KAMPALA, July 22 (Reuters) - Uganda’s top three raw sugar producers increased output by 17.6 percent in the first six months of 2014 but conflict in major market South Sudan has left them trying to find buyers for a growing pile of unsold stock, sugar officials said on Tuesday.
Uganda consumes about 350,000 tonnes of raw sugar a year and the government wants more investment to meet rising local demand, which is forecast to double by 2030.
But in the short term the industry has had to contend with fighting in Uganda’s northern neighbour, South Sudan, a key market for sugar and other exports from the east African country.
Uganda’s main producers will be hurt if they cannot find new markets, officials said.
The three biggest sugar-processing plants produced 193,000 tonnes of raw sugar from January to June, up from 160,000 tonnes in the same period of 2013, said Wilberforce Mubiru, secretariat manager at the Uganda Sugar Manufacturers Association (USMA).
But the firms, which account for about 85 percent of output, had also built stocks of more than 60,000 tonnes of unsold sugar since January due to a slowdown in exports to South Sudan, where fighting erupted in mid-December, USMA Chairman Jim Kabeho said.
The officials did not give the current level of exports to South Sudan or usual sales to Uganda’s northern neighbour.
“Piling up unsold sugar means these firms have their cash tied up in there,” Mubiru told Reuters.
“I know some are trying to see whether they can export more sugar to Rwanda and eastern Democratic Republic of Congo to replace the drop in sales to South Sudan,” he added.
All the firms had added to their sugarcane acreage, which was lifting supply and sugar output, he said, adding: “Milling capacity has also been expanded at all the three firms.”
Combined full-year output from the three firms - Kakira Sugar Works, Kinyara Sugar Works and Sugar Corporation of Uganda (SCOUL) - was likely to reach 375,000 tonnes, Mubiru said.
Adding extra production from smaller firms, Uganda’s total 2014 output was expected to hit 442,000 tonnes, surpassing USMA’s initial projection of 425,000 tonnes for the year.
Editing by Edmund Blair and Dale Hudson