Structural Aspects of the Sugar Industries in East and ... · PDF fileStructural Aspects of the Sugar Industries in East ... The Sugar Industries in East and Southern Africa ... and

The Sugar Industries of Eastern and Southern Africa

Structural Aspects of the Sugar Industries in East and Southern Africa

Table of Contents

Introduction

I - The International Sugar Industry

1. Restructuring in the International Sugar Industry

2. Fundamental Aspects in the International Sugar Industry

2.1. Production

2.2. Consumption

2.3. International Sugar Imports and Exports

2.3.1. Imports

2.3.2. Exports

2.4. Preferential markets

2.5. International “free market” prices

II - The Sugar Industries in East and Southern Africa (1998-2002)

3.Net Importers in East Africa: Kenya, Uganda and Tanzania

3.1. Kenya

3.2. Uganda

3.3. Tanzania

4. Deep Inside Illovo’s World: Zambia and Malawi

4.1. Zambia

4.2. Malawi

5. Swaziland

6. South Africa

7. Mozambique: On a Recovery Path

8. Mauritius: A Caribbean-like island in the Indian Ocean

9. Zimbabwe

10. An Overview of Sugar Projects in Africa

11. Conclusion

Appendixes

Table 1 - World Sugar Production by Regions in percentage: 1970/71 – 2001/02

Table 2 - World Sugar Consumption by Regions in percentage of total: 1972/73 – 2001/02

Table 3 - World Sugar Imports by Regions in percentage: 1972/73 – 2001/02

Table 4 - Sugar Exports by Regions: 1972/73 – 2001/02

Table 5 - EU-ACP Sugar Protocol Quotas

Table 6 - United States. Tariff-rate Sugar Quota Fiscal Year 2003

Table 7 - African participation in the World Sugar Industry in percentage

Page 2

The Sugar Industries of East and Southern Africa

Table 8 - Kenya: Sugar Balance 1993-2000

Table 9 - Uganda: Sugar Balance 1993-2000

Table 10 - Tanzania: Sugar Balance 1993-2000

Table 11 - Zambia: Sugar Balance 1993-2000

Table 12 - Zambia Sugar Exports 1997- 2000

Table 13 - Malawi: Sugar Balance 1993-2000

Table 14 - Malawi Sugar Exports 1997- 2000

Table 15 - Swaziland: Sugar Balance 1993-2000

Table 16 - Swaziland Sugar Exports 1997- 2000

Table 17 - South Africa: Sugar Balance 1993-2000

Table 18 - South Africa - Exports 1997-2000

Table 19 - Mauritius: Sugar Balance 1993-2000

Table 20 - Mauritius: Sugar Exports 1997-2000

Table 21 - Zimbabwe: Sugar Balance 1993-2000

Chart 1 - World Sugar Production by Regions

Chart 2 - International Sugar Agreement (ISA) Prices, 1960-2001

Page 3


Structural Aspects of the Sugar Industries in East and Southern Africa

Introduction

The present report situates the African sugar regional industry in the international sugar industry

and then focuses on ten sugar industries in the East and Southern Africa. The national sugar

industries are those from Kenya, Uganda, Tanzania, Malawi, Zambia, Zimbabwe, South Africa,

Swaziland, Mozambique, and Mauritius in the Indian Ocean, that were the geographic focus of

the IUF African Regional Sugar Project in 2002. These industries account for about 60 percent of

the sugar production in the continent, 29 percent consumption and 6.4 percent of sugar imports.

This sugar profile is because the project included South Africa but excluded Egypt and other

countries in North Africa.

The report describes the industries by highlighting their common features, in an effort to provide

basic elements to anchor an IUF regional work. One group comprises the three East African

countries (Kenya, Uganda and Tanzania) where concerns focus on trade issues and political

influence on the industry. From among the three countries, Tanzania is experiencing some

corporate developments that took place in other countries: the presence of South Africa-based

transnationals and the exportation of Mauritian capital and expertise to the continent. A second

group comprises the Illovo Sugar-centred industries: Malawi, Zambia, South Africa, Swaziland

and Mozambique. Illovo Sugar has a commanding presence in the first three, while it is an

important player in the latter two. Zimbabwe is a special case because of the political and

economic crisis that has recently deepened. The industry in Mauritius shares more common

features with those in the Caribbean than with the African continent, including a major

dependency on European markets and an ambitious restructuring program that has drastically

reduced the number of mills, cut the labour force by one third and it is expected to continue in the

near future.

The report is divided in two sections: the first explores the basic structure of the international

sugar industry, describing the larger context for the African regional industry. The second reviews

some of the most important developments in the countries in question and provides a broad

overview of the current sugar projects in the continent.

Two other reports are also part of the IUF regional sugar project: Trade Agreements in the Sugar

Industries of East and Southern Africa and Corporate Developments in the Sugar Industries of

East and Southern Africa. The first deals with two processes of free trade, the Common Market

for Eastern and Southern Africa (COMESA) and the Southern African Development Community

(SADC); the second presents information on (Illovo Sugar and Tongaat-Hulett, two South African

companies that have acquired great influence in the regional industry.

Page 4


Sources Consulted

This report used sources from the ten above-mentioned countries, such as industry reports and

the Internet edition of national newspapers. Sources for statistics were the International Sugar

Organization (ISO) and the German commodity analysis group F.O.Licht. Licht also publishes the

International Sugar and Sweetener Report (36 issues per year), which was reviewed for the

1998-2002. Other sources are reports by the news agencies Reuters and Dow Jones, and reports

by the Foreign Agricultural Services of the Department of Agriculture of the United States (FAS-

USDA). Most of the interpretation and analysis of the information was discussed with union

leaders and sugar workers in the mentioned countries, which were visited in March and June

2002. Some of the information also appeared in Sugar Worker, a monthly electronic newsletter

published by the IUF since June 1999.

The African Sugar Industry: Situation and Outlook, a study sponsored by the IUF in 1997, should

be consulted for background and historical information on the sugar industry in the continent.

Units used in this report are metric tonnes of sugar, raw value (“tonnes”). The national currencies

were converted into dollars of the United States (USD) at the exchange rate of the day – quoted

at Yahoo.com – referred by the news.

Page 5


I – The International Sugar Industry

1. Restructuring in the International Sugar Industry

By late 2001, news in the international sugar circles was of an expected huge increase in cane

production in Centre-South Brazil, around the state of Sao Paulo. Initial estimates were of 280

million tonnes of cane, up from the 244 million tonnes of the previous year. Although the

estimates were revised to 270 million tonnes by July 2002, the news weighed heavily on the

international sugar prices during all 2002. Price prospects, say international trade sources as this

report is written, are not bright because it is expected that in 2002/03 Brazil would set a new

record in cane production.

Besides the usual concern among producers worldwide when a major supplier expects a bumper

crop or a significant production increase, there was something relatively novel about the news. It

was about record highs in cane production rather than sugar production – even though the latter

was also expected – and the negative influence on prices because of the Brazilian alcohol and

sugar industry complex. For many years, Brazil has used most of its cane for producing ethanol

(fuel alcohol) rather than manufacturing sugar, which is the usual model for a cane-base sugar

industry in the world. Therefore, a question related to the news of a record Brazilian cane

production is how much of the extra cane would go into producing sugar.

This kind of news (e.g. a Brazilian cane record production) points out to the structural changes

that have taken place in the past three decades in the international sugar industry.1 The process

is known as restructuring, which has been the subject research and publications in the IUF work

program. The restructuring comprises four distinct processes:

Changes in the fundamental aspects of the sugar industry. In the past three decades, there

has been a shift of the industry’s centre of gravity from Europe (West and East) and North and

Central America towards Asia and South America (Brazil) in terms of production, consumption

and the international trade. The changes also include the emergence of sugar substitutes,

especially in industrial applications (high fructose corn syrup, for instance); the modification of

trade patterns (white or refined and raw sugar); the shrinking of preferential markets (end of the

Soviet Union-Cuba trade arrangement, reduction of the U.S. sugar quota).

1 The impact of the Brazilian cane production on the international and African sugar industry and, in particular, the sugar trade position of Kenya, surfaced during a meeting with managerial staff at Mumias Sugar. The company staff were very concerned that a sudden increase in the availability of Brazilian sugar in international markets – and in the African region – would push sugar prices further down which, in turn, would have a negative impact on the regional trade balance, already influenced by free trade arrangements under COMESA.

Page 6


Modernization of production. New technology and labour management practices, automation

and computer-based processes, and similar processes that have contributed to create a smaller

and more qualified labour force.

Concentration of ownership and control of the industry. There is a general trend towards

having sugar production under the control of fewer and more powerful companies while new

factories tend to have larger processing capacities. These processes are, from another angle, the

continuing consolidation of transnational corporations.

Market reforms and liberalization programs. In the early 1990s liberalization programs and

market reforms swept the world economy. The international sugar industry was greatly affected,

because the industry was used to a high level of state intervention, through state ownership of

production facilities (factories, land) or regulation of the industry (international and domestic trade,

fixing prices for cane or beet and sugar). This was, and still is, an experience present in the

“centrally planned” and the “market” economies. The liberalization and market reforms introduced

processes such as privatisation and deregulation, which became the cornerstone of the

restructuring process, in a more globalised economic environment. A very strong ideological

discourse accompanied the process of restructuring, which underlines the market forces as the

main influence to determine the allocation and use of production resources.2

2. Fundamental Aspects in the International Sugar Industry

2.1. Production

World sugar production grew from 73 million tonnes in the 1970/71 campaign to 136 million

tonnes estimated for the 2001/02 campaign, an increase of 63 million tonnes (86 percent) in the

thirty-year period. Table 1 “World Sugar Production by Regions” shows the contribution by each

region between 1970/71 and 2001/02. Some trends are clear: First, Asia and South America have

substantially increased their contribution from a combined 29.1 percent in 1970/71 to 54.4

percent in 2001/02. This expansion is significant in both absolute and relative terms: The regions

have a larger share of a larger pie. (Sugar statistics appear in the Appendixes.)

The “Asia region” is defined as the geographic area stretching west of the Middle East to Japan,

and from Mongolia in the north to Indonesia in the south. The International Sugar Organization

(ISO) lists over 40 countries in this region, comprising quite different situations. The main drives

behind the Asian growth are sugar giants such as India and China and the integration of relatively

new production areas (in the period) such as Thailand and, to a lesser extent and with somewhat

erratic behaviour, Pakistan.

2 Several sugar industries, still under state ownership, came to be examined based on their ability to produce higher returns, as privately run-profit seeking enterprises are, without much consideration to social and political aspects of the industry that, in some cases, outweigh the economic and financial considerations.

Page 7


Table 1 - World Sugar Production by Regions in percentage

1970/71 – 2001/02

1970/71 1975/76 1985/86 1995/96 2001/02

West Europe 15.8 17.0 18.3 15.1 13.6

East Europe 17.4 14.4 12.4 7.8 5.2

Africa 6.1 6.3 7.9 6.4 7.3 North & Central America 19.3 18.3 20.4 15.9 15.5

South America 12.8 13.3 12.5 17.1 21.8

Asia 16.3 18.5 24.0 32.9 32.6

Oceania 4.1 3.9 3.7 4.9 4.0

The South American experience is by far the Brazilian sugar industry, supported by an

increasingly efficient Colombian industry.

Brazil’s recent sugar history revolves around the national alcohol program or Proalcool, launched

in 1975, when the 1970s oil crisis hit record high prices. The main goal of Proalcool was to save

the country foreign exchange by replacing imported oil with ethanol (fuel alcohol) produced from

domestically grown sugar cane. The program received massive government support through

subsidies for cane growing and the establishing of new distilleries, and through the automobile

industry, which at a time produced cars running solely on ethanol. Because of Proalcool, the

Brazilian sugar and ethanol complex acquired high levels of technical efficiency, reaped the

benefits of the economies of scale, and achieved certain flexibility because of the possibility of

producing ethanol and sugar. The Brazilian alcohol and sugar complex has experienced several

readjustments and policy changes, including heavy criticism about the existence of Proalcool

itself, but it eventually allowed the Brazilian sugar and alcohol complex to become the single most

important factor influencing the stability of world sugar prices. During most of the 1980s and

1990s – and still today – most of the cane grown in Brazil goes to the production of ethanol

instead of sugar. In fact, people used to say, sugar was a by-product of ethanol.

West Europe and North and Central America (including the Caribbean) saw their contributions, in

the best of cases, at a static position. Together the regions accounted for 35.1 percent of the

world production in 1970/71 and 32.1 percent in 2001/ 02.

The Cuban sugar crisis explains most of the fall in the participation of North and Central America

in the world sugar production, a crisis that reached its climax in 2002 with the closure of 71 of the

country’s 156 mills. Other Caribbean islands (the Dominican Republic and Jamaica) also

experienced production problems, although the Caribbean decline was partially offset by the

increased production in Mexico and Guatemala.

The fall in sugar production in East Europe was dramatic, and the region lost 12 percentage

points (from 17.4 to 5.2 percent) in its share of the world sugar output during the period. The

region accelerated its fall in mid 1980s, in relation to the political and economic turmoil before and

after the collapse of the Soviet Union. Although production suffered in all countries in the region,

major production shortfalls took place in Russia and Ukraine. Chart 1 presents the contribution

from each region to the world total sugar production, as well as the trend of growth.

