AN OVERVIEW OF THE TANZANIA SUGAR INDUSTRY

1. AN OVERVIEW OF THE TANZANIA SUGAR INDUSTRY

2. Contents • Background • Stakeholders • Industry’s Significance in the Country’s Economy • Sugarcane Production • Sugar Production • Production vs Consumption • Challenges • Response to Challenges • Conclusion

3. Background • The Sugar Industry in Tanzania is governed by the Sugar Industry Act, 2001 ( as amended), and Sugar Regulations (2010) • Four Sugar companies , Five Mills: • Kilombero Sugar ( two mills ) Msolwa and Ruhembe – Located in Kilombero and Kilosa Districts in Morogoro Region • TPC Ltd – Located in Moshi Rural District- Kilimanjaro Region.

4. Background …Cont… • Mtibwa Sugar Estates located in Movomero District , Morogoro Region. • Before privatization all sugar companies were 100% owned by the government as parastatals managed by Sugar Development Corporation ( SUDECO). • They were privatized between 1998 and 2002

5. Background …Cont… • Government owns 25% equity in Kilombero Sugar Co. Ltd and TPC Ltd • Mtibwa Sugar Estates Ltd and Kagera Sugar Ltd are 100% divested to private investors

6. Background …cont… • Main objective for divesting the industry was to increase productivity in sugarcane and sugar production in terms of:- • increasing sugarcane yields • improving factory efficiencies • increasing crushing capacities

7. Background …cont… • rehabilitation and expansion of the factories • promotion of outgrowers • infrastructure development

8. Stakeholders

9. Industry’s significance in County’s Economy Annual revenue of agric sector- 3.8% Multiplier effect – 3.2% National Economy Contributes 1% in Country’s GDP Tax: Over Tsh. 100billion per annum • Employment • Direct 18,000 • Indirect 57,000 • Household value chain 75,000 Foreign exchange savings – About Tsh. 280billion per annum

10. Sugarcane Production Varieties • Out growers Kilombero & Mtibwa: NCo376 Kagera : Co 617 • Nucleus estates TPC: NCo 376,B52-313,EA 7097,N19&N25 Kilombero: NCo376,N19&N25 Mtibwa: NCo376, Kagera Sugar: Co 617, N19 and N25

11. Production.. Cont….. • Registered growers : 20,000 • Plot sizes : From 0.4 to 400ha (Average 0.8ha ) • Acreage : Area harvested 26,000ha

12. Production.. Cont….. • Cane production : 700,000 tons per annum • Cane yields : 40- 50 TCH • Production share : 24%

13. Kagera growers are less tha n 600

14. Sugarcane Production by MCPs • Area under cane : 62,569 ha • Area harvested : 44,194 ha • Cane production : 2.2 million tons • Cane yields : 70-120 TCH • Production share : 76%

16. Sugar Production (2008/09-2012/13)

17. Sugar Production …cont…..

18. Sugar Production vs Consumption • Per capita consumption : 12.78 kg • Population growth : 2.8% per annum • Current Demand : 590,000 mt • Domestic cons. : 420,000mt • Industrial cons. : 170,000mt

19. Sugar Production vs Consumption …..Cont… • Local production : 300,000 mt • Deficit : 290,000 mt • Deficit is addressed by importation with the applicable East African Community CET tariff with allowable remission

20. Challenges • Low cane yields for out growers • Inadequate collateral and high borrowing interest rates particularly for out growers • Absence of government subsidy on inputs to cane farmers • Poor infrastructure/access roads to Outgrower fields

21. Challenges….. Cont… • High cost of production • Inadequate capacity to provide effective and efficient research, training and extension services • Huge harvesting and post harvest losses • Market challenges (imbalances) • Inability to satisfy increasing demand

22. Challenges …..Cont… …. Demand vs Production Population Projections Historical • 1950 8 • 1980 19 • 2000 34 • 2012 45 Projection • 2015 49 • 2020 56 • 2025 64 • 2030 72 Source: • Tanzania National Bureau of Statistics • United Nations, 2010 Revision

23. Challenges …..Cont…

24. Response to Challenges • A five year Industry Development Plan to 2015/16 was evolved aiming at self sufficiency and moderate surplus by plan end. • Existing factories were to expand capacities • New projects were to come on board

25. Response to Challenges ….cont… • The National Development Plan to 2015 placed a huge challenge on the industry. • Aims at self sufficiency and realisation of 100,000mt surplus sugar by plans end. • Availability of suitable and unencumbered land has been identified as huge bottleneck to the relialisation of the plan. Need to debottleneck.

26. Response to Challenges ….cont… • The government has set up a Task Force to address the issue and recommend course of action. • Sugar is now a top agenda within the Government • Projects included in BRN portfolio • Compensation to free Ruipa land being processed • Land within Rufiji Basin on process to be free for investment into sugar

27. Response to Challenges ….cont… • Creating enabling environment for industry growth very crucial. • Need to protect the infant industry against market distortions. • Control of illegal imports/smuggling. • Building of trust amongst stakeholder groups particularly millers-growers.

28. Response to Challenges ….cont… • Institutional capacity building to deliver on regulation • Human capital development. • Development of financial resources. • Improvement of the legal and institutional framework to make it respond to the needs of the day.

29. Way Forward • Industry Development Plan up for major overhaul • Calls for unity and conviction to have set goals realised • Goals should be as realistic as possible under the existing circumstances

30. Conclusion • There exists huge potential for the development of the Sugar industry in Tanzania • Players should always move in unity to have common interests realised and safeguarded • The industry should conduct itself in unquestionable way and seek to reach a stage where it can be trusted by its stakeholders particularly the government • The industry has huge potential to create wealth to its stakeholders and contribute immensely to the country economy as well as welfare of the common man in the street.

31. Ahsanteni na Karibuni sana.