5 July 2016

Ethiopia: Sugar Import Continues With 140,000mt On the Way

Recent weather phenomena alone cannot explain why self-sufficiency in the domestic market remains elusive

The Ethiopian Sugar Corporation is importing 140,000 metric tonnes of sugar at a cost of 71 million dollars from India, to be transported in three rounds of shipments lasting four months.

The purchase has come after the closure of all the sugar factories in the country, following the start of the rainy season. The import represents the latest dent in the already tattered reputation of the Corporation after its persistent failure to keep its repeated promise to meet domestic sugar demand through local production.

Stated in the Corporation's nine-month performance report presented to Parliament, only 44pc of the annul production target of 535,693tn has been achieved. Just four of the Corporation's operating factories have contributed to this production. Most of its other factories, which are under development, are marred with chronic delays and over expenditure.

Despite registering some production during the nine months of the current fiscal year, Wonji, Finchaa and Kessem factories' performance was lower than 50pc of their respective production targets. The Metehara sugar factory also only achieved 51pc of its production goal, highlighting the woes the state-controlled sugar industry the country is facing.

"Two extreme phenomena on the same weather spectrum contributed to this problem," Gashaw Aychiluhim, communication head of the Corporation told Fortune.

The recurrent drought has had a tremendous negative impact on the cultivation of sugar cane on the one hand, and the major floods due to La-Niña resulted in River Awash overflowing its banks and causing unfiltered water to enter into the factories rendering their production capacity null, on the other hand. Technical problems ensued following the floods, significantly diminishing outputs.

Notwithstanding the problems caused by the weather, the fundamental problem the Corporation faces pertains to its failure to deliver completed sugar factories, after spending billions of birr and missing deadlines by several years in some cases. Despite already missing a March 2013 deadline and having spent 97pc of its budget, progress at the development of Beles I sugar factory is still at a disappointing 60pc.

Similarly, the Corporation was supposed to finalise Kuraz I sugar factory in 2013. But three years past the deadline and already having spent 94pc of its budget, the Corporation has only 83pc completed to show for its conundrum of a performance.

Moreover, technical failures and shortage of water in Tendhao sugar factory and limited engagement of its contractor and consultant have contributed to its underperformance of producing only 310tn of sugar.

With 45,000mt of the sugar already having reached the Port of Djibouti, the purchase of sugar from Agrocorp International Pte Ltd is expected to satisfy the local demand for the time being. The company had supplied 75,000mt of sugar last September, when the Corporation bought 200,000mt of sugar.

Agrocorp, based in Singapore, has been a consistent supplier of Sugar in Ethiopia. It is globally recognised as supplier of commodities such as pulses, rice, oilseed and sugar. The company is said to have a presence in 12 countries including a few Eastern African countries. Its annual revenue exceeds 1.9 billion dollars, according to its website.

Over the past ten months the Ministry of Trade has distributed 404,521tn of sugar to consumers across the country.

The distribution usually takes place based on a monthly quota where regions get 40,500tn of sugar at 45-day intervals; Addis Abeba gets 11,200tn and industries in beverage and food processing receive 15,600tn in one month intervals.


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