Page 8


Chart 1 - World Sugar Production by Regions

1970/71 - 1995/96 - 2001/02

-

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.0

45,000.0

1970/71 1995/96 2001/02

Year

1,000 tonnes, raw value

West Europe

N&C America

Asia

South America

Africa

Oceania

Trend: Asia

Trend: South America

Trend: N&C America

Trend: West Europe

Trend: Africa

Trend: Oceania

2.2. Consumption

Production and consumption move together, with the latter usually following the former. In the

period, as shown in Table 2, changes similar to those described in the case of production are

observed. The Asia region experienced an impressive growth in consumption, accounting for 39.0

percent of the world consumption in 2001/02, up from 23.3 percent in 1972/73. The process was

supported by some of the world’s largest sugar consumers such as India, China, Indonesia,

Pakistan and Japan, and the so-called newly industrialized countries in the 1970s and 1980s:

Hong Kong, Singapore, South Korea and Taiwan. Again, as noted with production, Asia accounts

for a bigger share of a bigger pie: In 1972/73, total world consumption was 78 million tonnes,

compared to 131 million tonnes in 2001/02.

West Europe’s share in world sugar consumption fell from 20 to 13.4 percent, while East Europe

fell from 19.6 percent to 11 percent. The latter figure is one more aspect of the general crisis that

followed the collapse of the Soviet Union.

Table 2 - World Sugar Consumption by Regions in percentage

1972/73 – 2001/02

1972/73 1975/76 1985/86 1995/96 2001/02

West Europe 20.0 18.7 15.5 14.2 13.4 East Europe 19.6 19.8 18.1 11.9 11.1 Africa 6.3 6.5 8.5 8.6 9.2 North & Central America 19.8 19.0 14.4 14.4 14.2 South America 9.9 11.6 11.1 11.9 12.1 Asia 23.3 23.2 31.4 38.0 39.0 Oceania 1.3 1.2 1.0 1.0 1.1

Page 9


The decline in the participation of North and Central America in world sugar consumption relates

to the introduction and consolidation of alternative sweeteners, especially the high fructose corn

syrup (HFCS) in the soft drink industry of the United States. For instance, Coca Cola and Pepsi

Cola decided in late 1984 to replace sugar (from beet and cane) with HFCS in their beverages. At

that moment, the two soft drink giants consumed about 1.7 million tonnes of sugar per year in the

U.S. alone. By the end of 1986, sugar industry analysts estimated that the consumption of HFCS

had replaced around 5 million tonnes of sugar per year in the U.S. only.

2.3. International Sugar Imports and Exports

The international sugar market has two main segments, the international “free market” and the

preferential markets, which will be discussed in a later section.

International sugar trade is expected to be a central issue in the current trade talks on agriculture

within the World Trade Organization (WTO), and is already under discussion in several regional

free trade agreements in place (COMESA, Mercosur, NAFTA, etc.) The implementation of freer

international trade in sugar faces some basic political aspects of the industry itself. On one side,

the industry involves the use of land and related resources (water, for instance), which in cane-

based industries tends to be a long-term venture. On the other, sugar – like few other crops –

carries an unusual high political content. This is because in many countries, sugar is a staple

food, its consumption sensitive to price changes, and governments tend to respond to organised

political pressure (lobbying) from growers and processors in support to the industry. In some

countries (European Union, United States), the political lobbying has resulted in the industry

being able to acquire and/or develop technology and gain efficiency in field and factory

operations. As this report is written, there is news that Brazil and Australia are ready to challenge

the EU sugar regime, on the basis that it allowed unfair advantages to EU sugar producers,

especially through export subsidies and by the re-exporting of imported sugar under preferential

trade arrangements. 3

2.3.1. Imports

Sugar imports are estimated at 39 million tonnes in the campaign 2001/02, with close to 40

percent imported into Asia. This new role of Asia, as importer, is the major change in sugar

imports in the past thirty years. Asia includes consistent importers such as China, Indonesia,

Japan, South Korea and Malaysia; and countries with somewhat erratic behaviour like Pakistan.

In the long-term, the region is expected to continue importing sugar, because no major

investments in production facilities have been realised.

3 Brazil and Australia did request a “dispute resolution,” the initial step in a formal challenge under the WTO, on 27 September 2002. India and Thailand said they would support the challenge, while the Caribbean countries and Fiji were the first to defend the privileges of the ACP countries under the ACP/European Union sugar arrangement.

Page 10


West Europe’s relative decline in imports is due to an increase in sugar production (the European

Economic Community was a net importer in the early 1970s). The growth in African imports,

reflect mainly the needs of countries north of the Sahara (Algeria, Egypt, Morocco) and of Nigeria.

Table 3 - World Sugar Imports by Regions in percentage

1972/73 – 2001/02

1972/73 1975/76 1985/86 1995/96 2001/02

West Europe 20.5 19.1 11.4 14.7 16.1

East Europe 14.1 20.3 23.0 19.4 19.4

Africa 7.4 7.5 11.9 13.5 14.2

North & Central America 28.0 25.5 12.0 10.6 8.6

South America 1.5 1.0 1.2 2.7 1.9

Asia 27.7 25.8 39.6 38.4 39.2

Oceania 0.8 0.9 0.8 0.7 0.6

2.3.2. Exports

Sugar exports in the 2001/02 campaign are estimated at 41.2 million tonnes, of which almost a

quarter originates in South America (i.e. Brazil) and a fifth in West Europe, mostly high-quality

refined sugar from the European Union.

Brazil has always had an industry key to the world sugar situation and continues to be a special

case in terms of volume and potential for development. Since the late 1980s, Brazil’s export

capacity has grown exponentially – driven by the Centre-South region – to the extent that the

country became the most important single factor in the determining the fate of international sugar

prices. In the late 1980s, Brazil exported 2.5 million tonnes per year; in 1999, it exported close to

12 million tonnes. In the current 2002/03 campaign, Brazil will export slightly over 10 million

tonnes. 4

The European Union (formerly the European Economic Community) was a net importer in the

early 1970s. Years later, after a very effective support from the Common Agricultural Policy

(CAP), the EU has become one of the world’s largest sugar exporter, consistently ranking among

the top three exporters. (In the 1970s, the EEC comprised only 6 countries; nowadays the EU has

15 country members; there are another 10 at different stages of their accession program.)

4 The structure of the international sugar trade has also changed in the past thirty years. In

addition to improved efficiencies in beet and cane growing and processing, and policy-related matters, there are external factors influencing the industry. Brazil is a good example. The ability of Brazilian sugar to penetrate new markets relates to its relative low costs and better quality (the “high polarization raw” over less purer raw sugar), in combination with cheaper freight, that lowers transportation costs, and the devaluation of the Brazilian currency that, although a transitory situation, makes Brazilian sugar cheaper in comparison to sugar from other origins. In January 1999, the Brazilian real stood at par with the U.S. dollar; at the moment of writing the exchange rate is BRL 3.12 = USD 1.00.

Page 11


Table 4 - Sugar Exports by Regions in percentage

1972/73 – 2001/02

1972/73 1975/76 1985/86 1995/96 2001/02

West Europe 11.7 13.2 20.4 17.0 20.2

East Europe 4.1 3.3 5.0 6.3 2.3

Africa 10.8 9.3 9.7 7.5 9.7 North & Central America 35.8 36.8 32.5 18.2 15.3

South America 16.5 9.2 11.1 17.8 25.8

Asia 11.7 17.8 10.9 20.5 17.0

Oceania 9.5 10.4 10.3 12.8 9.8

2.4. Preferential markets

A preferential market is an agreement that gives suppliers the opportunity to sell a certain volume

of sugar at premium prices and in long-term arrangements. Prices are usually above the “free

market” prices and closely linked to prices that domestic producers enjoy. At present, there are

only two of such arrangements: the European Union and the United States.

In the 1970-2002 period the most important change in preferential markets was the

disappearance of the Cuba-Soviet bloc trade agreement, with covered some 3 million tonnes of

sugar per year. The arrangement ended with the collapse of the Soviet Union and what is left are

some sugar-for-oil barter agreements based on international prices of the commodities.

Meanwhile, the existing preferential markets are under a growing pressure to reform. The

European Union still maintains a 25-year old agreement with the African, Caribbean and Pacific

(ACP) countries for the importation of 1.3 million tonnes of sugar (white value). Sugar prices in

this market fluctuate around US 21 cents per pound (depending on the value of the Euro against

the US dollar), which are related to prices paid to EU sugar producers. This amount of sugar is

known as Sugar Protocol (SP). In 1995, the EU introduced the Special Preferential Sugar

arrangement (SPS) to ensure raw sugar supplies to refineries in Portugal and Finland. The

amount of sugar under the SPS is negotiated annually and prices are about 85 percent of the

Sugar Protocol quotas. The SPS are in place until 2006, having been renewed in June 2001.

The EU-ACP sugar agreement, however, is under growing pressure because of several

developments. First is the process of reform of the Common Agricultural Policy (CAP) that

includes the domestic sugar regime. Second, the process of enlargement of the EU to include

Central and Eastern European Countries (CEECs) – some are sugar producers – and, third, the

trade initiative “Everything but Arms” (EBA), which grant duty- and quota-free access to the

European markets to products, including sugar, from the world’s 48 least developed countries

(LDCs). A related but secondary process is the free trade agreement with the Western Balkans.

Page 12


Table 5 – EU-ACP Sugar Protocol Quotas

(metric tons, white sugar equivalent)

Country Amount Country Amount

PR Congo 10,186.1 Barbados 50,312.4

Ivory Coast 10,186.1 Belize 40,348.8

Madagascar 10,760.0 Guyana 159,410.1

Malawi 20,824.4 Jamaica 118,696.0

Mauritius 491,030.5 St. Kitts-Nevis 15,590.9

Swaziland 117,844.5 Trinidad & Tobago 43,751.0

Tanzania 10,186.1 Fiji 165,348.3

Zimbabwe 30,224.8 India 10,000.0

Total Africa 701,242.5 Rest ACP + India 603,457.5

Total EU-ACP 1,304,700.0

The United States renewed (and improved) the protection to the domestic sugar industry in early

2002, when government passed the new Farm Act. The tariff-rate sugar quota (TRQ) in the

United States grants preferential treatment to 40 countries on 1.117 million tonnes of sugar (raw

value), at prices that fluctuate around US 18 cents per pound. The long-term future of this

arrangement is, at best, uncertain. On one hand, the U.S. sugar industry has a powerful lobby

that has shown more than once its ability to influence government policy. On the other, a

resolution to the 4-year old sugar and sweetener dispute between Mexico and the United States

under the North American Free Trade Agreement (NAFTA) might result in an unworkable system

to the current tariff-rate quota suppliers. A combination of the two may result in a drastic reduction

of preferential treatment to the traditional sugar suppliers under the TRQ.

Table 6 – United States. Tariff-rate Sugar Quota Fiscal Year 2003

(October – September, metric tonnes, raw value)

Country Volume Country Volume

Argentina 45,281 Congo 7,258 Australia 87,402 Cote d'Ivoire 7,258

Brazil 152,691 Gabon 7,258 Dominican Republic 185,335 Madagascar 7,258

Guatemala 50,546 Malawi 10,530 Philippines 142,160 Mauritius 12,636

Other 24 countries 334,184 Mozambique 13,690 South Africa 24,220

Swaziland 16,849 Zimbabwe 12,636

Total other countries 997,599 Total Africa 119,593

U.S. Tariff-rate quota 1,117,195

Page 13


2.5. International “free market” prices

The international “free market” price of sugar is considered as the most volatile of all prices of

basic commodities, mainly because the “residual” nature of the market and the composition of the

demand side. A “residual” nature of the market refers to the fact that several countries use the

international market to dispose their surpluses after having covered domestic consumption and

preferential markets. The latter two segments tend to cover fixed costs and producers are willing

to sell surpluses at lower prices. On the demand side, analysts have noted that, for several years,

industrialised countries have been the major sugar importers, who are consumers with a relatively

inelastic demand (i.e. they continue buying even when prices rise). This changed in the recent

past (as described in the section on consumers and importers) and developing countries, which

tend to respond quickly to price changes, have taken prominence on the demand side.

In the late 1990s, with the increase of refining capacity in the international sugar industry, in

particular due to the new refineries built in the Middle East, the demand for raw sugar is

increasing, reverting a trend that saw more refined sugar being traded over raw sugar.

The quality of sugar has also become an important factor in sugar trade, especially in reference

to the high polarization raw sugar from Brazil and smaller markets for specialty sugars.

Chart 2 shows the fluctuations of the sugar price in the past four decades, based on the yearly

average price as measured by the International Sugar Agreement (ISA).5 The 1970s were a

highly volatile period; it experience two dramatic situations. First, the boon prices of 1974/75,

when the monthly average ISA price reached a peak of US 56.14 per pound in November 1974

(daily spot prices were as high as US 66 cents per pound), and, second, the 1979/80 peak where

prices climbed to US 40.56 cents per pound in October 1980. However, deep valleys surrounded

the peaks: In November 1973 the ISA average price was US 10.14 cents per pound, immediately

before the 1974/75 peak and in June 1985, sugar prices dropped to US 2.78 cents per pound,

sugar’s lowest real price in modern history.

