31 January 2010 African Sugar Digest 2

Africa Sugar Digest
Number 1
31 January 2010 / Written by Jorge Chullén, IUF Sugar

Presentation

The Africa Sugar Digest is an information service produced by the IUF Global Sugar project in East and Southern Africa. It replaces the occasional e-mailing of news done until now, with the aim to provide compact information on relevant sector developments. The Africa Sugar Digest is published as news becomes available.

Tanzania needs 80,000 tonnes of sugar

Tanzania is facing a shortage of sugar, which has prompted the request for importation of 80,000 tonnes to curb the deficit. Local newspapers said that retail prices have increased by 17 percent (to 1,600 Tanzanian shillings per kilogram from 1,400), because of the scarcity observed in recent months. Comments provided by members of the Tanzania union TPAWU via their Yahoo Group (sugarworkerstanzania) said that factories are unable to increase production at the moment because structural limits, while some weather-related problems have negatively affected cane growing.

By the end of January, the Sugar Board of Tanzania (SBT) said that government’s approval on the importation had yet to be granted, and consumers might still face further price increases. Domestic producers, said the SBT, are facing increasing financial costs related to their expansion programs. The country’s domestic consumption is estimated at about 330,000 tonnes per year, and, last year, the output of the four sugar producers reached 279,000 tonnes. The four companies are TPC (recently acquired by the French Tereos), Kilombero Sugar Company (owned by Illovo Sugar), Kagera Sugar Company and Mtibwa

Swaziland: Ubombo Ranches engages multi-million Emalangeni project

Ubombo Ranches has embarked on an expansion project estimated at over 1 billion emalangeni (USD 132.3 million) said a source with the Swaziland Water and Agricultural Development Enterprise (SWADE), during a meeting with small-scale sugar cane farmers. The Human Resources Department of Ubombo Ranches said the large scale expansion project is under construction, but quoted no financial figure on its value. Local press reports that Illovo Sugar owns a 60 percent stake in Ubombo, with the remaining 40 percent owned by Tibiyo Taka Ngwane. About 3,000 employees work for Ubombo.

Kenya: Sugar cane farmers look for majority stake in factories

Sugar cane farmers said that the Agriculture Minister is ignoring the law in the intended sale of five sugar factories. The minister had recently said that farmers would be able to buy a 30 per cent stake in the factories, a 19 per cent will be sold to the public through an initial public offering (IPO), and a 51 per cent majority stake would go to strategic investors.

The farmers claim that the Sugar Act gives them the right to buy the majority stake in the factories that are privatised. They also said they should given more time to save money to complete the operation, which they might not be able to do if the government insists in finalising the process by June. A qualification of bidders is expected in February.

The government is looking for investors with enough capital and expertise as to revive the sector, and groups from Brazil, Mauritius and Turkey are mentioned as interested.

The factories to be privatised are reported to have accumulated a 42 billion Kenyan shillings (USD 556.66 million) debt with the government and the Kenya Sugar Board. On this, 33 billion shillings have been written off and another 9 billion converted into equity.

Kenyan domestic sugar production has increased by 7.8 percent to 405,835 metric tonnes in the nine months Jan.-Sept. 2009 from 376,624 tonnes a year earlier, according to the Kenya Sugar Board.

The factories are Chemelil, Muhoroni, Miwani, Nzoia and South Nyanza (Sony). Mumias Sugar Company, the country’s largest producer, has expressed interest in buying Nzoia Sugar Company and Muhoroni Molasses plant.

Zambia: Zambia Sugar to acquire supplies from local businesses

The Mazabuka District Business Association has welcomed Zambia Sugar Company’s decision to involve local medium and small-scale businesses in the supplying goods and services to the company, in line with a governmental policy that priority should be given to local businesses in the supply chain. The Association has in the past complained about the company’s policy to deal with foreign and large-scale suppliers, and The Times of Zambia said that there appears to be some tension in Zambia Sugar after some senior managers with supply contracts with the company have seen their contracts terminated.

Bahrain: New sugar factory planned

The Arabian Sugar Company announced it will build a 56.7 million Bahraini dinars (USD 150 million) factory to produce 585,000 tonnes of sugar per year. The factory will be located in the Bahrain Industrial Investment Park in the Hidd Industrial Area, and starting in 2011 will manufacture the high quality ICUMSA 45 Sugar, according to a company spokesperson. The project had the support of the Bahrain's Economic Development Board (EDB) and other government agencies.

Global: International sugar prices at their highest in 29 years

International sugar prices are at about US 29-30 cents/lb, their highest level in 29 years. Main factors are harvest problems in Brazil and India, the world’s two largest sugar producers.

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. Visit the IUF sugar site at www.iuf.org/sugar/ for further information on the cane, sugar and ethanol sectors.

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).

IUF Global Sugar Program