12 November 2012

Tanzania: Firms Allowed to Export Excess Sugar

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

Kilombero Sugar Company and Kagera Sugar Company, two firms among the country's sugar manufacturers, have been cleared to export 19,500 tonnes of sugar to the European Union, Uganda and Southern Sudan markets.

The development follows the piling up of tens of thousands of stocks of sugar in the companies' godowns in Dar es Salaam and at the premises in Kilombero and Kagera. The 'Daily News' has learnt that some 50,000 tonnes of unsold sugar for Kilombero's Illovo worth over 10bn/- remains piled up in godowns and around Kilombero and Dar es Salaam due to failure to secure local markets.

Already, due to the fact that warehouses in Dar es Salaam have piled up with the commodity, the company has had to pile up the other tonnes of sugar outside its factory in Kilombero. Details emerging from a meeting between the Minister for Agriculture, Food Security and Co-operatives, Engineer Christopher Chiza with sugar companies in Dodoma on Thursday show that the two sugar firms could no longer withstand the problem.

The minister said the companies were allowed to offload part of the unsold sugar to settle the out-growers' arrears as well bolster their cash flows. Confirming the reports, the Chairman of the Sugar Board of Tanzania, Mr Castor Ligarama told the 'Daily News' in Dar es Salaam over the weekend that the export licence given last week has allowed Kilombero Sugar Company to export 10,000 tonnes of sugar to sustain the company's healthy cash flows.

The Company expects to export the 10,000 tonnes to the European Union markets. "So it would not be prudent to leave such a situation to go on and rains come to destroy their sugar yet we have a better option of letting them export some sugar to the international markets," he said He said Kagera sugar would sell 9,500 tonnes to regional markets of Uganda and Southern Sudan. "If sugar piles up, the factory can stop operations and thus not buy cane from the small scale out growers," said Mr Ligarama.

The country's sugar consumption stands at 480,000 tonnes per year but the four factories--Tanganyika Plantation Company, Kilombero, Kagera and Mtibwa Sugar--produce only 320,000 tonnes, translating into a current deficit of 160,000 tonnes of sugar that is filled by importation. He said importers had been given importation licence in September to bring in sugar to bridge the gap at the time but noted that they had delayed to bring in the sugar and by the time they brought the product in the country, the gap sugar had gone down already.

In an interview with 'Daily News', the Kilombero Sugar Company Limited Managing Director Mr Don Carter Brown said it was important for them to be able to sell their sugar so that their cash flow continues in a sustainable manner. He said that last season, the company paid 34.4bn/- to small scale out growers and the money largely remains in local economy of Morogoro region. He said it was the first time the firm has faced the challenge of such magnitude with huge consignment of sugar being stranded.

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