Analysis tend to say that after these dramatic fluctuations, international sugar prices have known

quieter times, moving in the range of US 7-15 cents per pound. They recognized, however, that

although it is effectively a narrower band than previously known, prices can vary greatly in

proportional terms.

5 The ISA Daily Price is the arithmetical average of the New York Coffee and Sugar Exchange Contract No 11 spot price and the London Daily Price, after conversion of the latter to U.S. cents per pound, fob and stowed Caribbean port in bulk. If the difference between the fob prices is more than ten points, five points are added to the lower of the two prices.

Page 14


Chart 2 - International Sugar Agreement (ISA) Prices 1960-2001

Raw Sugar Prices

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Year

US cents/lb

Page 15


II. The Sugar Industries in East and Southern Africa (1998-2002)

The African continent is a small player in the international sugar industry. Table 7 shows the

contribution of Africa to the world sugar economy in terms of production, consumption and

exports; all item are below 10 per cent, and only imports goes above 14.2 percent of the world

figures for 2001/02.6

Table 7 – African participation in the World Sugar Industry in percentage

1975/76 1985/86 1995/96 2001/02

Production 6.3 7.9 6.4 7.3

Consumption 6.5 8.5 8.6 9.2

Imports 7.5 11.9 13.5 14.2

Exports 9.3 9.7 7.5 9.7

The small size of the African industry, however, does not preclude the diversity in the

configuration of the industries. For instance, countries north of the Sahara are net importers

(Algeria, Morocco) but Egypt has a very complex industry that includes beet, cane and corn

sweeteners. Down south, South Africa and Swaziland, along with Zambia and Malawi, are

technically well-established industries of a high level of efficiency, which rank among the lowest

cost producers in the world – especially the latter two. In the same area, Mozambique is

rebuilding its industry after years of war and destruction. In the Indian Ocean, the sugar industry

of Mauritius has a peculiar configuration with 93 per cent of its arable land under cane and a

heavy dependence on the EU preferential market. (The Mauritian sugar industry has more in

common with the sugar industries in the Caribbean islands than with the industries in the African

continent.)

The sugar industries described in this section are those from Kenya, Uganda, Tanzania, Zambia,

Malawi, Swaziland, South Africa, Mozambique, Mauritius and Zimbabwe. This section gives an

overview of the most recent developments in the industries, against the larger international

background described in the previous section. There is an effort to group the industries according

to some common features, which might help identifying a basic approach for a trade union work

in the region.

6 Basic information on these and other African industries appeared in the 1997 study: The

African Sugar Industry: Situation and Outlook.

Page 16


3. Net Importers in East Africa: Kenya, Uganda and Tanzania

Sugar production in the three East Africa sugar industries (Kenya, Uganda, Tanzania) is below

consumption and the countries import sugar to cover their domestic needs. This places the

countries in a different position than the rest of industries dealt with in this report. All three

industries (especially Kenya and Uganda) have experienced harsh competition from sugar

imports under the COMESA regional trade agreement while their industries are in a process of

change.

In the three industries, the state has had an important participation until very recently. Tanzania

finalized a privatisation process in 2000/01; Uganda, after expelled Asian groups returned to the

country to take over previously owned businesses, is finalizing the privatisation of the industry

with the sale of the minority stake the government holds in different companies; and the state still

maintains a participation in all mills of the highly politicised industry of Kenya.

3.1. Kenya

The sugar industry in Kenya is highly politicised. On-going disputes involving most of the sugar

groups and the state, epitomized in the passing of a new Sugar Act in 2001, have marked the

past three years.

The Kenyan sugar industry has seven mills listed. Two of them, Miwani and Muhoroni, have been

under receivership since early 2001 and their future remains uncertain, even when Muhoroni

reopened in late 2001. Some sugar groups have called for their closure; some others, especially

cane growers, have demanded government support for their rehabilitation and reorganization,

which should include ending political interference and introducing (i.e. hiring) skilled professionals

for the managing of the mills, on the other.

Table 8 - Kenya: Sugar Balance 1993-2000

(tonnes, raw value)

Year Production Imports Exports Net Trade Consumption Ending Stocks

1993 414,378 69,000 0 (69,000) 608,720 426,307

1994 358,844 182,073 0 (182,073) 619,590 317,634 1995 417,577 118,360 26,853 (91,507) 510,000 316,718

1996 422,977 71,549 26,607 (44,942) 500,000 284,637

1997 436,336 56,678 26,956 (29,722) 525,000 225,695

1998 488,187 203,390 0 (203,390) 650,000 266,272 1999 512,262 62,660 0 (62,660) 662,412 178,782

2000 436,938 125,912 3,260 (122,652) 662,520 75,852

Source: International Sugar Organization, Yearbook 2000

The case of the Miwani and Muhoroni exemplified some of the basic challenges for the Kenya

sugar industry. In early 2001, when the government was considering placing both mills under

Page 17


receivership, cane grower and other sugar groups demanded from the Kenya Sugar Authority

(KSA) a clear explanation on the mills’ debt situation, which the KSA estimated at USD 26.9

million. The growers said that an investigation by the Kenya Sugarcane Growers Association

(KESGA) had found no proof of any monies transferred to the mills, as stated the KSA. The

denunciation went further when KESGA officials accused top industry officials of diverting funds

earmarked for the industry to other ends.

Kenya’ sugar industry is concentrated in the provinces of Western, Nyanza and Rift Valley; there

are some 135,000 cane growers – around 100,000 of them in Western –, who constitute an

important political force. Cane growers are usually organized in outgrower associations, which,

although designed to represent them before the miller, they seem to have become an end in

themselves and nowadays negotiate with the growers as an independent organization. Some of

these outgrower associations are quite powerful in political terms, like in the case of the Mumias

Outgrowers Co. (MOCO): there are some 70,000 farmers supplying cane to Mumias. Such

political weigh was indeed a major force in the passing of the Sugar Act in April 2002. 7

Among the several matters dealt with in the Sugar Act of 2002, two important factors directly

relate to the miller-farmer relations. The first is that the cane would be paid according to quality or

sucrose content, within 30 days of its delivery to the mill. In the sugar industry, it is generally

accepted that payments based on quality are more objective that payments based of weigh. The

challenge, however, is whether the industry has the tools and expertise to implement the new

system and if cane growers have the means to improve the quality of their cane.

A second and controversial measure is that weighing of cane would be done in the fields. This

aims at avoiding significant losses to farmers due to spillage during cane transportation, and to

transfer on to the millers some of the costs of harvesting and transporting the cane. Some basic

questions are still to be resolved, such like the technical aspects of actually weighing cane in the

fields, which requires portable weigh bridges, the new costs involved in acquiring such bridges

and moving them around and, of course. coordinating harvesting operations in several locations.

The Sugar Act created the Kenya Sugar Board (KSB) to replace the Kenya Sugar Authority

(KSA). The new 14-member KSB has a strong representation of cane farmers, who elect seven

representatives; millers elect three representatives, and another four are government officials.

There is no representative of workers and unions. The main objectives of the new KSB are to

regulate and promote the industry, and coordinate activities among the industry’s stakeholders.

Some more specific responsibilities of the KSB are to develop research, monitor domestic

markets, facilitate exports, facilitate a mechanism for fixing cane prices, collect and maintain

statistical information and, also, regulating production through licensing mills and “jaggeries”

(non-centrifugal sugar). The KSB will be financed with resources from the national budget – as

7 The information on the Sugar Act here presented refers to the 2001 proposal. After the Act was passed in April 2002, there was news that amendments had been introduced but it was not possible for this writer to identify the changes. The Nairobi-based The Nation said on 5 September 2002 that the Kenya Sugar Board wants to clarify some of the new rules in the Sugar Act and wants new arrangements between farmers, outgrower institutions and millers. Among the issues to be decided are the terms and conditions of cane harvesting and the production and transportation of cane and sugar. A key matter to agree on is a formula to determine cane prices. The newspaper reported that Chemelil, a mill, adopted a new system of cane payments based on (sugar) market prices. The system, the company claims, is in line with “international standards.” At present, with the new system farmers will receive less than the fixed cane price.

Page 18


decided by Parliament – mostly through a levy on domestic and imported sugar (the Sugar

Development Levy) and funds provided by bilateral or multilateral donors.

The passing of the Sugar Act was not a success. Even before its publication in the official

gazette, the minister of agriculture said that the Act was flawed and should be returned to

Parliament for revision. The political weigh of the industry appeared quickly when several

politicians threatened to “mobilize” the farmers to pressure the millers to introduce the regulations

of the Act. At the time of writing (August 2002), news from Kenya still talks about disputes

between millers and farmers on the regulations contained in the new Act.

The new Sugar Act appears as one episode in a series of sugar policy difficulties, among which,

sugar imports have played a prominent role following the introduction of the free trade within

COMESA in October 2000. Since January 2001, quite inexpensive sugar imports flooded the

Kenyan domestic market. News said that sugar imports sold at USD 310 per tonne, compared to

a reported domestic cost of production of USD 625 per tonne. Not surprisingly, millers

complained they were unable to sell about 20 percent of their sugar production.

The problems around imported sugar from COMESA have two distinct aspects. One relates to

the process of COMESA that decided that a free trade area would be in force in East and

Southern Africa by January 2001. Although announced several years in advance, the sugar

industries (and governments) in the region were not ready to implement the free trade area

agreement. The second aspect relates to the so-called “rules of origin.” There were several

complains that a good portion of the supposedly COMESA sugar did not originate within

COMESA but was imported from third countries, like Brazil and Thailand.

After a year of significant imports – and endless complains by millers –, the government decided

to introduce a 200,000-tonne duty-free quota on COMESA sugar in February 2002. The decision

was taken ostensibly to protect the domestic industry from unfair competition and was negotiated

with COMESA. It is based on what is statistically Kenya’s yearly sugar deficit: roughly a

consumption of 600,000 tonnes against production of 450,000 tonnes. The sugar quota will be in

place for one year (until early 2003). All sugar imported outside quota will pay a 100 percent tariff.

In a related process, the government said in January 2000 it would float twenty-five percent share

of the Mumias Sugar Company on the Nairobi Stock Exchange. The government holds 71

percent stake in the company, which owns the largest sugar mill in the country. The government

said it had plans to sell 20 percent share of the company to cane growers and 5 percent to

workers and would retain 21 percent share. (The government was also willing to hold in trust the

25 percent destined to growers and workers, if they did not have the financial resources to

acquire the shares at that moment.) The privatisation of Mumias was announced in mid 1990s, in

response to proposals from the World Bank and the International Monetary Fund to privatise

state-owned enterprises. Mumias Sugar is management by the multinational Booker Tate.

At the moment of writing, the future of Miwani and Muhoroni has not yet been decided. There is

news that the Sudanese Kenana Sugar, a company in an expansion mode, is interested in

acquiring ownership in the companies or working a joint venture agreement with the government.

3.2. Uganda

Following years of war and destruction in the 1970s and 1980s, sugar production in Uganda

collapsed from an annual average of 160,000 tonnes to less than 20,000 in the early 1980s. The

Page 19


sugar industry suffered badly and lost expertise when the Idi Amin dictatorship expelled Ugandan

population of Asian background, mainly of Indian descent. A long-term rebuilding of the industry

began in mid 1980s, when the government invited some of the expelled Asians to return and take

back their previously owned businesses, among them, the sugar industry.

The sugar industry in Uganda comprises three companies; Kakira Sugar Works, the Sugar

Corporation of Uganda Limited (SCOUL) and Kinyara Sugar Works. They employ some 21,000

workers and there are several thousands of cane growers. In the 1990s, production has been

steadily recovering to the pre-1970s levels, and sugar groups are optimistic that production may

easily increase due to new investments and expansion plans. In 2001, production was 135,000

tonnes; in 2002, it may reach 150,000 tonnes.

Table 9 - Uganda: Sugar Balance 1993-2000

(tonnes, raw value)


1993 54,000 1,000 0 (1,000) 55,000 36,306

1994 48,000 15,249 0 (15,249) 65,000 34,555

1995 76,000 39,844 0 (39,844) 100,000 50,399

1996 109,000 6,377 0 (6,377) 100,000 65,776 1997 145,000 10,172 0 (10,172) 150,000 70,948

1998 111,000 6,734 0 (6,734) 150,000 38,682

1999 137,000 4,700 0 (4,700) 150,000 30,382

2000 130,000 27,594 0 (27,594) 155,000 32,976


In 1998, the government announced the privatisation of Kakira and Kinyara, having SCOUL been

reopened in 1988 under the control of the Metha Group, the previous owners.

Kakira Sugar Works is the largest of the three mills. The Madhvani Group, the previous owners,

acquired complete ownership of Kakira in July 2000 after buying a 30 percent stake owned by the

government. (The East African Holdings Ltd. (EAH), a subsidiary of the Madhvani Group,

completed the transaction.) Kakira accounts for about half of the national sugar production and

has expansion plants, including the development of a 1,200-hectare plantation in Butamira, a

man-made reserve forest.

