PROCESSING SUGAR BUSINESS IN UGANDA

 PROCESSING SUGAR BUSINESS IN UGANDA

Introduction

Sugar is a very vital commodity in every household and its demand has increased both domestically and internationally with the local demand already exceeding supply.

The project idea is based on production of sugar using the cheapest technology with an estimated production output of 312,000kgms annually with fixed capital of US$38,100 and operating costs of US$138,552 employed to generate a total revenue of US$234,000 with a net profit margin of 41% and a payback period of 1 year 6 months.

Production Capacity, Technology &Process

The harvested cane material is collected and crushed, the juice is collected and filtered and the liquid treated with lime to remove impurities. This is then neutralized with sulfur dioxide and then boiled .The sediment settles to the bottom and can be dredged out while scum rises to the surface and this is skimmed off. The heat is removed and the liquid crystallizes usually while being stirred to produce sugar crystals.

The production capacity greatly depends on the desired objectives of the entrepreneur, but the technology is simple mostly involving crushing, filtering, boiling and cooling.

Investment Scale, Capital Requirements & Equipment Capital Investment Requirements in US$

Capital investment item Units Qty @ Total
Land & Buildings No 17,000
Delivery Van (3-tones) No 1 12,700 12,700
Sugar cane crusher No 1 880 750
Filtering machine No 1 350 350
Collection containers No 4 100 400
Boiler No 2 800 1,500
Mixer No 2 250 500
Dryer No 1 2,000 2,000
Packaging Machine No 2 200 400
Weighing machine No 2 200 400
Furniture & Fixture No 1,200
Other tools No 900
Total 38,100

Production and Operating Costs in USS (a)Direct materials, Supplies and Costs

Cost Item Units @ Qty/ day Pdn cost/ day Pdn cost/ mth Pdn cost/ yr
Direct Costs
Sugar Cane Kgs 0.2 1,500 300 7,800 93,600
Lime Kgs 0.25 8 2 52 624
Sulfur dioxide Kgs 0.5 3 1.5 39 468
Packaging materials Pcs 0.05 1,000 50 1,300 15,600
Sub-total 2,511 354 9,191 110,292
Fire wood/Fuel 331 3,972
Labor 467 5,604
Utilities 375 4,500
Selling & distribution 271 3,252
Miscellaneous expenses 117 1,404
Depreciation 794 9,528
Sub-total 2,355 28,260
Total Operating Costs 11,546 138,552
  1. Production costs assumed are for 312 days per year with daily capacity of processing 1,000kgs of sugar.
  2. Depreciation (fixed asset write off) assumes 4-years life of assets written off a25% per year for all assets.
  3. Direct costs include: materials, supplies and other costs that directly go into production of the product.
  4. Total monthly days assumed are 26-work days.
  5.   The valuation currency used is United States Dollars.

Market Analysis

The market for sugar is already available as most of the sugar consumed is still being imported & there is still a wide market in Southern Sudan.

Project Product Costs and Price Structure

Item Qty/day Qty/yr @ Pdn cost/yr UPx Total/rev
Sugar 1,000 312,000 0.44 138,552 0.75 234,000

Profitability Analysis Table

Profitability Item Per Day Per Month Per Year
Revenue 750 19,500 234,000
Less: Production & Operating Costs 444 11,546 138,552
Profit 306 7,954 95,448

Government Facilities & Incentives

The government has sourced a fund for both small scale and medium size entrepreneurs to facilitate their investment activities at a low interest rate known as the European Investment Fund.

 

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