Soroti Fruit Factory Faces Privatization Amidst Ongoing Losses

Government Moves to Privatize Soroti Fruit Factory
PHOTO - Parliament Watch - Government Moves to Privatize Soroti Fruit Factory
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The Soroti Fruit Factory, a venture backed by government investments, is reportedly drowning in losses, prompting government officials to contemplate privatization. Mr. Kenneth Obote Ongalo, the State Minister for Teso Affairs, disclosed that an Ethiopian investor has been courted as a potential buyer for the beleaguered plant. In the coming days, meetings are scheduled to take place with this investor, leveraging her extensive experience in the field.

The government has embarked on a search for a private entity to assume control over the operations of Soroti Fruit Factory, renowned for its Teso juice (Teju) products. Minister Ongalo’s announcement came during a meeting with Teso Sub-region district chairpersons held at the Teso Affairs offices in Soroti. He attributed this decision to an exasperating period during which the factory consistently failed to turn a profit, despite continuous funding from the Uganda Development Corporation (UDC).

Currently, Soroti Fruit Factory is 80 percent government-owned through UDC, with the remaining 20 percent owned by farmers through the Teso Tropical Fruit Growers Cooperative Union (TETFGCU). Mr. Ongalo emphasized that this move aligns with a directive from the President, aiming to benefit the Teso community.

“The President instructed the Prime Minister to engage relevant government bodies in the privatization of the fruit factory, and I am part of the team working on this matter,” he stated. Despite an annual budget allocation of UGX 5 billion, the factory is teetering on the brink, described by Ongalo as “on life support.” Notably, the government has engaged an Ethiopian investor with significant industry experience for the deal, underscoring President Museveni’s dedication to Teso’s citrus industry.

As part of this process, the government’s chief valuer was set to deliver a report this week. Ongalo also highlighted President Museveni’s long-standing commitment to citrus cultivation in Teso, dating back to 2014 when the demand for a fruit factory was first raised. Commercial production of orange and mango juice by Soroti Fruit Factory commenced on April 13, 2019, inaugurated by the President. Despite the inevitable job losses, Ongalo asserted that this move is essential for the prosperity of citrus farmers in the region.

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However, Ongalo admitted that the frustration extends to the farmers themselves. The factory, unable to absorb more than 10 percent of their produce, has witnessed many farmers resorting to cutting down their citrus trees. Even those who have kept their orchards are no longer investing in their maintenance, as the business has become unprofitable.

Stephen Ochola, the Serere District chairperson and head of Teso LC5 chairpersons, lamented that the anticipated benefits from the fruit factory, nearly a decade later, remain elusive. He cited the pitiful remuneration of UGX 20,000 per bag of oranges, which pales in comparison to the high production costs.

Francis Akorikin, the Kapelebyong District chairperson, echoed these concerns, highlighting the expensive pesticides for farmers and meager returns from fruit sales. Mr. Julius Ekoom, the CEO of Soroti Fruit Factory, identified the persistent challenges faced by the factory, mainly the difficulty in marketing its juice products and securing funds to purchase fruit from farmers.

Ekoom revealed a lack of robust demand for their fresh juice and concentrates, coupled with fierce competition from cheap imported concentrates and ready-to-drink juices. He also pointed out the factory’s absence of an automated packaging line, limiting its packaging capacity to a mere 800 boxes. He disclosed that the factory’s heyday in purchasing oranges, amounting to two million kilograms between 2019 and 2020, has dwindled dramatically to less than 500,000 kilograms for the entire Teso Sub-region due to insufficient operational capital.

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