The Butamira case is an interesting example of the situation of the Ugandan sugar industry. It

describes the possibility for increasing production, but also the type of working relationship

between the sugar groups.

The government had given Kakira a 50-year lease on the forest reserve, where the company had

planed to develop a 1,000-hectare sugar plantation – from the 1,200 hectares available. These

plans would allow the company to pursue its objective of increasing annual production to 100,000

tonnes of sugar by 2004, from the current 60,000 tonnes. (At present Kakira owns 7,600 hectares

under cane and independent farmers grow another 7,100 hectares.)

Page 20


The Muljibhai Madhvani & Co. Ltd. (MMCL) had a 49-year lease on the Butamira reserve issued

in 1949 and, for several years, the reserve was a source of firewood (energy) for the factory. In

1995, Kakira’s factory switched to bagasse as energy source. When the original Butamira lease

expired in 1998, a new lease was extended on a “general purpose” basis, which Kakira used to

propose transforming the forest reserve into a sugar cane plantation.

Kakira expansion plans met with the resistance of local and community groups that, in recent

years, had had permits to grow eucalyptus trees for firewood as well as other crops. There are 16

villages near the Butamira reserve, with a population of 8,000 people. As part of the project, the

government offered to relocate some of the population and compensate those using the reserve

for firewood. In March 2002, Parliament voted in favour of giving Kakira Sugar Works the right to

develop a cane plantation in Butamira. It was said the program would create 600 new jobs.

One aspect of Kakira expansion plans was the growing uncertainty among cane farmers

(“outgrowers”) about their working relationship with Kakira, which, by accident, was witnessed by

the IUF delegation visiting Kakira in March 2002. Representatives of the Bugosa outgrowers

association complained that the mill was not buying enough cane from them and feared their

situation might become more precarious were the mill to expand its own plantation.8 In July 2002,

there was news that around 1,000 outgrowers and “dozens of unregistered jaggeries” were

considering setting up an independent mill to process their cane. According to the groups, the

new mill would successfully compete with Kakira.

Kinyara Sugar Works, the second largest sugar company, was listed again for privatisation in

early 2002, along with other 38 state-owned companies. The proposal was to privatise it through

floating the company shares on the stock exchange, instead of following an earlier idea of selling

a 70 percent stake to a single investor. Kinyara shares would be listed on the stock exchange

before the end of 2002.

Kinyara produces about 50,000 tonnes of sugar per year, processing cane from a 7,800-hectare

plantation and some 3,000 hectares from outgrowers. Kinyara has a good possibility to increase

production to 75,000 tonnes in the next 5 to 10 years, and to 150,000 tonnes in the longer run.

Since 1991, Booker Tate has a management contract in Kinyara and appears interested in

acquiring a controlling majority when the company is privatised.

The Metha Family runs the Sugar Corporation of Uganda (SCOUL), the third company in the

country, since the late 1980s. The government announced it would sell the 30 percent stake it

holds in the company.

Uganda as a net sugar importer has experienced trade problems in ways similar to Kenya. In

2002, Uganda has seen an influx of imported sugar, which, according to domestic producers is

smuggled sugar but also undeclared sugar that pays no import duties. The difficulties to apply

import regulations resurfaced in figures quoted by the International Sugar Organization: 20,000

tonnes imported from “unknown” origins only in 2000. In 2001 and 2002, Uganda’s sugar industry

faced stiff competition from these sugars (smuggled and undeclared), which sell at a 10 to 15

percent discount on domestically produced sugar. Illegal trade also flows out of the country,

8 Management of the mill complained that in 2001 the outgrowers chose to sell their cane to the “jaggeries” (non-centrifugal sugar) because payments were on the spot and in cash, and, as a result, the mill had experienced cane shortages. Besides, management said, outgrowers were using funds made available by the mill for cane growing for other purposes.

Page 21


towards Kenya. In September 2000, the Ugandan newspaper The Monitor wrote: “Fleets of

bicycles and trucks loaded with sugar cross the border points (at Busia and Malaba) daily.”

3.3. Tanzania

Quite recently, the sugar industry in Tanzania finished a privatisation process that started in 1998.

The five sugar factories owned by the government: Kilombero (with Ruembe and Msolwa),

Tanganyika Planting Co. (Moshi), Mtibwa and Kagera were transferred to the private sector, in a

process that has opened several lines of future developments. Kilombero was acquired by the

South Africa-based Illovo Sugar in 1998, Mtibwa and Kagera were bought by a local group, and

TPC’s Moshi was acquired by a Mauritian group in 2000. (Incidentally, Mtibwa is managed by

Mauritius-trained staff.)

The shape the Tanzanian industry is taking has close links to the corporate developments in the

rest of the African region. One is the participation of Illovo Sugar, the largest sugar producer in

Africa; the other is to be at the receiving end of the exportation of Mauritian sugar capital and

expertise to the continent. This is clear in three of the five privatised mills.

The Tanganyika Planting Co. was acquired by the Sucrerie des Mascarareignes Ltd., where the

main shareholders are the Deep River Beau Champ from Mauritius (60 percent shares), and

Quartier Francais from the Reunion Island (40 percent). In a later deal the Consolidated

Investment Enterprise Ltd. (CIEL) of Mauritius and a bank consortium led by Barclays Bank

agreed to a USD 15 million rehabilitation program for the company, which plans to increase

production from 40,000 tonnes in 2001 to 72,000 tonnes by 2006. The TPC was nationalized in

1979 and privatised in 2000.

The acquisition of Kilombero Sugar by Illovo more clearly inserts the Tanzanian industry in a

regional corporate strategy including some, apparently, new labour practices. 9

In early June some 3,000 workers of the Kilombero Sugar Company (KSC) went on strike

demanding the reinstatement of 61 workers who had been dismissed without respecting existing

labour laws on retrenchment, including failing to pay them their severance package. The case

highlighted the job security issue, which was under threat because of the privatisation and

restructuring process. The strike lasted for about four weeks. In early July, in a move to appease

Illovo Sugar, the Tanzanian government cancelled all 3,000 workers at Kilombero and paid their

severance benefits. Illovo was then free to decide on its new labour and industrial relations, which

included a drastic reduction of personal (from 3,000 to about 900 workers) and contracting out

(“outsourcing”) several work areas. (For instance, Illovo contracted out the cane loading and

hauling operations to Unitrans Tanzania Ltd. Murray & Roberts, owner of Booker Tate, has a

substantial interest in Unitrans, the parent company of Unitrans Tanzania.). Interestingly enough,

as to show some of the business style, Illovo had complained that smuggled sugar and the

workers’ strike had had a negative impact on its business, and had threatened to leave the

country.

9 Illovo Sugar had been until 1997, a company with South African concerns. In 1997, it acquired Lonhro plc and expanded interests to Malawi, Swaziland and Mauritius. In 2001, it sold its Mauritian concerns and bought Zambia Sugar from Tate & Lyle, having invested already in Maragra (Mozambique) and Kilombero (Tanzania).

Page 22


Table 10 – Tanzania: Sugar Balance 1993-2000

(tonnes, raw value)


1993 120,000 36,000 11,000 (25,000) 120,000 80,929

1994 130,000 25,467 105,871 80,404 115,000 15,525

1995 110,000 47,935 11,272 (36,663) 120,000 42,188 1996 100,000 70,826 12,806 (58,020) 160,000 40,208

1997 84,455 127,507 13,358 (114,149) 175,000 63,812

1998 110,200 128,807 22,121 (106,686) 200,000 80,698

1999 113,622 56,340 12,860 (43,480) 200,000 37,800 2000 130,000 88,583 17,375 (71,208) 207,500 31,508


As a net sugar importer, Tanzania suffers similar trade problems as Kenya and Uganda. One is

the illegal trade and irregular, or at best, lax import regulations, the other, being close to some of

the lowest cost producers in the world. Because Tanzania left COMESA in September 2000,

these trade-related difficulties are somehow independent from a regional free trade agreement

and could shed some light on the kind of trade structure and channels in the region.

For some years, illegal trade and smuggling of sugar through several ports on Indian Ocean have

been a major problem, not only for sugar but also for the economy in general. Until 2000 Zanzibar

and 30 other smaller ports were major entry points of smuggled sugar, but then the Tanzania

Revenue Authority (TRA) restricted sugar importation to three ports: Dar-es-Salaam, Tanga and

Mtwapa. The move, according to local producers, stemmed the use of Zanzibar as a channel for

illegal sugar.

In 2001, Tanzania experienced another set problem common to several countries in the region:

the weak enforcement of policies and regulations on imports. In May 2001, the minister of

industry and commerce authorised the importation of some 100,000 tonnes, in a decision that

quickly became a political scandal, when it was known that authorisations have been made

without proper procedure. The minister resigned in November 2001.

In September 2001, all millers (Kilombero, Mtibwa and TPC) said they would have to temporarily

stop operations if sugar imports continued. According to the groups, illegal sugar flooding the

domestic market made competition impossible. According Kilombero officials, for instance, the

domestic cost of production was about USD 28 cents per pound in 2000. This was almost 2.5

times the average international “free market” price for the whole 2000 (and almost 4.5 times the

average international price for the month of June 2002). These figures support the other side of

the dispute: According to sugar users domestic prices are too high in comparison to sugar

available in the international free market.

Page 23


4. Deep Inside Illovo’s World: Zambia and Malawi

Although Illovo Sugar is present in several countries in the region, Zambia and Malawi are special

cases in Illovo’s world. The countries rank among the lowest cost producers in the world, and

Illovo, through its subsidiaries, completely dominate the industries, where it is the only cane

processing company. Both countries are net exporters; they benefit from access to preferential

markets in the European Union (EU) and the United States and considered part of the world’s 48

least developed countries (LDCs) able to benefit from EU’s trade initiative “Everything but

Arms”.10

4.1. Zambia

The most important event in recent years was the acquisition of Zambia Sugar by Illovo Sugar

between February and May 2001. Illovo first bought 50.87 percent share from Tate & Lyle for

USD 11.4 million, and then made the same offer to minority holders of Zambia Sugar, boosting its

ownership to close to 89 percent. Zambia Sugar has an 11,000-hectare plantation, a mill of 8,000

tonnes of daily processing capacity, and a refinery. There are close to 3,000 workers, including

permanent and seasonal.

Table 11 – Zambia: Sugar Balance 1993-2000

(tonnes, raw value)


1993 146,598 0 50,854 50,854 86,390 169,475 1994 150,000 124 45,000 44,876 105,000 169,599 1995 150,504 0 68,531 68,531 152,044 99,528 1996 166,449 0 74,572 74,572 154,261 37,144 1997 174,024 2,470 62,671 60,201 73,909 77,048 1998 172,600 2,564 86,800 84,236 85,000 80,412 1999 210,000 20 3,495 3,475 115,000 171,937

2000 190,000 4,438 47,191 42,753 145,000 174,184


Table 12 – Zambia Sugar Exports 1997- 2000

(tonnes, raw value)

2000 1999 1998 1997

10 The “Everything but Arms” initiative, passed in February 2001, grants duty- and quota-free access to European Union’s markets to all products, including sugar, from the world’s 48 LDCs. The free trade in sugar will be in place in 2009, following the phase-out of import tariffs in 2006-2008, which combines with a sugar quota for the LDCs in 2001-2008.

Page 24


European Union 46,946 3,195 12,826 12,826

Congo Rep. of 0 0 56,460 45,567

Others 245 216 17,514 4,278

Total 47,191 3,495 86,800 62,671


In late 1990s, there was news that the Luena Sugar Project in Luapula Province, was again under

study. The project would include a 12,000-hectare sugar plantation, located 60 km south of

Kawambwa; a sugar factory with a production capacity of 130,000 tonnes per year and a distillery

with 109 million litres of alcohol per year. There would be some 5,000-cane outgrowers supplying

cane, and over 4,000 jobs created for permanent and seasonal workers. In 1999, a Pakistani

group of companies expressed interest in participating in the project. (The project was initially

identified in 1975.)

In June 2002, the Indian Sugar & General Engineering Corporation (ISGEC) from India

announced it had signed a USD 5 million contract to provide machinery for an integrated sugar

plant near Lusaka. The plant includes the cogeneration of electricity from bagasse. Local sources

reported that the plant belonged to Consolidated Farming Limited, a subsidiary of the Sable

Group Zambia. Construction works would start in April 2003.

4.2. Malawi

Illovo acquired the only two mills in Malawi, Nchalo and Dwangwa, in 1997, as part of the

transaction to buy Lonhro plc, then a major player in the sugar regional industry. The Sugar

Company of Malawi (Sucoma), run the Nchalo mill and Illovo holds 60 percent of the shares, with

the balance held by the government and institutional and private investors. The Dwangwa Sugar

Corp. runs the Dwangwa mill. From their total annual production of 208,000 tonnes of sugar,

some 126,000 tonnes go to the domestic market and the balance in the preferential markets in

the European Union and the United States.

The crisis in Zimbabwe recently provoked further trade distortions. In October 2001, Sucoma

complained that the Zimbabwe crisis allowed traders to buy inexpensive Zimbabwe sugar and sell

it in the Malawi domestic market. In mid 2002, the government established a new import licensing

system, making Sucoma and other traders, who previously sourced their sugar from Sucoma, the

only authorised importers.

