the economic valuation of the proposed ... - Nature Uganda

4.2. THE VALUE OF THE SUGAR SECTOR IN
20
UGANDA
The value aspects of Uganda’s sugar estate may be
classified into three categories including the following:
i. reproducible tangible assets including
plantations and the improvements made on
them;
ii. non-reproducible tangible assets by type where
land is categorised into: urban land, cultivated
land and other lands (parks and private gardens);
and
iii. assets not owned such as leased land on which
the sugarcane is produced (UN, 1991)
Box 1: Out-growers production and earnings with SCOUL
4.2.1. Value of Reproducible Tangible
Assets ( sugarcane)
The gross profit from sugarcane production for the
sugar factories cannot be individually disaggregated
from value of the sugar and other by-products derived
from the sugarcane. On the other hand, sugarcane value
can be derived (for Kakira and SCOUL) from the value at
which the sugar estates buy factory delivered sugarcane
from out-growers (Table 9). The outgrowers receive a
price ranging between Ushs20,200 per metric tone to
Ushs 25,000 per metric tone of sugarcane (Welch, 2004).
Consider the case of a farmer in Kasokoso village, Kawolo sub-county Mukono District:
» Sugarcane takes 18 months to mature, for the first crop;
» Kiwanuka got a Ushs 200,000 loan, bought sugarcane stems and planted three acres;
» At that time, a tonne of sugarcane cost Ushs 17,000;
» Kintu got Ushs 2.5 million from selling sugarcane to SCOUL;
» The price of sugarcane rose to Ushs 20,200 per tonne;
» The farmer hoped to get Ushs 8 million from his harvest in February 2006;
» The contracted out-growers are assured of the market for their sugarcane at SCOUL;
» The farmers get sugarcane stems, technical skills and tractors to plough our fields, on credit;
» SCOUL can meet the transportation costs depending on the distance from the factory;
» The farmer’s life has improved; he has renovated his house and bought three cows. He also plans to
buy more land. The farmer (Mr. Kintu) is now also a field supervisor at SCOUL.
Source: New Vision (2006)
The total value of sugarcane produced by SCOUL is
Ushs 12,120 million equivalent to US$ 7.128 million
(Table 9). For Kakira Sugar Works the value of sugarcane
is Ushs 20,200 million (equivalent to US$ 11.88 million).
Estimates of the average revenue per hectare, for
Busoga Sugar Cane Out-growers Association, was US$
490 per ha (Uganda Land Coalition, 2005), which was
only slightly higher than the estimates for farmers in
Kasokoso village, Kawolo Sub-county Mukono District
(New Vision, 2006).
Estimates of the present value of a 5 ratoon (annual) of
sugar cane gave a present value of Ushs 2,822,861 per
ha (US$ 1,660 per ha) and Ushs 3,207,162 per ha (US$
1,887 per ha) for the sugarcane estate at SCOUL and
Kakira respectively (Table 9). Therefore, a 7,186 ha estate
can, at the maximum, produce cane with a present
value of Ushs 20,285.08 million (US$ 12.3 million) at
SCOUL and Ushs 23,046.67 million (US$ 13.6 million) for
the equivalent of Kakira sugar works.
The Economic Valuation of the Proposed Degazettement of Mabira CFR | 2011