively through the Uganda Manufacturers Association and Private Sector Foundation. We have also prepared a paper which will presented to the Ministry of Finance regarding Excise Duty and how we think they should handle taxes in the next financial year. This year, we shall show them the impact on sales.