Battle for Sh312bn sugar trade

Dar es Salaam. The government’s decision to restrict sugar import permits to non-producers was received with mixed reactions from stakeholders yesterday the move opened room for companies, yet to be revealed, to battle for a share of the Sh312 billion business gap of the imported sweetener.

Tanzania’s four sugar factories of Kagera Sugar Ltd, Kilombero Sugar, Mtibwa Sugar Estates Ltd and TPC Ltd produce an estimated 300,000 tonnes of the product per year.

Yet, the country’s consumption demand stands at about 420,000 tonnes, leaving a gap of 120,000 tonnes.

Currently, a kilo of sugar retails at Sh2,600 in Dar es Salaam, suggesting that the 120,000 tonnes of imported sugar is worth around Sh312 billion.

On Tuesday, Agriculture minister Japhet Hasunga announced the government’s decision to stop issuing import permits to local sugar producers on the grounds that they were concentrating more on importation than expansion of their production.

Mr Hasunga said non–sugar producing companies would instead be mandated with the role of importation in case the country was grappling with the shortage.

But producers say the government’s reason for barring them from engaging in importation was misguided.

Kilombero chairman Ami Mpungwe said the government’s reason of banning local sugar producers from importation, does not hold water.

He said last December the company’s board approved the expansion plans of doubling annual production from the current 125,000 tonnes.

He said the government -- through the ministries of Finance and Planning; Agriculture and that of Industry and Trade -- was aware of the firm’s expansion plans.

“We are willing and able to invest more. We are just waiting for the government’s approval,” he said, banking his confidence on the well-financially established company’s shareholders.

He said with the expansion plan, the firm would increase consumption of cane from out growers from the current 40 per cent to 60 per cent.

“We have been forced to import to stabilise the market so we have no problem with who is to import sugar given that our main business is not importation but rather production,” said Mr Mpungwe, noting however that the producers’ concern was that the product should be imported at the right time and in the right quantity.

TPC Ltd sales and marketing executive officer Allen Maro shared similar sentiments, refuting the claims that with importation local manufacturers were abandoning expansion of their production.

“Imported sugar is subjected to several taxes and charges including import duty of 25 per cent, VAT (Value Added Tax), railway levy, sugar development levy, freight charges, just to mention but a few…It is more profitable to produce locally than it is to import,” noted Mr Maro.

He said the company was willing and able to expand provided that the government assured them of farms for cane production. Tanzania Sugar Manufacturers Association executive director Deo Lyato said his association has not received official communication from the government.

Tanzania Private Sector Foundation (TPSF) executive director Godfrey Simbeye said the ban had pros and cons.

“The government might be right that the ban was meant to increase appetite for expansion of local industries but on the other hand, the move may fuel flooding of cheap and sub-standard sugar in the market,” said Mr Simbeye.