Table 13 - Malawi: Sugar Balance 1993-2000

(tonnes, raw value)


1993 137,010 0 26,636 26,636 161,885 50,203

1994 213,155 12,722 43,216 30,494 148,593 87,271

1995 241,331 0 64,729 64,729 164,025 99,848

1996 233,759 0 57,127 57,127 173,366 103,114

1997 209,720 1,563 51,406 49,843 177,684 85,307

1998 209,705 15,151 67,224 52,073 158,313 84,626

Page 25


1999 187,392 0 47,395 47,395 137,195 87,428

2000 208,804 4,725 64,890 60,165 126,644 109,423


Table 14 – Malawi Sugar Exports 1997- 2000

(tonnes, raw value)

2000 1999 1998 1997

European Union 19,923 36,807 67,224 21,695

Portugal 19,362 0 0 0

United States 10,496 10,588 0 0 Kenya 6,184 0 0 0

Unknown 0 0 0 26,395

Others 8,925 0 0 3,316

Total 64,890 47,395 67,224 51,406


Another interesting feature for a small sugar industry are capital-raising strategies through the

stock exchange. Sucoma was incorporated in 1965 and publicly listed in 1997, when it sold

shares to domestic investors. In April 1998 also sold shares to foreign investors. In July 2002,

Sucoma’s shareholders approved a proposal to raise USD 2.4 million through issuing new stock,

which would be offered in September 2002. (The episode has other aspects as well, such as the

investors’ expected returns and the pressure they exert on the company to reduce costs and

increased profits.)

5. Swaziland

The Swazi industry is a well-established industry with three factories and two companies. In 2002,

Mhlume Sugar Company and Simunye Sugar Estate merged their operations. Mhlume has a mill

with a 7,000 tdc and Simunye a 7,200 tdc mill and a refinery. Simunye was planning to increase

its ethanol production, aiming at the U.S. market, in particular California. Production from Mhlume

and Simunye is estimated at 300,000 tonnes of sugar in 2001/02. The other company is Ubombo

Ranches with a production of 220,000 tonnes of sugar in an 8,400 tdc mill and a refinery of 500

tdc. Ubombo is a subsidiary of Illovo Sugar, which controls 60 percent of the company while the

Tibiyo Taka Ngwane holds the other 40 percent on behalf of the Swazi government.

The two processing companies produce about 60 percent of the cane. The remaining of the cane

is grown by four large growers with over 1,000 hectares of land each (including Tongaat-Hulett’s

Tambankulu plantation), 30 medium-size growers (50-100 h) and around 350 small-scale growers

(less than 50 h). (USDA FAS Report, August 2002.)

Page 26


Table 15 - Swaziland: Sugar Balance 1993-2000

(tonnes, raw value)


1993 458,327 0 363,281 363,281 103,328 186,009

1994 473,809 6,956 266,746 259,790 141,005 259,023

1995 418,969 0 275,204 275,204 174,009 228,779

1996 458,299 0 241,306 241,306 188,350 257,422

1997 457,437 0 229,274 229,274 186,918 298,667

1998 537,096 0 256,527 256,527 249,500 329,736

1999 571,051 0 215,609 215,609 275,105 410,073

2000 552,979 0 339,298 339,298 245,808 377,946


The country’s entire sugar production is marketed through the Swaziland Sugar Association, with

some 50 percent going to the Southern African Custom Union (SACU), 33 percent to the

European Union and the United States and 17 percent to regional and world markets.

A note on Swaziland’s statistics is the apparent anomaly in the per capita annual sugar

consumption, which the highest in the world at 245.8 kilograms or 12 times the world average of

20.7 kilos. This probably relates to non-documented sales to South Africa and the Southern

African Customs Union (SACU). In February 1998, the USDA reported, South Africa and

Swaziland agreed that Swazi exports to SACU would not exceed a certain undisclosed volume;

volume that international sources believe set at 260,000 tonnes of sugar per year. Local sources

provide some other information, for instance, that the food industry uses most of the sugar in

export products (fruit juices, confectionary, etc.), which mainly go to South Africa.

Table 16 – Swaziland Sugar Exports 1997- 2000

(tonnes, raw value)

2000 1999 1998 1997

European Union 181,637 169,493 216,519 178,706

Iran 21,086 0 0 0

Malaysia 24,354 0 0 0

Russian Fed. 45,648 0 0 0

Saudi Arabia 23,195 0 0 0

United States 34,022 17,655 3,350 27,641

Others 30,442 28,461 36,658 22,927

Total 339,298 215,609 256,527 229,274


Page 27


6. South Africa

Established in the second half of the 1800s, the South African sugar industry is the largest in

Africa and ranks among the world’s largest cane sugar producers. It is considered a low-cost

sugar producer of high quality raw and refined sugars. Main sugar cane producing areas are the

KwaZulu-Natal province and the eastern region of the Mpumalanga province. The cane is

processed in fifteen mills; five of them have refineries attached, and there is a stand-alone

refinery in Durban. Ownership of the factory facilities is concentrated in two groups: Illovo Sugar

and Tongaat-Hulett, with Transvaal Sugar being a small partner in the industry.

Table 17 - South Africa: Sugar Balance 1993-2000

(tonnes, raw value)


1993 1,282,157 61,676 51,562 (10,114) 1,302,632 1,135,335

1994 1,777,253 53,801 318,097 264,296 1,479,995 1,168,297

1995 1,731,604 44,198 389,780 345,582 1,381,357 1,172,962

1996 2,470,622 0 971,767 971,767 1,330,444 1,341,373

1997 2,419,427 0 984,204 984,204 1,656,086 1,120,510 1998 2,984,892 0 1,087,088 1,087,088 1,366,806 1,651,508

1999 2,546,886 0 996,029 996,029 1,222,870 1,979,485

2000 2,690,741 0 1,291,110 1,291,110 1,296,167 2,082,959


In mid 2000, Tongaat Hulett Group launched a bid to acquire Transvaal Sugar Ltd. for USD 161

million from the Rembrandt Group, attempting to consolidate its position in the industry, but the

Competition Commission stop the transaction. Tongaat wanted to add the 500,000-tonne sugar

business of Transvaal to its current 1.7 million tonnes production. In what might affect the future

corporate scene, Anglo American, parent company of Tongaat, has expressed its interest of

divesting its sugar concerns, which besides Tongaat also includes Hippo Valley in Zimbabwe.

Cane growers in South Africa or “independent estate growers,” are predominantly white farmers

who use hired labour. The grower-miller relations have been regulated since the 1930s. Small-

scale growers, a recent feature of the industry, are usually black farmers who have been

encouraged by government policies, companies (Illovo, Tongaat) and the South African Sugar

Association (SASA) to become cane growers. They are about 48,000 black cane farmers. In

1996, both Illovo and Tongaat-Hulett started a project to sell medium-sized cane farms to black

growers who also employ waged labour.

South Africa is one of the world’s top ten sugar exporters, with annual exports around 1.2 million

tonnes. As seen in Table 18, South Africa exports to over twenty destinations in any given year,

including other African countries. Since the late 1990s, new investments built new and large

refining capacity in the Middle East (mainly Saudi Arabia), in a process that continues today.

South Africa is well positioned to supply raw sugar to the new refineries.

Page 28


Table 18 - South Africa - Exports 1997-2000

(tonnes, raw value)

2000 1999 1998 1997

Iran 157,572 64,614 235,000 101,909

Japan 215,268 165,221 226,000 121,364

Korea 128,782 129,635 162840 135,600

Persian Gulf 122,904 40,000 0 0

Saudi Arabia 102,450 40,000 30,000 77,201

United States 4,626 0 69,922 34,793

Unknown 273,843 112,459 0 193,256

Angola 5,796 4,922 3,966 2,174 Kenya 32,108 22,602 40,539 0 Mauritius 21,821 13,770 38,714 36,584 Mozambique 9,056 18,759 10,382 0

Nigeria 30,200 0 0 0 Tanzania 13,155 18,259 21,093 0

Others 173,529 365,788 248,632 281,323

Total 1,291,110 996,029 1,087,088 984,204


7. Mozambique: On a Recovery Path

Probably the most interesting case of rehabilitation of a sugar industry in Africa takes place in

Mozambique. The civil war in 1977-1992 practically destroyed the industry; production collapsed

from an annual average of 325,000 tonnes to less than 30,000 tonnes; expertise and capital were

lost; the number of jobs plummeted from 45,000 to only a few thousand workers.

After years of negotiations, the government was able to put together a rehabilitation program in

the mid 1990s, expecting to attract some USD 330 million to the industry. South African and

Mauritian companies are now involved in the rehabilitation of four of the country’s six sugar mills.

The Sena Sugar Estates (Marromeu mill) is under a Mauritian consortium, which comprises the

Espitaler Noel Group, the WEAL Group (through its subsidiary FLACQ) and the Mon Loisir

Group, in addition to the Mozambican state.

Illovo Sugar controls the Maragra mill, where it invested USD 70 million in a rehabilitation

program. The mill resumed operations in October 1999, after fifteen years of inactivity. The

factory has 4,000 tonnes of daily processing capacity (built in 1969) and processes cane grown in

6,600 hectares of irrigated land on the valley of the Incomati River, about 75 km north of Maputo.

At its 1972 production peak, the mill reached 44,100 tonnes of raw sugar. In the campaign of

1999, it produced 6,000 tonnes of sugar and, then, the flooding of 2001 frustrated plans to bring

production to 70,000 tonnes in 2002. There are some 2,500 workers in Maragra’s fields and

factory.

After managing the Mafambisse mill for three years, Tongaat-Hulett exercised an option to buy 75

percent share in the mill in 2000, and became the largest sugar producing company in

Page 29


Mozambique. Tongaat-Hulett also increased its stake to 49 percent in the Xinavane mill and

estates, where still maintains an option to buy a further 11 percent.

With the sugar rehabilitation projects in place, torrential rains and flooding hit the country. In early

2000, a great portion of the Mafambisse area in the Sofala province was under water and the

Mafambisse mill stop processing. The Marromeu area in the Zambezi Valley, which supplies cane

to the Marromeu mill, suffered a similar experience. In the Manica province, where Maragra is

located, cane fields were devastated: Water levels rose to seven metres. According to

eyewitnesses, the flooding left no single cane stalk standing in Maragra fields. Rains and

flooding, at a smaller scale, repeated in 2001.

Even though climate-related factors hampered the recovery program, the industry came back on

track in 2001, with further production increases in 2002. According to the Ministry of Agriculture,

total sugar production in 2000 was 39,035 tonnes; it rose to 67,269 in 2001 (despite the flooding).

In calendar 2002, production estimates are at 219,785 tonnes, based on the evident recovery of

cane fields. The perspective in the immediate future is to reach 325,000 tonnes.11

As a sign of the times to come, Mozambique became the first least developed country (LDC) to

benefit from the “Everything but Arms” (EBA) trade initiative by the European Union, with reports

that the Sena Sugar Estates (Marromeu mill) shipped some 8,300 tonnes raw sugar under an

EBA quota in early 2002.

8. Mauritius: A Caribbean-like island in the Indian Ocean

Sugar continues to play a crucial role in Mauritius, accounting for about 6 percent of the Gross

Domestic Product (GDP), 20 percent of export earnings and 93 percent of the arable land in the

island is under cane. If the dependency on international markets and the social, political and

economic configuration of the Mauritian industry are added to the features mentioned, the

industry has more aspects in common with the Caribbean islands than with the rest of the

industries in the African continent.

In June 2001, the government announced a strategic plan for the sugar industry. Several factors

coincided in pressing the industry and the government for such strategic plan: a poor campaign in

1999 (due to drought and cyclones), the fall in export revenues because of the decline of the

Euro, the growing uncertainty about the future of the preferential market in the European Union

(EU), and general changes in the international industry.

The 2001-2005 strategic plan proposed, among others, the following goals:

11 During a visit to Maragra in June 2002, it was clear for this writer to see that production was on

an ascending curve. Company staff said that in 2001, even though production increased, the company had processed “out-of-cycle” cane (i.e. very young) because the flooding had disrupted the growing and processing cycles. They expected in late 2002 and 2003 production would take place at a proper rhythm; the company would process cane of better quality and increase output.

Page 30


• Reducing the cost of production from USD 18 cents per pound to 14 cents in 2001-2005,

with a further reduction to 10-12 cents per pound by 2008.

• Consolidating production by reducing the number of mills from 14 to 7 or 8 by 2005, with

factories able to produce more than 100,000 tonnes of sugar on a 150-day harvest.

• Introducing mechanical harvesting in a substantial portion of suitable lands.

• Developing projects of co-generation of electricity using bagasse.

• Reducing the labour force through a Voluntary Retirement Scheme (VRS).

A mid-term review, by the end of 2003, would propose corrective or new measures for the

remaining of the 2001-2005 strategic plan.

