Vitamin A fortification in Uganda: comparing the feasibility, coverage, costs, and cost-effectiveness of fortifying vegetable oil and sugar

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Food and Nutrition Bulletin, vol. 31, no. 2 © 2010, The United Nations University. 193

Vitamin A fortification in Uganda: Comparing the feasibility, coverage, costs, and cost-effectiveness of fortifying vegetable oil and sugar

Abstract

Background. Twenty-eight percent of Ugandan preschool children suffer from vitamin A deficiency. With vitamin A supplementation covering only a third of children under 5 years of age, fortification is essential to reduce their vitamin A deficiency–related disease burden. At present, the only widely consumed food in Uganda that is fortified with vitamin A is vegetable oil.

Objective. To compare the feasibility, coverage, costs, and cost-effectiveness of fortifying vegetable oil and sugar with vitamin A in order to assess, from a public health policy perspective, whether sugar should also be fortified.

Methods. The 2005/6 Uganda Household Budget Survey was used to analyze households’ apparent con-sumption levels of sugar and vegetable oil and to model the additional intake of vitamin A, assuming the sugar and oil fortification levels are those set by the Uganda Bureau of Standards.

Results. The annual incremental private sector cost of vitamin fortification is US$555,668 for oil and US$2,644,765 for sugar. Assuming that oil and sugar fortification are both effective in reducing vitamin A deficiency by 30% among those who consume these foods, the estimated cost per disability-adjusted life year (DALY) averted is US$82 for sugar and US$18 for oil. Vitamin A fortification of vegetable oil is 4.6 times more cost-effective than vitamin A fortification of sugar. If sugar were to be fortified, the 17% of Ugandans who purchase sugar but do not purchase oil would become new beneficiaries of vitamin A fortification. This would increase the coverage of vitamin A–fortified foods by

31% and reduce the percentage of Ugandans without any coverage to 25%. Those most at risk for vitamin A deficiency—members of rural, poor households—would benefit disproportionately from the introduction of sugar fortification.

Conclusions. Although the lack of information on the vitamin A deficiency status of consumers of oil and sugar precludes making definitive conclusions, the increased coverage and cost per DALY averted due to sugar forti-fication suggests—based on World Health Organization guidelines—that the Government of Uganda should pursue sugar fortification.

Key words: Cost-effectiveness, DALYs, food policy, fortification, health policy costs, household expenditure surveys, micronutrients, nutrition

Introduction

The consequences of vitamin A deficiency consti-tute an enormous global health burden. Globally, 627,000 deaths and 21,569,000 disability-adjusted life years (DALYs) are annually attributable to vitamin A deficiency. This disease burden is distributed highly unevenly demographically and geographically, falling disproportionately on the poorest and most vulner-able populations on the planet. More than 90% of the vitamin A deficiency–related burden is concentrated among children under 5 years of age, and geographi-cally, it is sub-Saharan Africa that suffers proportion-ately the most. Although sub-Saharan Africa accounts for 11% of the world’s population, it suffers 61% of the deaths and 63% of the DALYs attributable to vitamin A deficiency [1].

Within sub-Saharan Africa, Uganda ranks among the middle tier in terms of the prevalence of vitamin A deficiency. Twenty-eight percent of Ugandan children 6 to 59 months of age suffer from vitamin A deficiency. As shown in table 1, the annual burden of vitamin A deficiency in Uganda is estimated as the sum of 5,312

John L. Fiedler and Ronald Afidra

John L. Fiedler is affiliated with HarvestPlus, International Food Policy Research Institute, Washington, DC; Ronald Afidra is affiliated with A2Z: The United States Agency for International Development Micronutrient Project, Kampala, Uganda.

Please direct queries to the corresponding author: John L. Fiedler, HarvestPlus-IFPRI, 2033 K St. NW, Washington, DC 20006, USA; e-mail: [email protected].


194 J. L. Fiedler and R. Afidra

deaths of children under 5 years of age, resulting in 139,852 discounted years of life lost (YLLs), and 37,351 discounted years of life living with a disability (YLDs), or a total of 177,204 DALYs. Eighty-two percent of the vitamin A deficiency–related DALYs are suffered by children under 5 years of age. Although there is substantial variation in the prevalence of vitamin A deficiency across Uganda’s four regions (fig. 1), the level of vitamin A deficiency (defined as serum reti-nol < 0.7 µmol/L in children 6 to 59 months of age) throughout the country exceeds the 15% prevalence threshold that the World Health Organization (WHO) has established to identify when vitamin A deficiency constitutes a national public health problem [2].*

Fortification has been viewed as a strategy for reduc-ing micronutrient deficiencies in Uganda since the early 1990s. For more than a decade, the Ministry of Health has also undertaken twice-yearly campaign-style events to increase the coverage of vitamin A. The coverage of vitamin A capsule distribution has never been high enough to have a significant impact on the prevalence of vitamin A deficiency. Population-based surveys reported that in 2000/01, 38% of children 6 to 59 months of age had received a vitamin A capsule in the 6 months before the survey [6], and in 2005/06, the rate dipped to 36% [8]. Ministry of Health program data have generally reported higher coverage rates, but the data have been partial, with many districts failing to submit their reports. During the April 2007 campaign, for instance, with only 44 of 80 districts reporting, the coverage rate was 72% [8], and for the November 2007 round, with 70 districts reporting, the coverage rate was 69% [9]. Since nonreporting districts are likely to include a disproportionate number of poor perform-ers, these percentages are likely to overstate national

* These are data from the 2000/01 Uganda Demographic and Health Survey [6]. Although more recent data have been reported [7], the test that was used to identify vitamin A deficiency has been discredited as providing unacceptably imprecise information. TA

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195Vitamin A fortification in Uganda

coverage rates. Given that it is necessary to achieve coverage rates of at least 80% to realize the potential of vitamin A to reduce mortality, it would appear that if the impact of vitamin A deficiency is to be reduced significantly in Uganda, more than just twice-yearly vitamin A capsule distribution will be required.

