Production and profitability of sugar cane among Kinyara cane out growers, Masindi District

Abstract

The sugar industry is important in the economy of Uganda as it provides employment and income to out grower cane farmers and the employees in the industry, contributes revenue to the government through taxes, and reduces import bill through import substitution (USCTA, 2005). The main objective of this study was to determine profitability of sugar cane crop grown by Kinyara out growers. Primary data were obtained from a survey through random sampling of 141 cane farmers from cane growing sub counties of Budongo, Bwijanga and Karujubu. Secondary data were provided by Kinyara Sugar Works. Cobb-Douglas type of production function was used to determine factors affecting sugar cane production while gross margin analysis was used to determine profitability of sugar cane production. Results indicated that the cane farmers are getting positive gross margin from their sugar cane enterprise. Gross margin for new plants, replants and first ratoon, second ratoon and third ratoon was found to be Ushs 504,642, Ushs 218,738, Ushs 1,109,128, Ushs 964,560 and Ushs 739,850, respectively. Also revenue to cost ratio for new plants, replants, first, second and third ratoons were 1.15, 1.07, 1.66, 1.9 and 1.56, respectively. Cobb-Douglas results revealed that cane acreage, amount of labour used and the distance from farms to factory are statistically significant at (P≤0.001). Return to scale was 1.375, indicating that land and labour are under utilized. Marginal analysis also revealed that farmers were under utilizing land and labour while over using fertilizer despite the unfavorable existing market price conditions. It is therefore recommended that the farmers should devote more land and labour towards cane production because of their high MVP and reduce on fertilizer use at the current market price.