Table 19 - Mauritius: Sugar Balance 1993-2000

(tonnes, raw value)


1993 603,957 0 575,460 575,460 39,380 253,367 1994 530,223 0 551,543 551,543 39,366 192,681

1995 571,515 21,636 554,887 533,251 39,399 191,546 1996 623,880 33,650 649,253 615,603 40,341 159,482

1997 658,445 41,210 610,289 569,079 42,132 206,716 1998 666,841 41,434 638,694 597,260 42,683 233,614

1999 395,691 38,814 565,978 527,164 42,356 59,785 2000 603,561 41,743 449,836 408,093 41,527 213,726


As happens in the sugar industries of the Caribbean, the restructuring – to ostensible make the

industry more efficient – has two aspects: the consolidation of production (closing down facilities)

and the reduction of the labour force (increasing labour productivity). In Mauritius, these two

aspects developed very quickly in the past four years.

The Voluntary Retirement Scheme (VRS) was offered to all female agricultural workers of 50

years or more and all male agricultural and non-agricultural workers of 55 years or more.

According to the industry about 8,000 workers, one third of the total labour force, signed for the

VRS.

The cash compensation within the VRS is determined by multiplying the number of years of

service by a variable factor (the number of months awarded per year of service) and the wage in

effect on the day when the Ministry of Agriculture accepts a VRS application. All female

agricultural workers of 50 years or more and male agricultural and non-agricultural workers over

55 years receive a 2-month wage per year of service. For the rest of the workers, the VRS grants

1.5-month wage for the first five years of service, 1.25-month wage for years 6-15, 1-month wage

for years 16-25, and 0.75-month wage for years after that.

Page 31


The program also includes a piece of land, which many workers would use to build their own

houses. Once the company and the employee agree on the plot of land, the company would build

the infrastructure: Roads, drains, energy, and water supply. These services will be provided by

the company for a three-year period from the date of the land allocation or until the local

authorities assume the responsibilities.12

The consolidation of production has been in place for some years: In 1995, there were seventeen

mills in the island; in the first half of 1999 two more mills closed (Bel Ombre and Beau Plan), and

at the end of the 2001 harvest, the state-owned Rose-Belle mill (2,200 tonnes of daily capacity)

closed.

A process of centralization of management, with the merger of two or more factories, runs parallel

to the consolidation of production. In June 2001, it was announced the possible merger to the

Compagnie Usinière de Mon-Loisir Limitée, with a mill of 3,500 tdc, and the Flacq United Estates

Limited (FUEL), with a 6,600-tdc mill. In October 2001, it was announced that the Highlands mill

would close after the 2001 harvest and the Britannia would close in the near future. The

consolidation and centralization processes might result in the creation of a new milling company

in the island’s southern region, with the merger of the Britannia, Mon Tresor/Mon Desert, Riche-

en-Eau, Savannah and Union St. Aubin mills into one administration. In a second phase,

production would consolidate: Following the closure of the Rose-Belle and Britannia mills, the

Rich-en-Eau and Savannah would follow suit. (The participation of St. Félix, another mill in the

area, in the merger was still undecided at the moment of writing. The mill had made fresh

investments in processing capacity after the closure of the Bel Ombre.)

The private sector controls all mills and owns 80 percent share in them. The Sugar Investment

Trust, which brings together workers and farmers, owns the remaining 20 percent.

The Mauritian sugar industry, so dependent on the EU market as shown by Table 20, seems in

effect to head towards 7 mills and, quite probably, less than 10,000 workers employed.

Table 20 - Mauritius: Sugar Exports 1997-2000

(tonnes, raw value)

12 Although no study on the matter is known to the writer, during the June 2002 field visit to Mauritius, it was possible for him to attend meetings with grass-root workers who had signed for the VRS. The majority of workers expressed their dissatisfaction with the VRS. One key element that appeared in several conversations was the possible misinformation on the actual conditions of the VRS, in particular in reference to pension and social benefits and to how soon the plots of land would be available. Several workers said that they had been unaware that their pension benefits would be drastically cut or they need to wait several years before receiving them; that medical and education services would stopped (for those living outside a company’s compound), and that the piece of land to build their houses would be available only after two years. In the meantime, with no other job, they were already spending the cash they had received.

Page 32


2000 1999 1998 1997

European Union 439,935 554,970 615,178 579,866

United States 5,402 6,079 18,583 24,660

Others 4,499 4,929 4,933 5,763

Total 449,836 565,978 638,694 610,289


9. Zimbabwe

The sugar industry of Zimbabwe comprises two milling companies, Triangle Sugar and Hippo

Valley, located in Triangle and Chiredzi, about 440 km south of Harare; and one refining

company, the Zimbabwe Sugar Refineries Corporation Ltd. (ZSR), with two facilities, one in

Harare, the other in Bulawayo.

Tongaat Hulett owns Triangle Sugar, and Anglo American, a U.K.-based company owns Hippo

Valley. Anglo American is also the parent company of Tongaat.

In February 2002, Tate & Lyle sold Tate & Lyle Investments Africa Ltd. (TLIA) in USD 4.65 million

to CBAQ (Pty) Ltd, a Botswana-registered holding company. TLIA is a holding company that

owned 50.1 stake in ZSR Corporation Ltd. and a 33.3 percent interest in Sugarmark Pty Ltd., a

marketing operation in Namibia.

Table 21 - Zimbabwe: Sugar Balance 1993-2000

(tonnes, raw value)


1993 50,890 201,153 33,489 (167,664) 228,716 11,255

1994 523,822 44,732 221,547 176,815 253,193 105,069

1995 511,881 24,700 168,227 143,527 292,236 181,187

1996 336,731 2,468 179,311 176,843 286,859 54,216

1997 574,091 31,500 222,047 190,547 335,046 102,714

1998 571,943 11 242,641 242,630 305,325 126,702

1999 583,358 0 142,725 142,725 375,999 191,336

2000 571,289 0 217,155 217,155 373,714 171,756


The concentration of ownership of production facilities repeats itself in marketing. The distribution

of sugar in the domestic market, according to a report submitted to the Trade Commission in

August 2002, is handled by Sugar Distribution Ltd., a company whose directors include

management of ZSR, Triangle and Hippo Valley; while the Zimbabwe Sugar Sales, a closely

related company, deals with sugar exports.

Page 33


Although Zimbabwe is in crisis, sugar production continues (until the moment of writing) largely

unaffected and corporate profits are very attractive. In 2001, for instance, Hippo Valley had a

strong financial performance with its turnover increasing from 3.8 billion Zimbabwe dollars to 8.1

billion and profits after taxes soaring from 523 million to 1.6 billion Zimbabwe dollars. (The official

exchange rate is ZWD 55 = USD 1.00, but the parallel market rate was over 600 to 1 in July

2002.) About 46 percent of Hippo’s turnover in 2001 was realised through exports.

Hippo Valley invested more than 900 million Zimbabwe dollars (USD 16.3 million at the official

exchange rate) in capital projects in 2001. Most of the expenditure was for new mill equipment

(about USD 10.5 million) and transportation (USD 3.7 million). Hippo Valley has plans to generate

electricity and sell the excess energy to the Zimbabwe Electricity Supply Authority. This solid

financial performance by Hippo Valley contrasts greatly with the country’s uncertain political

situation and trade disputes with neighbouring countries, and even with sugar shortages in the

domestic market reported in 2001 and 2002.

In March 2002, two estates of Hippo Valley, the Hippo Valley North Estate and the Mkwasine

Estate, were listed in the compulsory land acquisition program of the Ministry of Lands,

Agriculture and Rural Resettlement. (The estates also appeared in a 2000 list of acquisitions.)

Although there is no timeframe announced to implement the acquisitions, it contributes to create

an uncertain economic environment.13

The land acquisition program was cited as the main reason in the failure to develop the Lower

Mazowe sugar project in Bindura, about 100 km north of Harare. The project had been under

discussion for several years until 1998, when all work stop. Local sources reported that the

interested parties demanded guarantees from the government that the cane plantation to be

developed and the farms, which would have supplied cane to the factory, would never appear in

the land acquisition program. Foreign investors included Tate & Lyle (then a major player in the

sugar industry worldwide) and Tongaat-Hulett. Other parties were 76 large-scale commercial

farmers (four of them were listed in the land acquisition program), and some 1,000 small-scale

farmers. Construction was to start in 1999, and the mill would have come on line in 2000, with a

production goal of 140,000 tonnes of sugar per year. Total cost for the project was USD 650

million.

The political and economic crisis in Zimbabwe has also a negative influence on neighbouring

countries. The crisis has put further pressure on the relative weakness of state agencies to

effectively enforce regulations (border crossing, import regulations, customs.), which worsens the

already “porous” borders in the region, and exacerbates any imbalance created in domestic

markets by even relatively small amounts of (legally or not) imported sugar. In the Zimbabwe

crisis, a traumatic element is the huge difference between the official and the parallel or black

market rates on foreign exchange. By maintaining a fixed parity of 55 Zimbabwe dollars to one

US dollar, in comparison to the 600 to one rate in the parallel rate (July 2002), the government

automatically fixes the parity with the rest of the currencies in the region, and creates quite

unsteady grounds for the international trade. In such situation massive profits can be realised by

playing the rate differential while markets can easily be flooded with relatively cheap goods.

13 According to local sources, the Mugabe government aims at seizing over 8 million hectares of

the 12 million hectares of land under white commercial farmers. The government says that 4,500 white farmers occupy 70 percent of the country’s best land.

Page 34


The sugar industry in Mozambique complained that sugar from Zimbabwe was “the largest single

threat” to its recovery. According to local producers, Mozambique experienced a surge in sugar

“imports” from Zimbabwe in 2002, which undermined domestic prices and put at risk the chances

to recover production.

In mid 2002, industrial groups in Zambia complained of illegal trade and rampant smuggling from

Zimbabwe. The Zambian government imposed a temporary ban on basic goods such as sugar,

salt and cooking oil, and on cement, asbestos, timber, cigarettes, flour and bananas. The

COMESA secretariat agreed to the decision. For how long this “temporary” measure will be

maintained is still to be seen.

In July 2002, the Malawi government established a new licensing import system with stricter

controls to deter illegal imports of Zimbabwean sugar. The decision followed reports that some

traders were exchanging foreign currency on Zimbabwe’s black market and then buying

Zimbabwe products, including sugar, at very low prices. In October 2001, the Sugar Company of

Malawi (Sucoma) had complained to the government about the practice, which, according to the

company, resulted in a 22 percent drop in their sugar sales.

The crisis in Zimbabwe shows some aspects in the industries of the region: While it might be

difficult to think that foreign exchange differentials, as in the case of Zimbabwe, can go on

indefinitely, it is also true that their impact on neighbouring sugar industries might have lasting

effects, especially in cases of initial recovery programs like in Mozambique. It is also a challenge

to official structures in each country to forestall major negative effects of the crisis by introducing

– and effectively enforcing – policy measures. Finally, it is also a challenge for regional trade

arrangements, such as COMESA, to introduce in a somewhat orderly manner freer trade and

market practices, if this is a real possibility.

10. An Overview of Sugar Projects in Africa

The sugar industry in the African continent appears to be in an ascending curve. Table 22 lists

some of the sugar projects that started or were announced in 1997-2002. There are some new

basic trends in the region: First, the construction of new refining capacity in the Middle East that

may source out sugar from Southern Africa; second, the opening of the European Union market,

especially to new comers (LDCs) such as Mozambique and Sudan. The third aspect consists of

the corporate developments when Africa-based companies are very active. This is process with

several aspects: the U.K.-based Tate & Lyle, until very recently a giant in the world of sugar, has

been divesting sugar concerns at a very rapid pace, including direct ownership in Africa (Zambia,

Zimbabwe) and management services (Booker Tate). South Africa-based companies (Illovo,

Murray & Roberts) are occupying Tate & Lyle’s former space, without precluding their expansion

into other areas such as Illovo’s acquisition of Tanzania’s Kilombero. A closely related aspect is

the exportation of capital and expertise from Mauritius to industries in the continent, which

appears to be a direct result of the industry having reached its technical limits (including land

availability) and the process of restructuring, which creates a surplus of qualified personal. It

should be expected that Mauritian expertise would make its presence felt in other industries in the

continent.

Page 35


Sugar companies worldwide tend to look for ways to increase labour productivity, among others,

by adopting new management styles and strategies or by introducing mechanization and

automation. Probably the best example of this new trend was witnessed by the present writer in

the cane fields of Mon Tresor/Mon Desert in Mauritius. There, the sugar company had outsourced

part of the harvesting operations to a small independent company. The new company owned a

combined harvester that cuts the cane into small pieces and throws them into an accompanying

truck for transportation to the mill. Although no hard information was available, an in-site informal

conversation underlined that the machine replaced about 80 workers. The new company hires a

five-people crew to operate the harvester. The case illustrates one possible combination of

corporate strategies, management styles, technical advances and increased labour productivity.

The list below estimates an increase of 1.5-2 million tonnes of sugar in African production in the

next five to ten years. The dimension of the projects, that is their economic value and long

timeframes for development, imposes some conditions for their realisation, such as a minimum of

institutional strength in the countries in question, a certain degree of social and political stability,

and the developing of agricultural practices as demanded by the growing of sugar cane, usually a

long-term crop.

