Sugarcane farm

Tanzania stands a good chance of becoming sugarself sufficient and net exporter of the essential product if there are strategic moves to attract more investors in the local sugar sub-sector.

Apart from increasing sugar supply in the market and stabilising prices, increased investments would create employment and support in the implementation of the governments’ ambitious Kilimo Kwanza Initiative. Sugarcane is mostly grown in processing factories’ owned estates and some outgrowers in contracts with the factories.

Experts have it increased acreage under sugarcane and improved productivity would significantly raise sugar production in the country. Despite major sugarcane estates by Kilombero Sugar Company and Mtibwa Sugar Estates in Morogoro; Kagera Sugarcane Estates in Kagera; and Tanganyika Plantation Company in Kilimanjaro, the demand for sugar has always surpassed supply, with imports bridging the gap.

One of the critical problems facing the local sugar industry is the country’s porous borders and ports that facilitate smuggling. Smuggling is not only creating shortage in the local market but also subjecting the government to huge losses due to tax evasion. Last year, for example, the government was compelled to engage security organs to block illegal exportation of sugar to the neighboring countries with acute shortage that pushed prices of the commodity to extraordinarily high levels.

Mr Kombe said the commodity price in all factories has never changed but blamed distributors destabilise supply in the market. However, for the imported sugar, he observed that the prices depend largely on the commodity value in the world market. Likewise, sugar prices are likely to remain less unaffected despite power tariff hike because the producing firms use alternative energy that they generate.

“Almost all the sugar factories no longer depend on the national grid rather produce their own source of energy from sugarcane remains,” remarked Mr Kombe. Effective from January 15, this year, the energy regulator approved an electricity price hike of 40.29 percent for the state-run power firm (TANESCO).

Increase of power charges would affect power users from individual, commercial, industrial and mining segments. Despite government interventions few months ago, sugar price continued to rise and in some regions especially those in the boarder with neighboring countries, a kilo was sold for as high as 2,600/-.

In Dar es Salaam for example, retail price for sugar ranges between 2,000/- and 2,400/-, a kilo. Tanzania’s sugar consumption is estimated at 480,000 tonnes per annum, but the four factories, namely the Tanganyika Plantation Company (TPC), Kilombero, Kagera and Mtibwa Sugar produce only 320,000 tonnes.

Last year for example, sugar demand exceeded 330,000 tonnes at the time when production stood at 250,000 tonnes, creating a deficit of nearly 80,000 tonnes. The balance was covered by imports. It’s a contradiction to promote Kilimo Kwanza on one side and prohibit exports that fetch premium prices on the other hand.

Boosting supply therefore should go hand in hand with the establishment of better export structures. Some analysts did however criticise the export ban, which they described as a reflection of serious weakness in the supply side. They instead proposed for concerted efforts to increase production and tape the shortage in other countries as business opportunity.

“Increased production will close the current demand-supply gap and create sugar surplus for export markets,” says Mathew Kombe, the Sugar Board of Tanzania (SBT) Director General. Mr Kombe advises local producers to capitalise on frequent shortages in neighboring countries. The board ruled out the possibility of intervening sugar prices last week but blamed few distributors for accumulating the commodity to create artificial shortages to make quick gains.

“There are no plans to intervene on sugar prices for the time being instead market forces will be the determinant factor,” Mr Kombe was quoted as saying. The short term plans, he said would be to increase output in the four producing factories and importing certain amount to cover deficit. But, in the long run more investments in the sector would provide lasting solution.

By SEBASTIAN MRINDOKO, Tanzania Daily News

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