Although there has been great deal of discussion about the promise of fortification as a tool for combat-ing vitamin A deficiency, progress in establishing for-tification programs has been slow in Uganda, as it has been elsewhere in the developing world. Box 1 presents

a timeline of major fortification-related activities in Uganda since 1991. Today, there are four companies in Uganda that are fortifying; all four are doing so volun-tarily. The Mukwano Group of Industries’ AK Oil and BIDCO Uganda are fortifying vegetable oil and fat with vitamin A, and UNGA 2000, Mbarara and Maganjo Grain Millers are fortifying maize flour with iron, zinc, and vitamins A, B1, B2, B3, B9, and B12.

Discussions about vitamin A fortification in Uganda have focused on vegetable oil and sugar. This paper undertakes an evidence-based assessment of the

BOX 1. A timeline of major fortification events in Uganda

1991 Makerere University conducts a food consumption survey in Kamuli District.1993 Rapid assessment study in 37 of 39 districts found high levels of vitamin A, iodine, and iron deficiency.1994 Government mandates all imported salt to be iodized in compliance with Food and Drugs Acts.1995 UNICEF sponsors a fortification study tour to Zambia. Government negotiations with sugar factories to fortify with vitamin A. Negotiations ongoing through 1997,

but not conclusive.1998 Ministry of Health (MOH) commissions Uganda Bureau of Standards to conduct a National Consumption

Survey.1999 The USAID Micronutrient Project, MOST, conducts a Situation Analysis assessing the feasibility of vitamin A

fortification in Uganda.2001 Makerere University’s Food Science and Technology Department conducts an Industry Assessment Report

that identifies maize flour and edible oil or fat as the most suitable potential food fortification vehicles based on the criterion of the number of persons consuming them.

Management of the Mukwano Group, the owner of AK Oils, approves of the concept of fortification.2002 The National Working Group for Food Fortification (NWGFF) is developed by the MOH.2003 A food consumption survey is conducted by Makerere University. MOST provides training in fortification issues and techniques and sponsors members of the NWGFF on a

study tour of Morocco. Food fortification standards are established by the Ugandan National Bureau of Standards (UNBS).2004 National Fortification Campaign is started. 16 laboratory technicians from 11 public and private institutions are trained in food fortification analytic

methods to build national capacity for monitoring and evaluation for regulatory purposes.2005 Fortification assessments and trials held by Mukwano (oil), Kakira (sugar), Mganjo (maize), and UNGA 2000

(maize). MOST purchases capital equipment and initial supplies of fortificant/premix to facilitate take-up by these four

companies Two new oil companies, BIDCO and Muddu, are established. BIDCO fortifies all oil with vitamin A. Muddu

is receptive to the idea of fortifying, but has never actually started fortifying, and is reported to be bankrupt and (June 2008) in receivership.

2006 Food fortification standards are revised with technical assistance of A2Z. The new oil fortification standards require a 67% increase (from 15 to a minimum of 25 mg/kg) in the level of vitamin A to be added to oil, and relabeling of all packaging to reflect the new standards.

Food Control Workshop held in October to develop a monitoring plan for fortified oil, maize, and salt at retail and importation sites and to conduct a round of Quality Assurance/Quality Control (QA/QC) sampling and testing, to establish UNBS-led regulatory system.

2007 East, Central and Southern African Health Community (ECSA) food fortification guidelines and regulatory system manuals developed with aid of A2Z.

June workshop reporting out QA/QC sampling and testing round and planning second round to establish UNBS-led regulatory system.

2008 GAIN fortification grant focusing on maize and wheat flour and vegetable oil received by NWFGG after a 1-year delay.



Ugandan vitamin A fortification program and attempts to answer some still outstanding public policy issues: What is the cost of oil fortification? What is its cover-age and impact? Why has it proven so much more difficult to introduce sugar fortification? What would be the cost of fortifying sugar? Is there a public health rationale for continuing to pursue sugar fortification? What, if anything, would the fortification of sugar with vitamin A add to the coverage and impact of vitamin A-fortified vegetable oil? What would it cost? What is the cost-effectiveness of fortification of sugar compared with fortification of vegetable oil? Should sugar fortifi-cation be mandated?

Vegetable oil and vegetable oil fortification in Uganda

Vegetable oil production in Uganda

There are no comprehensive data on the vegetable oil and fat market of Uganda. However, the Uganda Bureau of Statistics annually reports indicators of national output and the values and levels of imports, which may be supplemented with other data obtained directly from the private sector to provide a general understanding of the vegetable oil market—its size, composition, dynamics, and other key characteristics that are pertinent to the development of an evidence-based fortification policy. These data suggest that the vegetable oil industry of Uganda is thriving.

The Ugandan vegetable oil industry is heavily dependent on the processing of imported crude palm oil. In 2007, Uganda imported 285 million metric tons of vegetable oil, 99.6% of which consisted of crude or degummed palm oil, the base input into the produc-tion of most of the refined vegetable oil and fat that is produced in Uganda. Most of the palm oil imported by Uganda comes from Malaysia and is purchased by two companies, Mukwano and BIDCO. These two compa-nies dominate the industry.* In 2007, they produced 105,000 metric tons (personal communication from company sources). Mukwano is the older company, and it has long produced more than half of all of the com-mercially produced vegetable oil in Uganda. BIDCO, on the other hand, is a recently established company, dating from 2005.

