30 October 2012

Tanzania: Local Sugar Market Saturated

Photo: John Mbanda
Tanzania revokes sugar importers licences (file photo).

MORE than 50,000 tonnes of sugar worth over 1bn/- is piled up in godowns of local factories after failure to secure the market for the commodity in the country.

The situation comes amid higher prices of sugar in the domestic market forcing producers to seek export permits from the government. Prices at retail outlets range between 1,800/- a kg in the urban areas to 2,500/- per kg in remote areas.Various sources in sugar industry say while local producers owe out-growers a lot of money, yet the producers have failed to sell the commodity.

The Sugar Board of Tanzania (SBT) Chairman, Mr Castor Ligallama told the 'Daily News' in an interview some producers have sought permits export unsold sugar to settle the out-growers debts."Delays in bringing imported sugar until local factories have resumed production is the major reason for the surplus supply of the commodity in the local market," said Mr Ligallama.

The Tanzania Sugar Producers Association (TSPA) Executive Secretary, Amb. Fadhili Mbaga, said excess sugar in the market has made local manufacturers to settle debts of out-growers difficult.Last year, the government granted licences to various companies to import about 180,000 tonnes of sugar to cover the deficit, when the local factories were closed for maintenances.

On Monday, TSB issued a statement stating that about 324,839 tonnes are expected to be produced this year. By mid October, this year, 183,082 tonnes had been manufactured by the local factories. The Agriculture, Food Security and Co-operatives Minister, Eng. Christopher Chiza, said the government asked manufacturers to submit production evidence before granting them export permits.

"After consultations with the Sugar Technical Committee and after verifying that there were unsold stocks piled up in the factories, the government issued them with permits to sell the commodity in East Africa," Mr Chiza said.However, he said last month, some suppliers came again to seek export permits to European markets after failing to get premium prices in East African countries.

"Currently, the government is consulting various experts including the sugar technical committee to determine possible effects in case export permits are granted to local producers to sell the commodity to the EU market," he said.

In comparison with the other countries in the region, Eng. Chiza said prices in Tanzania were still low despite being determined by market forces.He blamed poor distribution system as one of the reasons pushing up prices in the local market despite high supply of the commodity.

"There is need to have official distributors of the commodity to ensure that consumers get it at an affordable price," he added.For example, he said has received a case from the Kilimanjaro Native Cooperative Union (KNCU) after the Tanganyika Planting Company Limited (TPC), refused to supply it with sugar only because it was selling to final consumers at a price between 1,700/- and 1,800/-.

"This is typical case showing complications in the distribution systems which affect largely the final prices going to the consumer," he noted.

Tanzania is a deficit sugar producing country, because local production does not meet the existing demand.

Normally the demand gap is covered by licensed imported sugar that has to arrive in the country at the time when all factories have been closed down for maintenance or have less stock for sale.An average of 30,000 tonnes of sugar is needed monthly to meet demand of the local markets.

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