Government, sugar producers settle their differences

Kitila pic
Kitila pic

What you need to know:

  • The two sides met in Dar es Salaam on Monday and addressed six critical issues within the industry and outlined a path forward

Dar es Salaam. The government, through the Minister of State in the President’s Office (Planning and Investment), Prof Kitila Mkumbo, on Monday met with local sugar producers and the two sides addressed six critical issues within the industry and outlined a path forward.

The meeting was apparently in response to a recent exchange of words between the two parties, occasioned by differences in viewpoints with regard to sugar production, gap sugar, imports and recurrent price hikes.

It all started when sugar prices rose sharply in January and February, this year, leading to heated debate on the same in Parliament a few weeks ago, with Agriculture minister Hussein Bashe announcing a new modality for the importation of gap sugar.

He is on record saying the price hikes could partly be attributed to domestic manufacturers’ failure to import the sweetener on time.

The government thus proposed the amendment of the Sugar Industry Act and to give the National Food Reserve Agency (NFRA) the exclusive mandate to import, store and distribute gap sugar for domestic consumption.

However, a few days after the amendments were passed, members of the Tanzania Sugar Producers Association (TSPA) denied allegations of failing to import sugar and hoarding so as to profiteer from artificial shortages.

As producers, they said, they have no intention of undermining sugar supply in the country and are committed to increasing production.

Following the developments, Prof Mkumbo on Monday convened a meeting with domestic sugar manufacturers at the Tanzania Investment Centre (TIC) headquarters and the results were shared with the media.

Prof Mkumbo assured manufacturers of the government’s commitment to ensuring their safety and security of their investments.

The two parties also discussed the balance between locally produced and imported sugar.

“We expect that within the next few years, we will have overcome the sugar deficit issue,” he said.

According to the Sugar Board of Tanzania, the national sugar demand determined by the government, is approximately 650,000 tonnes per year, including a buffer stock for at least two months’ consumption.

As of 2023, the production capacity of existing factories is 460,200 tonnes.

On addressing the deficit, Prof Mkumbo said the two parties discussed policies and fundamental laws within the sugar sector.

“This includes establishing accurate data on the required deficit and timing the importation of sugar…which is only when local production is halted due to maintenance or adverse weather conditions,” he said.

Tax rates on sugar were also a focal point, with Prof Mkumbo stressing the importance of setting customs duties and value added tax (VAT) that protect local production.

“The goal is to ensure that the price of imported sugar does not disrupt the market price of locally produced sugar,” he said.

A significant change in the importation process was also addressed. Previously, manufacturers had the mandate to import sugar.

However, a new law passed by Parliament has allowed the National Food Reserve Agency (NFRA) to also start importing sugar.

“The business community has no issues with NFRA taking on this role,” Prof Mkumbo said.

Another key issue was suggested by the manufacturers was on the outdated Sugar Industry Act which has been in place since 2001, will undergo a review process.

”As the government, we acknowledge this and there is a regular process to review it. Therefore, the relevant ministry will set a procedure, and stakeholders will go through it, clause by clause,” he assured.

On that note, Bakhresa Group corporate affairs director Hussein Sufian echoed the need for updated legislation.

“Since the law was enacted, many things have emerged in between, and it is a standard procedure for any place to review their laws to keep up with the times and address current challenges,” he said.

Another key issue according to the minister was on strengthening communication between the government and sugar producers.

Prof Mkumbo called for improved collaboration to ensure a stable and thriving sugar industry in Tanzania.