BIDCO’s entire production line—composed of four vegetable oil brands (Ufuta, Golden Fry, Kornogold, and Fortune) and four vegetable fat brands (Kimbo, Chipsy, Chipo, and Cowboy)—is based exclusively on imported palm oil. Most of Mukwano’s raw material is also Malaysian palm oil, but it also uses some sunflower and cottonseed oils that are derived from crops grown

* Following local custom, AK Oil will be referred to in this report as Mukwano.

in Uganda. Mukwano reports that it always blends cottonseed oil with other oils (palm or sunflower), whereas sunflower oil is sold both as a blend and as a high-end, pure sunflower oil product (Nice Fry). Muk-wano has a total of four brands; the others are Three Star, Mukwano, and Roki. Both Mukwano and BIDCO produce vegetable oil–based cooking fat in addition to cooking oil, although in both cases the fat is of much less commercial significance. Ninety-five percent of Mukwano’s output is vegetable oil, with the remainder composed of fat. BIDCO’s proportionate shares are about 85% and 15%, respectively.

There are reported to be 26 other vegetable oil pro-ducers in Uganda, including small- and medium-sized plants. Unlike Mukwano and BIDCO, however, none of them sells its product throughout the country, produc-ing instead only for subnational or regional markets within Uganda.** The vegetable oil and fat industry has an association, the Ugandan Oil Seed Producers and Processors Association.

With BIDCO’s entry into the vegetable oil market, competition has been heightened. Uganda now has two large firms producing vegetable oil. Both are modern plants and both have a commitment to producing a high-quality, fortified product. The competition has been manifested mainly by growth in advertising and in product differentiation and branding, as opposed to price cutting. It is a vibrant market in which both total national production and exports are growing rapidly in both quantity and value. The nature of the market and the business strategies of the companies portend well for a sustained commitment to vitamin A fortifica-tion of vegetable oil. It is not known whether the other producers are interested in or capable of fortifying. Although Mukwano and BIDCO represent roughly 85% of the output of the industry, the other producers may still be of strategic significance to the fortification policy, depending upon the overlap of their geographic markets and the geography of vitamin A deficiency in Uganda.

Vegetable oil and fat fortification in Uganda

In July 2004, Mukwano Industries began voluntarily adding vitamin A to its vegetable oil products, mark-ing the advent of fortification in Uganda. At that time, Mukwano was supplying an estimated 60% of the total national production of vegetable oil, and although the Uganda National Board of Standards vitamin A fortifi-cation standard at the time was 15 mg per kilogram of oil, Mukwano added 58.8 g of fortificant per metric ton of oil, twice the level required to meet the standard.

In June 2005, BIDCO started fortifying its vegetable

** Unpublished source: “Strengthening the National Food Fortification Programme of Uganda.” Director General of Health Services, Ministry of Health, August 2005.



oil products with vitamins A and D. It fortified at the level stipulated by the Uganda National Board of Standards, 15 mg/kg. The fortificant BIDCO used had a different concentration, 1.0 million IU/g (equivalent to 300 g/kg). Meeting the standard with this fortifi-cant required adding 50 g of fortificant per metric ton of oil.

Both companies are currently fortifying both their vegetable oil and their vegetable fat products except for Mukwano’s pure sunflower-based Nice Fry.

The Mukwano fortification process

Since it began fortifying, Mukwano has used a fortifi-cant that has a vitamin A concentration of 1.7 million IU/g. It uses a dilution process to introduce the vitamin A into a 1-metric ton, stainless-steel premixing tank and mixes the vitamin A with a relatively small batch of oil for 30 minutes. After being mixed for approxi-mately one half-hour, the oil is pumped into one of the four 50-metric ton holding tanks, where it is mixed for another 30 minutes with the oil.*

Mukwano reported that it has had to purchase some new types of chemicals (those essential to performing monochloride tests), as well as some new equipment in order to be able to comply with the Uganda National Bureau of Standards in-plant quality control require-ments [10]. At the time of this study, the company reported that it had decided to outsource the required monthly quantitative tests to the Uganda Industrial Research Institute, but that it was still uncertain as to what it would do to comply with the new in-plant quality control requirements that the Uganda National Board of Standards issued in 2006. Compliance with the new standards will require additional training in the new laboratory methods. The in-plant qual-ity control consists of four samples per day from the seven or eight batches (large tanks) that they process. Thus, roughly one-half of the batches they produce are sampled, and there are 28 to 32 samples daily. To meet Uganda National Board of Standards quality control requirements, Mukwano has assigned one person to be in charge of the vitamin A blending process. Prior to introducing fortification, there was no person dedi-cated to blending, but with the introduction of forti-fication, a single person (per shift) has been assigned this responsibility. These additional personnel costs are included in the cost estimates.

Mukwano reported additional costs of fortification: the development of advertisements (the Sunday sec-tions of several papers regularly carry a prominent advertisement) and the development of a jingle used on radio. However, because these costs are seen as related to the company’s general marketing and product

* The tank and pump, with a cost of US$15,000 and an estimated lifespan of 20 years, were donated by the MOST Project in 2004.

differentiation strategy and are not unique to fortifica-tion, they are not included in the cost estimates.

