”New Sugar Tax Threatens Jobs & Rural Economies”-Sugarcane Farmers Warn!

By Swift Reporter

Sugarcane farmers in western Uganda are pushing back against a newly approved tax on sugar, warning that the policy could quietly squeeze them out of an already fragile industry.

Under the Excise Duty (Amendment) Act, 2026, passed by Parliament of Uganda, the excise duty on sugar has tripled from Shs100 to Shs300 per kilogramme. While the tax is officially levied on processed sugar, farmers argue its real impact will be felt much earlier in the value chain.

For growers in the Bunyoro and Tooro sub-regions, the concern is simple: millers will pass the cost downwards.

Operating under the Bunyoro Tooro Sugarcane Farmers Association (BUTOS), farmers say the decision reflects a pattern of policy-making that overlooks primary producers. They point out that although government intends to boost domestic revenue for the 2026/27 financial year, the burden is likely to land on those least able to absorb it.

“We are not the ones taxed on paper, but we are the ones who will pay in reality,” said BUTOS chairperson Patrick Byamukama. He warned that millers, faced with higher taxes, are likely to lower the price they pay for sugarcane, cutting directly into farmers’ earnings.

The timing adds to the frustration. Farmers say they were not meaningfully consulted before the tax amendments were passed between April 21 and 23, and are now mobilising to formally challenge the decision.

Across districts such as Masindi, Kikuube, Kyenjojo, Kiryandongo, and Hoima, the reaction has been largely uniform: rejection.

Robert Atugonza, who represents Bunyoro-Tooro on the Uganda Sugar Industry Stakeholders Council and leads the Masindi District Sugarcane Outgrowers Association Limited (MASGAL), described the policy as misleading in its framing.

“Calling it a tax on sugar hides the truth. The farmer carries the heaviest load,” he said, adding that consultations with growers nationwide reveal widespread opposition.

Beyond opposing the tax, farmers are also questioning broader structural issues in the sector. They argue that instead of increasing pressure on sugar, government should widen its tax base and address inefficiencies, particularly revenue leakages linked to under-declaration by some millers.

There is also a growing sense that deeper reforms have stalled. Farmers point to gaps in implementing the Sugar Act, especially the long-delayed cane pricing formula meant to ensure fair compensation. According to MASGAL vice chairperson Phinehans Kyotasobora, current pricing fails to reflect the full value of sugarcane.

He notes that by-products such as electricity, bagasse, fertilisers, and industrial spirits generate additional revenue for processors, yet farmers see little of that reflected in what they are paid.

“The value chain is bigger than sugar alone,” he said. “If farmers are not sharing in those benefits, the system is unbalanced.”

Some growers are now hinting at more drastic responses. Atugonza warned that continued inaction could trigger supply disruptions, including a possible halt in cane deliveries to factories, an outcome that could ripple across an industry employing thousands.

For many farmers, the issue is no longer just about one tax. It is about whether policy decisions recognise their role at the foundation of the sector, or continue to treat them as an afterthought.