Table 22 - Selected Sugar Projects in Africa (1997-2002)

Country Project / Partners Goal Date

Angola Dombe Grande- F.C. Shaffer Rehabilitation and expansion

of present facilities. USD 60-

70 million.

Six years to maturation.

100,000 tonnes of sugar,

10,000 h of land

May & Sept.

1998

Cameroon Cameroon Sugar Co. after

acquisition by Societe Sucriere du

Cameroun (Somdiaa-Vilgrain

Group)

To increase production from

35,000-40,000 tonnes to

50,000 tonnes.

Jan. 1999

Ethiopia Finchaa Sugar Factory

Loans from the African

Development Bank, Australia,

Sweden, Spain and Ethiopia. (F.C.

Shaffer involved?)

85,000 tonnes of sugar

8 million litres of alcohol

May 1999 –

Ethanol

plant on line

in 2002

Ghana Komenda Sugar Factory Plans to rehabilitate the

factory to produce sugar,

canned pineapple, oranges,

tomatoes

Jan. 2002

Page 36


Kenya Busia factory - China National

Machinery and Equipment Import

and Export (CMEC International)

(Aug. 1998).

Plans scrapped (July 2000)

Consortium of Swedish and South

African companies to build Busia

(July 2001)

4,000 – 10,000 tdc

16,000 h of land

5-8 billion shillings (USD 70

million)

Aug. 1998 –

July 2000 –

July 2001

Kenya Kenana (Sudan) to invest in

Muhoroni and Miwani.

Government told to close down

both factories.

Cooperation and investment July 2001 –

June 2002

Mali Sukala (China Light Economic and

Technology Corp. holds 60

percent)

Increase production of two

factories to 30,000 tonnes

from 26,000 tonnes by 2001.

Sept. 1998

Mali F.C. Shaffer and a Brazilian

company

Reported as interested in

building three new mills.

Sept. 1998

Mauritius Illovo sells Mon Tresor-Mon Desert

to a local consortium (linked to the

acquisition of Zambia Sugar)

Mar. /Apr.

2001

Mozambique Sena Sugar Estates (government +

Mauritian consortium) in the Luabo

and Marromeu mills

USD 70 million July 1998

Mozambique Mafambisse - Technical

studies/management by F.C.

Schaffer 1990/1999.) Tongaat-

Hulett acquired majority in 2000

Production up to 160,000

tonnes / year.

Mozambique Tongaat-Hulett acquired 49 percent

in Xinavane (option to a further 11

percent) (Technical management

by F.C. Schaffer 1999/2000.)

Apr. 1998

Mozambique Marromeu mill received a loan from

the Development Bank of Southern

Africa. (Also involved are the

Standard Corporate Merchant

Bank, Mauritius Commercial Bank,

industrial Development

Corporation.)

Marromeu run by a Mauritian group

USD 12 million to reach

100,000 tonnes by 2003

Sept. 2001

Page 37


(Lagesse) – Sugar Sena Estates.

Namibia Caprivi sugar project (north-eastern

border of Lake Liambezi, 30 km

from the Zambezi river). October

1998: FC Schaffer & Associates

completed study.

Operational by 2008

Approximate cost USD 255

million (over N$2,5 billion).

7,500 direct jobs, 45,000

people to benefit directly or

indirectly.

1998-2001

Nigeria Nigeria Sugar Co. Bacita and

Savannah Sugar Co. (Government

want to sell 51 percent of its 79.4

percent share in Savannah –

July/Aug. 2002)

Rehabilitate 11,000 h;

expand plantation of the two

estates by 4,000 h. (plus

new equipment)

Rehabilitate the two factories

at USD 155 million

Apr. 1998

Nigeria Sunti Sugar Co. 250 tdc mini-mill

Lafiaji plan upgrades to

process 200 tdc.

Apr. 1998

Nigeria Private importers (?) (April 1998) –

Dangote Group reported with a new

refinery on line in March 2000.

Refinery expected to restructure

significantly the national sugar

scene. (April 2000)

U.S. Trade and Development (US-

TDA) Agency Sugar Factory and

Estate (FS) $310,000: Feasibility

Study granted to the Dangote

Group for assessing the

development of two new cane

sugar factories and estates in

Jigawa and Bauchi States. (F.C.

Schaffer & Associates) (FY 2000)

40,000 t refinery to process

imported raws (April 1998).

New refinery with 700,000

tonnes of refined sugar (April

2000)

Apr. 1998 –

Apr. 2000

Nigeria Construction started for a new

sugar factory in Hadejia – 3,000 tdc

State government proposed a

three-plant sugar company, one

with 10,000 tdc, and the other two

with less than 1,000 tdc.

July 2000 –

2002

Nigeria US Trade and Development

Agency grants USD 310,000 to

Sept. 2000

Page 38


partially fund a USD 511,572 study

of two new cane mills. F.C. Shaffer

involved in the study.

Nigeria New factory at Gombe – Nanjing

Heavy Machinery Works of China

and Nigeria government.

Government to contribute

USD 14 million (15% total)

Jan. 2002

South Africa East Cape Agricultural Co-op,

Nordzucker (Germany) and others.

Proposed beet factory in Port

Elizabeth (Cape Town) (Feb. 1998)

Nordzucker reported as

withdrawing from the project. New

partners sought. (Aug. 1999)

100,000 tonnes of sugar

(USD 86 million)

Feb. 1998

South Africa Tongaat-Hulett attempt at buying

Transvaal Sugar fails

Aug. 2000?

Sudan Kenana Sugar Company [KSC] and

the OPEC Fund for International

Development [OPECFID]

Agreement for repayment

guarantee signed between KSC,

the OPEC Fund, the Sudanese-

French Bank and the British Trade

Bank.

Complete the major

component for the final

expansion project and

providing power for the

factory, and expanding other

projects.

USD 10 million loan.

Kenana to produce 500,000

tonnes

7 Jan. 2002

Sudan Sudan and China: White Nile Sugar

Co. Chinese government: USD 90

million in equity; $160 loan;

Sudanese government: $50 million

equity; Sudanese investors: $6

million equity; $194 from the Arab

Authority for Agricultural Investment

and Development.

Investors from Sudan, Egypt, Libya,

South Africa, and the Arab

Authority for Agriculture Investment

and Development (AAAID).

Commercial production in

2003, with 150,000 tonnes

(75,000 tonnes for exports).

(July 1998)

Total output 300,000 tonnes.

(Aug. 2001) then rising to

500,000 tonnes.

16,000 jobs

July 1998 –

Jan. 1999 –

Aug. 2001

Swaziland Ubombo Ranch (Illovo Sugar) Increase from 175,000 to

200,000 tonnes by 2000

Feb. 1998

Swaziland Swaziland Royal Corp. Increase from 165,000 to

200,000 tonnes by 2000

Feb. 1998

Page 39


Swaziland Mhlume Sugar Co. Increase from 170,000 to

250,000 tonnes by 2000

Feb. 1998

Swaziland Merger of Mhlume (7,000 tdc) and

Swaziland Royal Corp. (7,200 tdc

and a refinery). Total production of

over 300,000 tonnes of sugar per

year.

2001

Tanzania Kilombero: Illovo Sugar,

E.D.&F.Man

Increase from 30,000 tonnes

to 110,000 tonnes by 2001

Mar. 1998

Tanzania Mtibwa acquired by local group in

2000 (?). Run by Mauritians. Same

group acquired Kagera mill (2001).

Mtibwa from 28,000 tonnes

in 1998/99 to 48,000 tonnes

in 2003

Tanzania Kagera (same group that owns

Mtibwa)

Kagera to enter on line in

2004: 30,000 tonnes in

2005; 60,000 tonnes in 2006

Sept. 2002

Tanzania Tanganyika Planting Co., the

Mauritian Consolidated Investment

Enterprise Ltd. (CIEL) and a bank

consortium led by Barclays Bank

Rehabilitation of TPC for

USD 15 million.

Production of 40,000 tonnes

in 2001, then 72,000 tonnes

by 2006

May 2001 –

Aug. 2001

Tanzania National sugar industry to increase

production from 120,000 tonnes to

440,000 by 2010, according to the

Sugar Development Corporation

(SUDECO).

Jan. 2000

Uganda Kakira (Madhvani) (Nov. 1998)

Plans to expand (Dec. 2001) with

1,200 hectares in a forest reserve –

Consolidate production at 100,000

tonnes by 2004 from current 60,000

tonnes.

Investment of USD 75-80

million.

Double production to

140,000 tonnes in five years

(2,600 to 5,000 tdc)

Co-generation project: 30

mw.

Nov. 1998 –

Dec. 2001

Uganda Kakira outgrowers propose setting

up a 1,000 tdc mill

Mid 2002

United

States

Illovo Sugar – Monitor Sugar Illovo buys Monitor Sugar

from C.G.Smith for USD

Mar. 1999

Page 40


56.5 million

Zambia Illovo buys Zambia Sugar from Tate

& Lyle, linked to the disposal of

Mon Tresor-Mon Desert in

Mauritius.

US $11.4 million March/April

2001

Zambia Consolidated Farming Ltd.

(subsidiary of Sable Group) – to

build a sugar mill and a co-

generation facility.

Financing from PTA Bank –

Nairobi (related to a line of

credit extended to the bank

by Exim Bank of India).

India’s ISGEC to supply

USD 5 million in equipment.

June 2002

Zambia Luena Sugar Project (60 km south

of Kawambwa, Luapula Province)

12,000 hectare plantation

133,000 tonnes of sugar per

year

109.0 million litres of alcohol

per year.

Identified in

1975 –

Talks in

1999

Zimbabwe Triangle and Tongaat Hulett to

build a mill in Bindura (northern

area) - New mill project shelved –

Zimbabwe Sugar Refineries, Lower

Mazowe Valley Sugar Producers

(Lomaz), Tongaat Hulett

140,000 t/year (on line by

2001), at a cost of 260

million rand.

Project would have used the

equipment from the Mount

Edgecombe mill (SA) closed

in 1995 (?)

Apr. 1998-

Nov. 1998

Zimbabwe Hippo Valley Potential to expand to

70,000 tonnes after

completion of the Tokwe-

Murkosi dam in the Lowveld

in 2003.

Oct. 1998

Zimbabwe Hippo Valley Hippo Valley North Estate

and Mkwasine Estate listed

for government acquisition

program.

2000 & Mar.

2002.

Zimbabwe One project in the lower Mazowe

Sugar Estates (northeast), another

the expansion of the Mwenezi

Development Corp. (southeast

Masvingo) by Triangle.

Total of 25,000 h of lands,

could increase national

production in 50 percent in

the next five years.

June/Aug.

1998

Zimbabwe Tate & Lyle sold ZSR Corp. (two

refineries) to CBAQ (Pty), a

Feb. 2002

Page 41


Botswana-registered company.

Region Murray & Roberts (South Africa)

acquires Booker Tate

Aug. 2000

Region Murray & Roberts willing to sell 45

percent share in Unitrans

(transportation company)

Feb. 2002.

Sources: F.O.Licht’s ISSR; ISO Monthly Press Summary; the Sugar Worker, Reuters, Dow Jones.

11. Conclusion

The sugar industries in East and Southern Africa are rather small players in the international

sugar industry. Their size, however, does not preclude diversity in their configuration nor frees

them from the processes that affect the global industry.

What is important to underline is that industries in Southern African, without exception, rank

among the lowest-cost producers in the world. With the exception of South Africa, they are small

industries by international standards and are still to make their presence felt in the global industry,

a fact that the recent political instability and economic crisis seemed to have prevented. Their

recent history has not been conducive to strengthening and developing a cane-based sugar

industry, which, by definition, is a long-term investment. All industries in East and Southern Africa

are cane-based industries.

As the region achieves some political stability, however, the industry shows its ability to realise its

production potential: Mozambique comes to mind. With changes in the international sugar trade,

some of these industries are poised to take full advantage of the opening of new markets, in

particular in the European Union. The future appears bright for the African sugar industries.