BIDCO oil fortification process

The BIDCO plant is located in the city of Jinja. It began plant operations in June 2005. In 2007, it produced 4,500 metric tons of vegetable oil and 850 metric tons of fat per month. The plant is currently operating at 150 metric tons of vegetable oil per day, about 60% of its capacity. Most of the fat it produces is sold to baker-ies, although BIDCO also has two consumer products (Kimbo and Cowboy). All vegetable oil is fortified with both vitamins A and D. The premix contains 1 million IU of vitamin A and 100,000 IU of vitamin D per gram. The vegetable oil is added directly to a mixing tank and mixed for 30 to 60 minutes. The oil is then pumped into a holding tank for an additional 30 minutes of mixing and then packaged. Contrary to Uganda National Bureau of Standards recommendations, no predilution is prepared.** The premix is weighed out for each batch in the laboratory, and a log book documenting the addition of vitamin A is maintained. Samples are sent to the Uganda Industrial Research Institute monthly for qualitative vitamin A testing.

The cost of fortifying vegetable oil in Uganda

Estimates of the cost of vegetable oil fortification, based on extensive interviews with and data obtained from Mukwano and BIDCO, are presented in table 2. In order not to divulge proprietary information, the cost estimates presented and discussed here are based on a hybrid of the two companies rather than the actual separate costs for each of the two individual companies. The two companies’ output levels are very similar, and the techniques they use in fortifying their products are similar, with the exception of whether or not they use a vitamin A premix/dilution or add the vitamin A directly to the oil. The calculations are based on an exchange rate of 1,665 Uganda shillings (UGX) per US$1.00 (the rate as of May 1, 2008) and assume that each company consists of one plant; produces six different products or brands; annually produces 50,250 metric tons of vegetable oil fortified with a vitamin A content of 35 mg/kg; uses a retinol palmitate vitamin A compound of 1 million IU/g, for which it pays 67,849 UGX (the equivalent of US$40.75) per kilogram, or uses the spectrophotometer-based, in-plant quality assurance method (method #1 as described in the East, Central and South Africa vegetable oil fortification manual [10]; and already owns a spectrophotometer (so that the incremental costs of fortification are only the

** The Uganda National Bureau of Standards Uniform Stat-ute 511 “Fortified Edible Fats and Oils—Specification” states “Prior to addition, producers should prepare a pre-diluted fortified oil to reduce the dilution factor, and therefore im-prove the homogeneity of the fortification” (page 4).



TABLE 2. Private sector plant costs of fortifying vegetable oil with vitamin A in Uganda using retinol palmitate 1 million IU/g as fortificanta

One-time capital costs

To mix, introduce, and improve dispersion of vitamin A UGX US$Stainless steel tank for making premix 8,325,000 5,000Pump to pump premix solution into process tank 832,500 500Accessories 1,415,250 850Piping 333,000 200

10,905,750 6,550

Training in in-plant QA sensitization for QA heads of all food vehicles (25 staff, does not include value of staff time)

333,000 200

Training in in-plant QA of supervisors, lab personnel, etc. (25 staff, does not include value of staff time)

333,000 200

Redesigning of label and printing plates (8 brands) 3,496,500 2,100Total capital costs 15,068,250 9,050

Annual recurrent costs

1. Premix costs

Using retinol palmitate 1 million IU/g to add 83.3 g of vitamin A per metric ton of vegetable oil

1,466 kg/quarter 99,469,236 59,741Freight 5,055,939 3,037Clearance 250,000 150Import license/NDAb certi-

fication of premix supplier (prorated to quarterly payment)

25,000 15

2% NDA charge 1,989,385 1,195Total premix cost/quarter 106,789,560 64,138Total premix cost/yr 427,158,238 256,551

2. QA/QC testing costs — in plant

Method #1 (as described in ECSA “Manual for Internal Monitoring of Oil Fortified with Vitamin A” [10]Spectrophotometer supplies: $60/cell × 10 cells = $600

(prorated 2-yr life span)c499,500 300

Spectrophotometer-based testing method: 11,500 UGX per test/brand/mo (6 brands)

828,000 497

Additional lab personnel costs

1 person added to handle increased lab activity and the QA requirements = lab technologist700,000 Monthly salary245,000 Benefits @ 35% of salary, includes: NSSF (National Social Security Fund, 10%) Transport and food allowances Health insurance945,000 Total remuneration of 1 lab technologist/mo 11,340,000 6,811

Total additional in-plant lab costs

12,667,500 7,608

continued



additional test materials required for fortification).The key findings about the costs of a prototypical pri-

vate sector company producing vegetable oil in Uganda are as follows: the start-up costs, or one-time capital costs, are 15,068,250 UGX (US$9,050); the annual recurrent costs of fortifying with a vitamin A content of 35 mg/kg with retinol palmitate 1 million IU/g at the Uganda National Bureau of Standards 511:2006 “average at production” level are 462,593,938 UGX (US$277,834); and the premix costs are roughly 70 million UGX, representing 92% of the total annual recurrent costs of fortification (fig. 2).

Given the way in which the prototype was con-structed, the total private sector costs can be estimated by simply multiplying by two. Thus, the total annual recurrent private sector costs of vegetable oil fortifica-tion in Uganda, using retinol palmitate 1 million IU/g,

are currently (given the above assumptions) 925.9 mil-lion UGX (US$555,668) or US$5.29 per metric ton.*

An alternative measure of the cost of fortification: The consumer’s perspective

Given the price per liter of fortified vegetable oil (as of May 1, 2008) of 3,133 UGX (US$1.88), the retail value of all fortified vegetable oil in Uganda net of fortification costs using retinol palmitate 1 million IU/g is [(3,133 UGX) × (105,000 metric tons) × (1,098.9 L/metric ton)] – [(462,593,938 UGX) × 2] = 360,613,274 UGX. Assuming that all of the costs of fortification were shifted onto the consumer in the

* If the vitamin A fortificant used were retinol palmitate 1.7 million IU/g instead, the costs of the prototypical company would be 5.3% less, or 439,365,813 UGX (US$263,883).

