Africa Sugar Digest, Vol. I, No 11, May 2010

Ghana: New sugar factory proposed

A USD 100 million sugar factory is to be established in Ghana by 2012, the first one in more than four decades. The plant is to be located in Tema, with an initial capacity of 450, 000 tonnes, to be increased to 650,000 tonnes. Construction is expected to start next October. Main input will be imported raw sugar in syrup form, according to Cargil International, which is the project’s main sponsor. A Cargill study concluded it was not economically viable to invest in cane plantations, despite favourable weather conditions, because they will not be able to compete with raw sugar exporting countries.

ISO figures for 2009 show Ghana producing no domestic sugar and depending heavily on imports, which reached some 485,000 tonnes in 2008, with a re-exported amount of 230,000 tonnes. Brazilian whites comprise the overwhelming proportion of Ghana’s imports accounting for 460,000 tonnes in 2008.

Malawi: A third sugar factory announced

In his State of the Nation address at the opening of the budget session of Parliament in late May, President Bingu Wa Mutharika said that his government has included in the 2010/11 financial year the support to establishing a third sugar factory in the country at a cost of USD 50 million. The factory will be located at Lifuwu, Salima. Mutharika also said that Illovo Sugar plans to increase production to about 500,000 tonnes, from the current 310,000 tonnes.

Tanzania: Feedstock for biofuels production

A 70 per cent reduction in the purchase price of sugar cane feed stock will bring Tanzania’s ethanol production costs closer to that of Brazil, said a study on potential production of biofuels, conducted by Bioenergy and Food Security (BEFS). The study reviewed five analytical components, including biomass potential, biofuel supply chain production costs, agriculture markets outlook, economy wide impacts and household level food security. The aim is to support the formulation of bioenergy policies in line with Tanzania’s poverty reduction and food security strategies and to inform policy over time. The study also underlined the need for improved access to farm technology, better cane varieties, training, irrigation and inputs, as well as an improved transportation network. Bioenergy crops considered in the analysis were sugar cane, sweet sorghum, palm oil and jatropha, while the most important food security crops selected on per capita calorie consumption were rice, maize, wheat, potatoes and sugar.

Zimbabwe: Gold Star refinery still closed

The Gold Star Sugar refinery in Bulawayo has been non-operational since last December, when it shut down for the annual maintenance program. In January this year, the company said that shortages of sugar and working capital, limited supply of water, and chronic power outages were making operations unviable. A company spokesperson said on 26 May that operations will resume only when supplies and other conditions are guaranteed. Meanwhile, there is only a small number of staff in the refinery, receiving reduced wages. One result has been the increased importation of brown sugar, mainly from South Africa.

Kenya: Delays in privatising the sugar sector

Kenyan sugar groups are concerned with the delays in the privatisation of five state-owned sugar factories, as the safeguards granted by the Common Market for East and Southern Africa (COMESA) will expire in March 2012, and the sector might not have enough time to get ready to compete with sugar imported from other COMESA members. According to the local press, the Privatisation Commission of Kenya (PCK) completed its work, and the only remaining issue if the approval by the Ministry of Agriculture to the process. The Kenya Sugar Board estimates that some USD 733 million in new capital will be invested to make the sector competitive.

The privatisation includes five state-owned sugar companies (Nzoia, Chemelil, Muhoroni, Miwani and SONY Sugar), and it proposes to sell a 51 per cent stake in each company to strategic investors, a 30 per cent to farmers, and the remaining 19 per cent through initial public offerings.

Some groups, however, are sceptic about the success of the privatisation, which has been on the public domain for the past ten years; and had 2007 as an initial target to complete the process. Others disagreed with the current proposal saying that the 2001 Sugar Act proposed that farmers take 51 per cent stake and 49 per cent to go to strategic investors; while some farmer organisations said they should be allowed to buy 100 per cent of the companies.

COMESA first granted the safeguards in 2002, which allowed protecting the domestic sugar sector through import quotas, but it was also understood that the sector would modernise and complete a privatisation process. While the safeguards have been negotiated several times, nothing of importance had taken place in the state-owned companies.

Kenya’s sugar output rose by 5 percent to 548,207 tonnes in 2009, the highest production ever achieved according to Kenya Sugar Board. Imports were down 16 percent to 184,530 tonnes. Mumias Sugar accounted for 45.3 percent of the total output.

Tunisia buys 44,000 tonnes of Brazilian white sugar

Tunisia bought 44,000 tonnes of white sugar from Brazil for August delivery, the ministry of trade said. The price was quoted at USD 546 per tonne. The country needs 350,000 tonnes of sugar in 2010, of which 168,000 have been purchased.

Africa Sugar Digest is produced thanks to the IUF Global Sugar project in East and Southern Africa. It appears as news becomes available. Contributions are welcome. The IUF African sugar project is supported by the Social Justice Fund of the Canadian Auto Workers (SJF-CAW), with contribution from the Canadian International Development Agency (CIDA) through the Labour International Development Program of the Canadian Labour Congress (LIDP-CLC).

Africa Sugar Digest, Vol. I, No 11, May 2010 – click to download –

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