Uganda's 2010 sugar production rose slightly on a year earlier but fell short of forecasts, hit by technical problems at the leading producer and poor rains, an industry association said on Tuesday.

Richard Orr, chairman of the Uganda Sugar Cane Technologists Association (USCTA) said east Africa's third-largest economy produced 292,051 tonnes of raw sugar last year, 8.2 percent below the projected 318,000 tonnes forecast.

Kakira Sugar Works (KSW), Uganda's largest producer, which accounts for roughly half of all output, saw its output drop 4.3 percent to 151,000 tonnes in 2010 from a year earlier.

The 4.3 percent fall in production here was to do with adverse weather conditions for part of the year and also a technical problem we had with a new mill drive that was not installed correctly, Orr, who is also KSW's general manager, told Reuters.

That meant that we had to bypass one of our mills for six months, which affected the milling rate and recovery on cane. We will be making an insurance claim for that loss.

Uganda's sugar output last year was up 1.6 percent from 287,387 metric tonnes produced in 2009. Orr denied the drop in production at KSW was caused by a disruption to cane supply earlier in the year when outgrowers went on strike over a land dispute.

Uganda's Madhvani Group plans to invest $100 million in a new sugar plantation and manufacturing plant in northern Uganda to help address supply shortfalls but the project has been stalled by a wrangle with locals over land.