3. External lab costsUIRI lab quantitative test fee = 80,000 per test

480,000 Monthly for 1 test/mo for all 6 brands External lab costs 5,760,000 3,459

4. Incremental production costs

Additional staff to handle production/premix-related activities: 1/shift

300,000 Monthly salary 105,000 Benefits @ 35% of salary, includes: NSSF (National Social Security Fund, 10%) Transport and food allowances Health insurance 405,000 Total remuneration of 1 production worker/

mo1,215,000 Total cost of 3 additional workers/mo 14,580,000 8,757

Power for pump and 2 mixing tanks: 4 kW/hr ∗ 9 hr/day ∗ 355 days/yr ∗ 190 UGX/hr

2,428,200 1,458

Incremental annual production costs

17,008,200 10,215

Total annual incremental costs of fortification1. Premix 427,158,238 256,5512. QA/in-plant lab testing 12,667,500 7,6083. QC/external lab testing 5,760,000 3,4594. Additional production costs 17,008,200 10,215

Total 462,593,938 277,834UGX, Uganda shillings; UIRI, Uganda Industrial Research Institute; QA, quality assurance; QC, quality controla. Based on a weighted average of the costs of the two largest vegetable oil producers in Uganda, and an annual output level of 50,250 metric

tons per plant and six products or brands.b. The National Drug Authority (NDA) is the Uganda government agency responsible for monitoring the quality of premix and issuing

import licenses to premix suppliers.c. These companies already have a spectrophotometer which they use for other purposes as well. The cells are technically capital costs because

their useful life span exceeds a year. However, they are classified here as recurrent costs in order to be able to provide an estimate of the annual costs of the program. The exchange rate is assumed to be 1,665 UGX = US$1.00.

TABLE 2. Private sector plant costs of fortifying vegetable oil with vitamin A in Uganda using retinol palmitate 1 million IU/g as fortificanta (continued)



form of increased price (i.e., assuming the maximum price increase scenario), it may be estimated that the maximum increase in the retail price attributable to fortification is [(360,613,274 UGX)/{(105,000 metric tons) × (1,099 L/metric ton)}] = 8.02 UGX. This is the equivalent of (8.02/3,133) = 0.26% of the retail price of 1 L of vegetable oil.

Analysis of the 2005/06 Uganda National Household Survey* (UNHS) reveals that 54% of Ugandan house-holds (15.7 million persons) purchase (and apparently consume) vegetable oil [11]. According to industry sources, 105,000 metric tons of oil is annually pro-duced by Mukwano and BIDCO, and roughly 15,000 metric tons of that output is exported. From these data it may be estimated that the average Ugandan has an apparent consumption level of 15.7 g/day of Mukwano and BIDCO fortified vegetable oil.** Thus, it may be estimated that the average person consumes 5,745 g (5.745 kg, 6.3 L) of vegetable oil per year and pays an additional 50 UGX (US$0.030) per year for fortified oil. According to the Uganda National Household Survey, the 2,835,299 Ugandan households that pur-chase some vegetable oil have a mean of 5.53 persons each. Therefore, it may be estimated that the average Ugandan household that purchases vegetable oil pays

*A description of the Uganda National Household Survey is available at: http://www.ubos.org/nada/ddibrowser/?id=5. Accessed 21 April 2010.

** The implicit assumption—that all purchasers of oil pur-chase some Mukwano and/or BIDCO oil, even though these two producers account for only 85% of the domestic market—is not necessarily true, and results in an overestimation of the coverage of fortified oil and concurrently an underestimation of its average per capita consumption level.

an additional 271 UGX (US$0.163) per year for forti-fied oil.***

The public health allure of fortifying Ugandan sugar

Sugar fortification prospects

Sugar has been considered an attractive potential for-tification vehicle in Uganda since the start of fortifica-tion discussions in the early 1990s. Sugar production in Uganda has increased nearly twofold over the past decade, growing from 102,527 metric tons in 1998 to 197,292 metric tons in 2007. Although annual growth rates of production over this period have been erratic—varying from −1% to + 24% — the annual average has been a robust 8%. In 2007, total domestic sugar produc-tion was 197,292 metric tons and accounted for 77% of the 256,644 metric tons of sugar consumed nationally. The difference, 59,352 (23% of national consumption), was imported. About half of total imports come from South Africa, although sources and quantities of sugar imports have varied substantially. Imported sugar in Uganda is generally a whiter, more refined sugar that is primarily used by the food industry, most importantly in making soft drinks.

Uganda has three major sugar mills, which together produce about 83% of the total national requirement. These three mills—Kakira, Kinyara, and Lugazi—have participated sporadically in meetings and discussions about fortification held by the Ministry of Health since 2001. Trials to determine the technical feasibility were conducted in Kakira Sugar Works in 2005. The three mills are all members of the Ugandan Sugar Cane Technologists Association (USCTA), and the trials were done under the association’s banner. The results showed that fortification of Ugandan sugar with fortifi-cants already available on the market was possible.

One of the big three sugar mills is unequivocally opposed to fortification. In interviews conducted during this study, the other two companies stated that they did not want to oppose or be seen as opposing something that could improve the health of Ugandans or that could help the country. Both of these producers stated that they would not fortify voluntarily because of the uncertainty of the impact of fortification on the quality of their product, costs, and the demand for their product (vis-à-vis legal and illegal imports). The pro-ducers were also skeptical about the program’s potential effectiveness, its ability to reach people with vitamin A

*** The analysis of the impact of fortification on consumer costs when the vegetable oil is fortified with retinol palmitate 1.7 million IU/g is very similar and is not presented. When that fortificant is used, the average Ugandan household pays an additional US$0.155 per year for fortified oil, 5% less than when retinol palmitate 1 million IU/g is used.