Page 42


World Sugar Balance – 1991/92 – 2001/02 September/August, (1,000 tonnes, raw value)

1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/2000 2000/01 2001/02

Opening stocks 35,662.6 40,523.8 40,278.9 37,674.8 38,254.5 45,702.8 46,752.2 50,223.1 56,812.0 61,258.8 61,704.7

Production 117,146.9 113,023.1 111,608.4 116,123.8 125,595.6 127,246.1 128,503.5 134,706.2 134,213.9 131,412.8 135,967.2

Imports 31,481.9 31,424.8 32,457.8 35,002.9 38,627.9 37,263.5 39,343.5 41,308.1 39,992.5 42,178.2 41,910.8

Disappearance 111,182.2 112,083.7 112,580.3 115,008.2 117,768.8 120,894.0 121,131.4 125,494.5 128,246.9 130,137.4 132,286.8

Exports 32,585.4 32,609.1 34,090.0 35,538.8 39,006.4 39,582.2 41,234.7 43,940.9 42,301.3 43,007.7 44,051.6

Ending stocks 40,523.8 40,278.9 37,674.8 38,254.5 45,702.8 46,752.2 50,233.1 56,812.0 60,470.2 61,704.7 63,244.3

+/- Production 1,070.3 (4,123.8) (1,414.7) 4,515.4 9,471.8 (1,333.5) 4,241.4 6,202.7 (492.3) (2,778.9) 4,554.4

+/- per cent 0.92 (3.52) (1.25) 4.05 8.16 (1.06) 3.41 4.83 (0.37) (2.07) 3.47

+/- Consumption 1,092.4 901.5 496.6 2,427.9 2,760.6 3,125.2 2,237.4 2,363.1 2,752.4 2,123.1 2,149.4

+/- per cent 0.99 0.81 0.44 2.16 2.40 2.65 1.85 1.92 2.19 1.66 1.65

Stocks as $

of consumption 36.45 35.94 33.46 33.26 38.81 38.67 40.80 45.27 47.15 47.42 47.81

Source: F.O.Licht's International Sugar and Sweetener Report - World Sugar Balances

Page 43


World Sugar Production by Regions – 1970/71 – 2001/02 September/August (1,000 tonnes,

raw value)

1970/71 1975/76 1985/86 1991/92 1995/96 1999/2000 2000/01 2001/02

West Europe 11,522.0 14,108.0 18,030.4 19,919.7 18,962.7 22,312.2 21,463.7 18,470.0

European

Union 10,379.0 14,626.8 16,756.1 16,973.1 19,184.8 18,208.9 15,992.2

(France) 3,302.0 2,756.0 4,323.9 4,412.0 4,564.0 4,915.0 4,685.0 4,007.0

(Germany) 2,602.0 3,270.0 4,227.9 4,249.9 4,155.3 4,789.5 4,741.7 4,068.4

East Europe 12,677.0 11,954.0 12,224.1 10,632.4 9,791.1 7,223.9 7,120.0 7,072.0

Poland 1,505.0 1,900.0 1,809.0 1,640.0 1,716.8 1,968.6 2,187.0 1,767.0

Russia 2,230.0 2,237.0 1,715.0 1,698.0 1,705.0

Ukraine 4,178.0 3,804.0 1,780.8 1,696.0 1,761.0

Africa 4,453.0 5,199.0 7,770.2 7,836.8 8,018.8 9,513.0 9,968.7 9,926.5

South Africa 1,425.0 1,897.0 2,336.0 2,241.8 2,106.1 2,707.7 2,611.0 2,449.6

N & C America 14,118.0 15,171.0 20,182.5 20,736.8 19,925.4 22,037.8 21,358.6 21,010.5

United States 2,542.0 2,888.0 5,454.7 6,378.6 6,698.4 8,214.3 7,977.5 7,348.0

Cuba 5,942.0 5,800.0 7,346.6 7,103.7 4,503.7 4,134.0 3,615.0 3,650.0

Mexico 2,563.0 2,750.0 4,030.6 3,577.4 4,667.3 4,983.4 5,169.9 5,345.0

South America 9,347.0 10,998.0 12,353.0 15,250.9 21,445.7 25,108.2 23,188.3 29,635.0

Brazil 5,378.0 6,180.0 7,370.6 9,510.0 15,189.6 18,189.8 16,113.0 22,431.1

Colombia 744.0 1,000.0 1,216.5 1,792.2 2,046.0 2,314.2 2,291.3 2,416.1

Asia 11,912.0 15,326.0 23,724.9 38,833.0 41,294.1 42,547.3 41,009.4 44,386.0

China P.R. 2,350.0 2,800.0 5,550.3 8,577.7 6,770.0 7,420.3 6,400.0 9,410.0

India 4,185.0 4,700.0 7,623.6 14,595.0 17,942.8 19,797.5 19,865.1 18,537.8

Pakistan 582.0 662.0 1,213.3 2,528.1 2,684.8 2,638.5 2,697.2 3,228.4

Thailand 601.0 1,665.0 2,585.8 5,106.1 6,323.4 5,832.8 5,155.0 5,905.0

Oceania 2,972.0 3,205.0 3,686.8 3,937.3 6,157.7 5,470.6 5,029.3 5,467.2

Australia 2,590.0 2,933.0 3,290.7 3,418.7 5,631.7 5,087.3 4,605.1 5,102.6

World Total 73,026.0 82,873.0 98,770.2 117,146.9 125,595.6 134,213.9 129,111.1 135,967.2

Source: F.O.Licht's International Sugar and Sweetener Report - World Sugar Balance


Basic Information of Sugar Mills and Refineries in East and Southern Africa

Workers

Outgrowers

Country Mill Company Capacity (*) Total Factory Field Women

KENYA BUNGOMA Nzonia Sugar Co. Ltd. (F.C.

Schaffer)

3,000 tdc 2,780 70 80% of cane

KENYA CHEMELIL Chemelil Sugar. Co. Ltd. 3,000 tdc 1,012 75 75% of cane

KENYA KAKAMEGA West Kenya Sugar Co. Ltd. 900 tdc 324 5 100% of cane

KENYA MIWANI Miwani Sugar Co. Ltd. - (State)

in receivership

3,000 tdc 477 8 60% of cane

KENYA MUHORONI Muhoroni Sugar Co. Ltd. (State)

in receivership

2,400 tdc 545 10 80% of cane

KENYA MUMIAS Mumias Sugar Co. Ltd. (run by

Booker Tate)

8,000 tdc 3,450 150 90% of cane

(70,000)

KENYA NYANZA South Nyanza Sugar Co. Ltd. 2,600 tdc 1,237 20 80% of cane

MALAWI DWANGWA Dwangwa Sugar Corp. Ltd.

(Illovo)

4,000 tdc 3,395 300 (10 % of

cane)

MALAWI SUCOMA

(Nchalo)

Sugar Corp. of Malawi Ltd.

(Illovo)

7,200 tdc 5,099 250 (10 % of

cane)

MAURITIUS (2) BEAU

CHAMP

3,750 tdc

MAURITIUS (2) BEAU PLAN 2,261 tdc 2,587


Page 45

(closed)

MAURITIUS (2) BELLE VUE 5,000 tdc

MAURITIUS (2) BRITANNIA

(closed)

BBHM Consortium (Espitalier,

Lagesse)

1,050

MAURITIUS (2) HIGHLANDS

(closed)


Lagesse)

2,735 tdc 212 690 2,600

MAURITIUS (2) MEDINE 4,051 tdc,

20,000 dap,

500 drc,

3,000,000

aap

2,234 526 1,388 376 (field) 550

MAURITIUS (2) MON

DESERT

ALMA

3,383 tdc 2,102

MAURITIUS (2) MON LOISIR Lagesse Group 3,546 tdc

MAURITIUS (2) MON

TRESOR


Lagesse)

2,504 tdc 279 1016 940

MAURITIUS (2) RICHE EN

EAU

2,828 tdc 807

MAURITIUS (2) SAINT FELIX 1,378 tdc 1,749

MAURITIUS (2) SAVANNAH Espitalier Noel 2,791 tdc 398 1,172 1,544

MAURITIUS (2) UNION

FLACQ

6,600 tdc 4,722

MAURITIUS (2) UNION

SAINT AUBIN

2,593 tdc 204 363


Page 46

MOZAMBIQUE (1) BUSI

MOZAMBIQUE (1) LUABO Sena Sugar Estates (Mauritian

consortium- Lagesse Group –

Mon Loisir)

4,320 tdc

MOZAMBIQUE (1) MAFAMBISS

E

Tongaat – Hulett (Technical

studies by F.C.Schaffer.)

4,300 tdc 4,781

MOZAMBIQUE (1) MARAGRA Illovo Sugar 4,000 tdc 625

MOZAMBIQUE (1) MARROMEU Sena Sugar Estates (Mauritian

consortium- Lagesse Group –

Mont Loisir)

4,300 tdc 1,127

MOZAMBIQUE (1) XINAVANE Tongaat – Hulett (Technical

studies by F.C.Schaffer.)

2,400 tdc 3,791

SOUTH AFRICA (5) AMATIKULU Tongaat – Hulett (2) 9,000 tdc 10,765

SOUTH AFRICA (5) DARNALL Tongaat - Hulett (2) 7,500 tdc 424

SOUTH AFRICA DURBAN Tongaat - Hulett (2) Refinery only

SOUTH AFRICA (5) ENTUMENI Tongaat - Hulett (2) 2,400 tdc 3,432

SOUTH AFRICA (5) FELIXTON Tongaat - Hulett (2) 14,400 tdc 7,108

SOUTH AFRICA (5) GLEDHOW Illovo Sugar (4) 7,200 tdc

800 drc

5,036

SOUTH AFRICA GLENDALE Illovo Sugar (4) Distillery only

SOUTH AFRICA (5) KOMATI Transvaal Sugar 9,000 tdc 886

SOUTH AFRICA (5) MAIDSTONE Tongaat - Hulett (2) 10,500 tdc 5.874

SOUTH AFRICA (5) MALELANE Transvaal Sugar 512

SOUTH AFRICA MEREBANK Illovo Sugar (4) Distillery only


Page 47

SOUTH AFRICA (5) NOODSBER

G

Illovo Sugar (4) 6,720 tdc

1,150 drc

1,058

SOUTH AFRICA (5) PONGOLA Illovo Sugar (4) 5,000 tdc

600 drc

536

SOUTH AFRICA (5) SEZELA Illovo Sugar (4) 10,800 tdc 5,329

SOUTH AFRICA (5) UMFOLOZI Illovo Sugar (4) 6,000 tdc

700 drc

5,852

SOUTH AFRICA (5) UMZIMKULU Illovo Sugar (4) 5,500 tdc 785

SWAZILAND MHLUME Merged with Royal Swaziland in

April 2002.

7,200 tdc

SWAZILAND ROYAL

SWAZILAND

Partially owned by T&L until

April 2002, merged with

Mhlume.

7,000 tdc

SWAZILAND UBOMBO

RANCHES

Illovo Sugar 8,400 tdc

500 drc

TANZANIA KAGERA Kagera Sugar Ltd. (same owner

that Mtibwa)

2,500 tdc 128

TANZANIA MOSHI TPC Ltd. (Mauritian Forges

Tardieu?)

2,500 tdc 4,500

TANZANIA MSOLWA Kilombero Sugar Co. Ltd. (Illovo

+ E.D.&F.Man: 75%)

2,175 tdc 700 inc.

Ruembe

1,000 ha

TANZANIA MTIBWA Mtibaw Sugar Estates

(Tanzania Sugar Industries, run

by Mauritians)

2,000 tdc 2,000+

2,500

4,500


Page 48

TANZANIA RUEMBE Kilombero Sugar Co. Ltd.

(Illovo)

2,400 tdc 700 inc.

Msolwa

2,100 ha

UGANDA KAKIRA Kakira Sugar Works (Madhvani

Group / State)

3,000 tdc 6,500 1,600 4,900 540 3,200 –3,500

UGANDA KINYARA Kinyara Sugar Works Ltd.

(state-owned, run by Booker

Tate. To be privatized 2002)

2,000 tdc 6,700 800-900

UGANDA SUCOL Sugar Corp. of Uganda Ltd.

(Metha Family / State)

2,500 tdc 8,000 700-800 10% (+/- 1,500)

ZAMBIA Nakambala

Sugar Estates

(and refinery)

Zambia Sugar (Illovo)

(Privatised in 1995.)

7,200 tdc 2,400 +

3,000

(1,800

unioniza

ble)

500 40

ZIMBABWE BULAWAYO

ZSR Corp.

refinery

(ex-Tate & Lyle) acquired by

CABQ (Botswana registered)

190 drc

ZIMBABWE HARARE

ZSR Corp.

refinery

(ex-Tate & Lyle) acquired by

CABQ (Botswana registered)

305 drc

ZIMBABWE HIPPO

VALLEY

Anglo American with 50.4% –

parent company of Tongaat

Hulett (50.7%).

10,000 tdc

ZIMBABWE TRIANGLE

SUGAR

Tongaat Hulett (South Africa) 9,000 tdc

120,000 dap

40,000,000


Page 49

aap

(*) tdc = tonnes of cane daily processing capacity; drc = daily refining capacity (tonnes); dap = daily alcohol production (litres) ; aap = annual

alcohol production (litres)

(1) Industry on a rehabilitation program. Listed capacities for reference only. Figures for workers include permanent and seasonal for 1999.

(2) Industry in a process of consolidating production. Several mills recently closed or about to be closed. Figures for workers and out-growers from

1995-1998.

(3) Tongaat-Hulett Sugar operations in South Africa: 69 percent of the cane comes from large commercial growers; 17 percent from small/mediam

scale growers, and 14 percent from company farmed land. The latter is grown in some 22,500 hectares under cane.

(4) Illovo Sugar operations process cane grown by some 13,000 small-scale farmers and 57 black medium-scale growers. The latter delivered

262,000 tonnes of cane in 2001.

(5) Outgrowers figures include miller-cum-planters and large- and small-scale farmers.

Source: F.O.Licht’s World Sugar and Sweetener Yearbook 2002, Canegrowers (South Africa) web site at

http://www.sacanegrowers.co.za/

Documents

Structural Aspects of the Sugar Industries in East and ... · PDF fileStructural Aspects of the Sugar Industries in East ... The Sugar Industries in East and Southern Africa ... and