AN OVERVIEW OF THE TANZANIA SUGAR INDUSTRY

Contents

Background Stakeholders Industry’s Significance in the Country’s

Economy Sugarcane Production Sugar Production Production vs Consumption Challenges Response to Challenges Conclusion

Background

The Sugar Industry in Tanzania is governed by the Sugar Industry Act, 2001 ( as amended), and Sugar Regulations (2010)

Four Sugar companies , Five Mills:Kilombero Sugar ( two mills ) Msolwa and

Ruhembe – Located in Kilombero and Kilosa Districts in Morogoro Region

TPC Ltd – Located in Moshi Rural District- Kilimanjaro Region.

Background …Cont…

Mtibwa Sugar Estates located in Movomero District , Morogoro Region.

Before privatization all sugar companies were 100% owned by the government as parastatals managed by Sugar Development Corporation ( SUDECO).

They were privatized between 1998 and 2002

Background …Cont…

Government owns 25% equity in Kilombero Sugar Co. Ltd and TPC Ltd

Mtibwa Sugar Estates Ltd and Kagera Sugar Ltd are 100% divested to private investors

Background …cont…

Main objective for divesting the industry was to increase productivity in sugarcane and sugar production in terms of:-

increasing sugarcane yields

improving factory efficiencies

increasing crushing capacities

Background …cont…

rehabilitation and expansion of the factories

promotion of outgrowers

infrastructure development

Stakeholders

Industry’s significance in County’s Economy

National Econom

y

Multiplier effect – 3.2%Multiplier effect – 3.2%

Tax: Over Tsh. 100billion per annumTax: Over Tsh. 100billion per annum

Employment-Direct 18,000

-Indirect 57,000-Household value chain

75,000

Annual revenue of agric sector- 3.8%

Contributes 1% in Country’s GDP

Foreign exchange savings – About Tsh. 280billion per annum

Sugarcane Production

Varieties Out growers Kilombero & Mtibwa: NCo376 Kagera : Co 617

Nucleus estates TPC: NCo 376,B52-313,EA

7097,N19&N25 Kilombero: NCo376,N19&N25 Mtibwa: NCo376, Kagera Sugar: Co 617, N19 and

N25

Production.. Cont…..

Registered growers : 20,000

Plot sizes : From 0.4 to 400ha

(Average 0.8ha )

Acreage : Area harvested 26,000ha

Production.. Cont…..

Cane production : 700,000 tons per annum

Cane yields : 40- 50 TCH

Production share : 24%

Kagera growers are less tha n

600

Kagera growers are less tha n

600

Sugarcane Production by MCPs

• Area under cane : 62,569 ha Area harvested : 44,194 ha

Cane production : 2.2 million

tons

Cane yields : 70-120 TCH

Production share : 76%

PeriodKilombero

Sugar Mtibwa

Sugar Estate TPC LtdKagera

Sugar Ltd TOTAL

2008/09

118,023 42,863 78,483 40,482 279,852

2009/10

119,623 40,029 68,616 35,193 263,461

2010/11

126,824 47,301 85,928 44,082 304,135

2011/12

113,100 28,269 86,148 35,362 262,879

2012/13

129,737 38,794 86,078

45,089 299,698

2013/14* 116,618 26,491 100,000

46,242 289,351

Sugar Production (2008/09-2012/13)

Sugar Production …cont…..

Sugar Production vs Consumption

Per capita consumption : 12.78 kg

Population growth : 2.8% per annum

Current Demand : 590,000 mt

Domestic cons. : 420,000mt

Industrial cons. : 170,000mt

Sugar Production vs Consumption …..Cont…

Local production : 300,000 mt

Deficit : 290,000 mt

Deficit is addressed by importation with the applicable East African Community CET tariff with allowable remission

Challenges

Low cane yields for out growers

Inadequate collateral and high borrowing interest rates particularly for out growers

Absence of government subsidy on inputs to cane farmers

Poor infrastructure/access roads to Outgrower fields

Challenges….. Cont…

High cost of productionInadequate capacity to provide effective and efficient

research, training and extension services Huge harvesting and post harvest lossesMarket challenges (imbalances) Inability to satisfy increasing demand

Challenges …..Cont… …. Demand vs Production

Population Projections Historical 1950 8 1980 19 2000 34 2012 45

Projection 2015 49 2020 56 2025 64 2030 72

Source: Tanzania National Bureau of Statistics

United Nations, 2010 Revision

Challenges …..Cont…

Response to Challenges

A five year Industry Development Plan to 2015/16 was evolved aiming at self sufficiency and moderate surplus by plan end.

Existing factories were to expand capacities

New projects were to come on board

Response to Challenges ….cont…

The National Development Plan to 2015 placed a huge challenge on the industry.

Aims at self sufficiency and realisation of 100,000mt surplus sugar by plans end.

Availability of suitable and unencumbered land has been identified as huge bottleneck to the relialisation of the plan. Need to debottleneck.

Response to Challenges ….cont…

The government has set up a Task Force to address the issue and recommend course of action.

Sugar is now a top agenda within the Government Projects included in BRN portfolio Compensation to free Ruipa land being

processed Land within Rufiji Basin on process to be free

for investment into sugar

Creating enabling environment for industry growth very crucial.

Need to protect the infant industry against market distortions.

Control of illegal imports/smuggling.

Building of trust amongst stakeholder groups particularly millers-growers.

Response to Challenges ….cont…

Institutional capacity building to deliver on regulation

Human capital development. Development of financial resources. Improvement of the legal and institutional

framework to make it respond to the needs of the day.

Response to Challenges ….cont…

Way Forward

Industry Development Plan up for major overhaul

Calls for unity and conviction to have set goals realised

Goals should be as realistic as possible under the existing circumstances

Conclusion

• There exists huge potential for the development of the Sugar industry in Tanzania

• Players should always move in unity to have common interests realised and safeguarded

• The industry should conduct itself in unquestionable way and seek to reach a stage where it can be trusted by its stakeholders particularly the government

• The industry has huge potential to create wealth to its stakeholders and contribute immensely to the country economy as well as welfare of the common man in the street.

Ahsanteni na Karibuni sana.