FIG. 2. Annual incremental private sector costs of fortifying vegetable oil in Uganda. Output-weighted average costs of two companies using retinol palmitate 1 million IU/g. Source: Calculated from data provided by Mukwano and BIDCO

Additional production costs

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deficiency, and the stability of the vitamin A content of the sugar during the time before it was consumed.

Given the attitudes of the big three sugar mills, it seems evident that if Ugandan sugar is to be fortified, fortification will have to be legally mandated. The discussion turns now to further examination of the sugar industry to better understand the position of the industry, as well as to estimate the cost, coverage, impact, and cost-effectiveness of fortified sugar relative to vegetable oil, with the aim of providing evidence to be used for determining whether or not sugar fortifica-tion should be mandated.

The changing Ugandan sugar market

The Ugandan sugar industry faces keen competition internationally. It produces an inferior product—it cannot produce a sugar that is white enough to qualify for what international standards classify as “mill sugar” or “plantation sugar”—and it has a high cost structure. This limits the potential markets for Ugandan sugar, which are further restricted by transportation costs due to Uganda’s being landlocked. The USCTA states that “probably the only realistic markets” for the Ugandan sugar industry to target for exports are the Demo-cratic Republic of Congo, southern Sudan, Burundi, and Rwanda [12]. Its major market is, and is likely to remain, Uganda. This has important implications for the government’s sugar fortification strategy—partic-ularly given the high level of protection the industry currently enjoys (further discussed below).

The Ugandan sugar production market is changing in several important ways. First, the number of sugar producers is growing. GM Sugar started production in 2007. It has no land of its own planted with sugarcane and relies on outside suppliers for cane. In addition, Sango Bay, a mill that has been out of production for several years, is planning on resuming production shortly, and a new, relatively small mill is being con-structed by Mayuge Sugar near Kayunga.

A second way in which the market is changing is that there has been growing international competition due to the lowering of the tariff protection that the Ugandan sugar industry has enjoyed for many years. A third way in which the market is changing is through international conditions, which are changing in a variety of ways. These changing conditions are further described below.

The big three sugar producers’ new business model

In response to these changing conditions, the three major sugar companies are all in the process of develop-ing a new business model that entails the development of new product lines. While the traditional model—based on the production and refining of sugarcane and the sale of its by-products—is still at the heart of the approach, international conditions, (primarily the

high price of oil) have created new opportunities that the big three are taking advantage of. According to the USCTA 2007 Annual Report, all three companies are involved in major modernization efforts in which they are together investing more than US$100 million [12]. Underlying the strategy are two key assumptions: that domestic consumption of sugar will increase faster than in direct proportion to the national population, and that the companies will be able to increase output much more rapidly and take advantage of economies of scale so that the average cost of producing a metric ton of sugar will fall.

Kakira Sugar has been the innovator and industry leader. It has changed the traditional model, which is based on ownership of sugar estates by the sugar companies, by expanding its output, relying largely on increased purchases of cane from outside suppliers, and by the introduction of new sugarcane varieties. It has also developed two major new products: electrical power, and ethanol produced by combining molasses and petroleum. The power is produced by burning bagasse (the residual fiber left after the sugar has been pressed out of the cane) to turn steam turbines and produce electricity. Kakira began producing power in December 2007. It uses the electricity it produces to power its own operations and sells 6 MW of electricity to the national grid. Kinyara is currently installing a steam turboalternator with 7 MW capacity, and Lugazi is installing one of 6 MW capacity. The molasses-based biofuel is still in the developmental process, but the economics of oil suggest it is a very promising new product. All three companies are looking for a govern-ment policy to be articulated before investing in the distillation equipment that it would require. USCTA reports that in 2007, 80,000 metric tons of molasses were produced, and “assuming that one ton of molasses can be turned into 200 to 250 liters of anhydrous etha-nol, then 16 to 20 million liters of anhydrous ethanol could be mixed with 180,000 liters of petrol (at a 10 to 90 ratio) saving the foreign exchange cost of importing 20 million liters of petrol” [12].

Two key underlying assumptions of the new business model are that the companies can increase production by relying principally on additional cane from outside suppliers, and that they have adequate excess capacity to be able to achieve these output levels with relatively minor incremental cost increases (effectively spreading the fixed costs of their current operations over a larger level of production).

Sugar imports and import duties

The Ugandan sugar industry is currently protected from international competition by several different international agreements to which Uganda is a party. Uganda is a member of the East African Customs Union, which was established by Uganda, Kenya, and Tanzania on November 30, 1999. The Union identifies



sugar (among other products) as an exception to the Common External Tariff, which applies special, higher tariff rates to imports. The Union membership was expanded in July 2007 to include Rwanda and Burundi.

According to East Africa Commission regulations, imports of “direct consumption sugar” (East Africa Commission code: 1701.11.90) have a 100% duty, and industrial sugar has a duty of 10% of the price (inclusive of cost, insurance and freight) at the East African port of entry. The international agreements that provide the protection are being phased out. USCTA is urging the Government of Uganda to maintain some level of protection, warning that:

By March 2011, the safeguard will be eliminated. This will affect Uganda and indeed the whole of the East African sugar industry as much as it will Kenya. It is doubtful whether the whole of the East African sugar industry will be able to survive full liberaliza-tion and some of the smaller producers will prob-ably disappear. . . . This is a very serious concern and should be assessed and addressed by the Uganda Government as soon as possible at every level of Trade negotiation. [12].

Whether or not it chooses to do so, or is able to do so, is an important, unanswered question at present that may constitute a bargaining chip that the govern-ment could use to affect the willingness of the sugar industry to fortify.

The costs of fortifying sugar

As already noted, one of the sugar companies is adamantly opposed to sugar fortification. Given the strength of their negative reaction, it was assumed that they would not provide the wherewithal necessary to develop estimates of the cost of fortification in their company. When an official of one of the other big three sugar companies was asked if they would be willing to work with the authors to develop cost estimates, he politely, but resolutely, responded, “No, we’re not ready for that. We won’t be ready for that for some time.” The estimates presented here, therefore, are a “desk-top” estimate based on Government of Uganda and USCTA data, together with Uganda National Bureau of Stand-ards requirements and the following assumptions:» Fortifiable sugar is defined as the 197,292 metric tons

of sugar that the UCSTA reported was produced in 2007 by four sugar companies that account for 85% of domestic production: 232,108 (= 197,292/0.85).

» As estimated from the data on sugar purchases contained in 2005/06 Uganda National Household Survey database, 58% of Uganda’s 5.23 million households purchase fortifiable sugar.

» The average consumption of fortifiable sugar is estimated as: (total sugar output of fortifiable sugar for final consumption) divided by (5.46, the mean

number of persons in the households purchasing some sugar) and converting the metric tons per year to grams per person per day (multiplying by 1,000,000 and dividing by 365) = 32.6 g per person per day.

» The fortificant is retinol palmitate 250,000 IU/g.» The cost of the fortificant is 79,920 UGX (US$48)

per kilogram.» The total cost of freight, clearance, the import license

fee of the National Drug Authority (NDA), and the 2% NDA fee is the equivalent of 5.43% of the cost of the fortificant (based on Ugandan oil industry data).

» The retail price of sugar is 1,700 UGX (US$1.02) per kilogram.

» The cost to the sugar company of adding the vitamin A to the sugar and its quality assurance costs are 8.3% of the costs of the fortificant (assumed to be equal to the Ugandan oil industry proportion).Given the above assumptions, it may be estimated

that:» The total cost of fortifying all Ugandan-produced

sugar with an average factory level of 15 mg/kg (as stipulated in the Ugandan National Bureau of Standards regulations) is 4,403,533,725 UGX (US$2,644,765).

» The cost of fortifying a metric ton of sugar is 18,964 UGX (US$11.39).

» The cost of fortification is 18.964 UGX (US$0.01139) per kilogram, or the equivalent of 1.12 % of the retail price of a kilogram of sugar.

» The annual cost per person consuming purchased sugar is 225.65 UGX (US$0.1355).

Comparing the coverage, costs, and cost-effectiveness of sugar and oil fortification

As already noted, the conditional average per capita consumption of fortified vegetable oil (i.e., the mean consumption of the 54% of households that purchase some amount of oil) is estimated to be 15.7 g/day. Assuming that 32% of the vitamin A content of the oil is lost between the time it is fortified at the factory and when it is consumed in the household [13], and that the average person’s Estimated Average Requirement (EAR) is 453 μg/day,* it may be estimated that at a forti-fication level of 35 mg per kilogram of vegetable oil, the average Ugandan who purchases and consumes oil will receive 91% of the EAR of vitamin A from the oil.

* The “average person’s” EAR of 453 μg/day is calculated from the Uganda National Household Survey database. It is the weighted average of the age- and sex-specific vitamin A EAR levels (according to the United States Institute of Medi-cine [14]), as calculated from the persons in the households that reported purchasing some vegetable oil in the Uganda National Household Survey.



The conditional average per capita consumption of sugar (i.e., adjusted for the 42% who do not purchase it) is 32.6 g/day.* Assuming that 28% of the vitamin A content of the sugar is lost between the time it is fortified at the factory and when it is consumed in the household [13], it may be estimated that at a fortifica-tion level of 15 mg/kg, sugar will provide the average person consuming purchased sugar with 95% of the EAR of vitamin A.

Although the levels of fortification of both sugar and oil result in the delivery of very similar percent-ages of the daily EAR of vitamin A, the industry costs of fortifying these foods are very different. The annual incremental recurrent private sector cost of fortifying vegetable oil with retinol palmitate 1 mil-lion IU/g is US$555,668. Sugar fortification would cost US$2,644,765. The private sector costs of fortifying sugar in Uganda are 4.8 times more than the private sector costs of fortifying vegetable oil.** Fortified sugar has a coverage of 16.6 million Ugandans, nearly 1 mil-lion (6%) more people than the 15.7 million covered by fortified vegetable oil. Thus, the annual private sector cost of reaching a person with nearly the same percent-age of the daily EAR for vitamin A using vegetable oil is 28.4 UGX (US$0.02), compared with 240.6 UGX (US$0.14) for sugar. By this metric—cost per person

* The per capita apparent consumption estimates derived from the Uganda National Household Survey 2005/06 [11] are 37.4 g of sugar per person per day and 13.8 g of oil. These figures are not adjusted for losses and include all of the prod-uct purchased, not only the portion of it that is regarded as “fortifiable.” One would, therefore, expect that the Uganda National Household Survey–based estimates would be some-what greater than the industry estimates used in this analysis. Sugar is consistent with these expectations but oil is not, although the two sets of figures are encouragingly similar.

** More specifically, in the case of vegetable oil, it is as-sumed that the production of only the two largest oil factories (100,500 metric tons) is fortified, and in the case of sugar, it is assumed that the output of the four largest mills (197,292 metric tons) is fortified.

covered—vegetable oil is by far the more cost-effec-tive approach to delivering vitamin A to Ugandans. Whether it delivers to the “right” Ugandans—i.e., those who are vitamin A deficient and those who are most severely vitamin A deficient—is not known, and this is obviously a major information gap precluding the fine-tuning of the Ugandan fortification program.

Based on the estimate of 177,204 DALYs that is associated with vitamin A deficiency (table 1), and assuming that oil and sugar fortification are both (indi-vidually) effective in reducing vitamin A deficiency by 30% among those who consume these items (61% of the population in the case of sugar, and 58% in the case of oil), it may be estimated that the cost per DALY averted is US$82 for sugar and US$18 for oil.*** By this metric, vitamin A fortification of vegetable oil is 4.6 times more cost-effective than vitamin A fortification of sugar.

Should Ugandan public health and nutrition officials be satisfied that the fortification of just one food, veg-etable oil, is enough to adequately address vitamin A deficiency in Uganda? Or should they be pursuing the mandating of sugar fortification as well? Information gaps preclude being able to definitively answer this fundamentally important question. Still, some addi-tional information can be analyzed to provide greater insight in helping to address it. The answer depends, in part, on the extent to which the same households are consuming both sugar and vegetable oil. The Uganda National Household Survey 2005/06 allows us to ana-lyze joint consumption patterns.

Figure 3 shows that 54% of all Ugandan households and 58% of all individual Ugandans purchase vegeta-ble oil—either only oil (14%) or oil and sugar (44%). In comparison, slightly more households (58%) and individuals (61%) purchase sugar. (For ease of exposi-tion, from this point forward the discussion will focus only on individuals.) Of the 61% of individuals who are purchasing sugar, 72% (or 44% of all Ugandans) are already apparently consuming some vitamin A, because they also purchase fortified vegetable oil. The comple-ment, however—17% of all Ugandans or 28% of those who purchase sugar, but do not purchase oil—would become new beneficiaries of vitamin A fortification if sugar were to be fortified. This would reduce the percentage of Ugandans without any coverage with vitamin A–fortified foods from 42% to 25%.

Moreover, it appears that those who would benefit more from the fortification of sugar would be those who are at greatest risk for vitamin A deficiency. According to the Uganda Demographic and Health Survey, children who live in rural areas are nearly twice

*** There are few estimates of the effectiveness of iron for-tification, and none for Uganda. In its fortification work, the WHO CHOICE Team assumed the effectiveness of iron for-tification to be 60% [15]. This seems unduly optimistic. This figure was revised down to 30% in the current analysis.

FIG. 3. Apparent consumption of vegetable oil and sugar in Uganda 2005/06 by households and individuals. Source: Author’s calculations based on Uganda National Household Survey 2005/06 [7].

0

10

20

30

40

50

Neither Sugar nor Oil

Both Sugar and Oil

Only OilOnly Sugar

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as likely to have vitamin A deficiency as those who live in urban areas. Their respective levels of prevalence in 2000/01 were 29% and 16% [6]. In the general popula-tion, the addition of vitamin A fortification of sugar to vitamin A fortification of oil would increase the coverage of vitamin A fortification from 54% to 71% of households—a 31% increase. Figure 4 shows the sugar and vegetable oil purchasing patterns of rural poor Ugandan households that purchase sugar. Among the rural poor, the increase in the percentage of the population consuming vitamin A–fortified food would be from 41% to 57%—a 39% increase.

There are no more precise data about the vitamin A deficiency status of the households or individuals who consume vegetable oil (before or after their consump-tion of fortified oil) with which to assess the incremen-tal cost-effectiveness of fortifying sugar in addition to vegetable oil. If, however, we adopt a simplistic and extreme approach in which we assume that only 17% of Ugandans become new beneficiaries of vitamin A for-tification with the introduction of sugar fortification, assign all of the costs of sugar fortification exclusively to this group, and assume that 30% of them overcome

vitamin A deficiency as a result of consuming forti-fied sugar, then the estimated cost per DALY averted attributable to sugar fortification is US$293.

Clearly, this approach understates the benefits of sugar fortification: it does not take into account any additional benefits that sugar fortification may bring to the 41% of households and 44% of individuals who were already purchasing fortified oil and who now also purchase fortified sugar. According to WHO, health projects with a cost per DALY equal to or less than national per capita income are “highly cost effective” [16]. The estimated cost of US$293 per DALY averted due to sugar fortification is only 80% of the 2008 Ugan-dan per capita income of US$370 [17]. Therefore, it appears that the Government of Uganda should pursue sugar fortification.

There are several other considerations, however, that should be taken into account before a more definitive conclusion and more definitive policy recommenda-tions can be made. First, it is not known if the introduc-tion of sugar fortification will result in some individuals being put at risk for excess vitamin A intake because they consume large amounts of sugar and/or oil. Assessing this risk requires quantitative information on the levels of individual sugar and vegetable oil con-sumption, which are currently not available. A second and related shortcoming is that there is no information about usual vitamin A intake levels. These information gaps preclude more definitive assessment of the Ugan-dan vitamin A fortification program. Addressing these gaps should be a priority and is essential to making fortification in Uganda more evidence-based.

Acknowledgments

The views expressed are those of the authors and do not necessarily reflect those of the US Agency for International Development, which supported the work through A2Z: The Micronutrient and Child Blindness Project (Cooperative Agreement, Leadership with Associate Awards, GHS-A-00-05-00012-00).

FIG. 4. Percentage of poor rural households purchasing major potential food fortification vehicles in Uganda. Source: Authors’ calculations based on Uganda National Household Survey 2005/06 [7].

0

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30

40

50

60

%

Sugar Oil Sugar and Oil

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Vitamin A fortification in Uganda: comparing the feasibility, coverage, costs, and cost-effectiveness of fortifying vegetable oil and sugar