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
The Sugar Industries of Eastern and Southern Africa
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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
The Sugar Industries of East and Southern Africa
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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.
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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 (FASUSDA). 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.
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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
1
that have taken place in the past three decades in the international sugar industry. 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.
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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
2
main influence to determine the allocation and use of production resources.
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.
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Table 1 - World Sugar Production by Regions in percentage
1970/71 – 2001/02
West Europe
East Europe
Africa
North & Central
America
South America
Asia
Oceania
1970/71
15.8
17.4
6.1
1975/76
17.0
14.4
6.3
1985/86
18.3
12.4
7.9
1995/96
15.1
7.8
6.4
19.3
12.8
16.3
4.1
18.3
13.3
18.5
3.9
20.4
12.5
24.0
3.7
15.9
17.1
32.9
4.9
2001/02
13.6
5.2
7.3
15.5
21.8
32.6
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.
The Sugar Industries of East and Southern Africa
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Chart 1 - World Sugar Production by Regions
1970/71 - 1995/96 - 2001/02
45,000.0
Trend: Asia
West Europe
N&C America
Asia
South America
Trend: South America
Africa
Trend: N&C America
Oceania
40,000.0
1,000 tonnes, raw value
35,000.0
30,000.0
25,000.0
20,000.0
Trend: West Europe
15,000.0
Trend: Africa
10,000.0
Trend: Oceania
5,000.0
1970/71
1995/96
2001/02
Year
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
West Europe
East Europe
Africa
North & Central America
South America
Asia
Oceania
1972/73
20.0
19.6
6.3
19.8
9.9
23.3
1.3
1975/76
18.7
19.8
6.5
19.0
11.6
23.2
1.2
1985/86
15.5
18.1
8.5
14.4
11.1
31.4
1.0
1995/96
14.2
11.9
8.6
14.4
11.9
38.0
1.0
The Sugar Industries of East and Southern Africa
2001/02
13.4
11.1
9.2
14.2
12.1
39.0
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 canebased 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.
The Sugar Industries of East and Southern Africa
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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
West Europe
East Europe
Africa
North & Central America
South America
Asia
Oceania
1972/73
20.5
14.1
7.4
28.0
1.5
27.7
0.8
1975/76
19.1
20.3
7.5
25.5
1.0
25.8
0.9
1985/86
11.4
23.0
11.9
12.0
1.2
39.6
0.8
1995/96
14.7
19.4
13.5
10.6
2.7
38.4
0.7
2001/02
16.1
19.4
14.2
8.6
1.9
39.2
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.
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Table 4 - Sugar Exports by Regions in percentage
1972/73 – 2001/02
West Europe
East Europe
Africa
North & Central
America
South America
Asia
Oceania
1972/73
11.7
4.1
10.8
1975/76
13.2
3.3
9.3
1985/86
20.4
5.0
9.7
1995/96
17.0
6.3
7.5
35.8
16.5
11.7
9.5
36.8
9.2
17.8
10.4
32.5
11.1
10.9
10.3
18.2
17.8
20.5
12.8
2001/02
20.2
2.3
9.7
15.3
25.8
17.0
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.
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Page 12
Table 5 – EU-ACP Sugar Protocol Quotas
(metric tons, white sugar equivalent)
Country
PR Congo
Ivory Coast
Madagascar
Malawi
Mauritius
Swaziland
Tanzania
Zimbabwe
Total Africa
Total EU-ACP
Amount
10,186.1
10,186.1
10,760.0
20,824.4
491,030.5
117,844.5
10,186.1
30,224.8
701,242.5
1,304,700.0
Country
Barbados
Belize
Guyana
Jamaica
St. Kitts-Nevis
Trinidad & Tobago
Fiji
India
Rest ACP + India
Amount
50,312.4
40,348.8
159,410.1
118,696.0
15,590.9
43,751.0
165,348.3
10,000.0
603,457.5
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
Argentina
Australia
Brazil
Dominican Republic
Guatemala
Philippines
Other 24 countries
Total other countries
U.S. Tariff-rate quota
Volume
45,281
87,402
152,691
185,335
50,546
142,160
334,184
997,599
1,117,195
Country
Congo
Cote d'Ivoire
Gabon
Madagascar
Malawi
Mauritius
Mozambique
South Africa
Swaziland
Zimbabwe
Total Africa
The Sugar Industries of East and Southern Africa
Volume
7,258
7,258
7,258
7,258
10,530
12,636
13,690
24,220
16,849
12,636
119,593
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.
The Sugar Industries of East and Southern Africa
Page 14
Chart 2 - International Sugar Agreement (ISA) Prices 1960-2001
Raw Sugar Prices
35.00
30.00
20.00
15.00
10.00
5.00
0.00
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
US cents/lb
25.00
Year
The Sugar Industries of East and Southern Africa
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
6
figures for 2001/02.
Table 7 – African participation in the World Sugar Industry in percentage
Production
Consumption
Imports
Exports
1975/76
1985/86
1995/96
2001/02
6.3
6.5
7.5
9.3
7.9
8.5
11.9
9.7
6.4
8.6
13.5
7.5
7.3
9.2
14.2
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.
The Sugar Industries of East and Southern Africa
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
1993
1994
1995
1996
1997
1998
1999
2000
Production
414,378
358,844
417,577
422,977
436,336
488,187
512,262
436,938
Imports
69,000
182,073
118,360
71,549
56,678
203,390
62,660
125,912
Exports
0
0
26,853
26,607
26,956
0
0
3,260
Net Trade
(69,000)
(182,073)
(91,507)
(44,942)
(29,722)
(203,390)
(62,660)
(122,652)
Consumption
608,720
619,590
510,000
500,000
525,000
650,000
662,412
662,520
Ending Stocks
426,307
317,634
316,718
284,637
225,695
266,272
178,782
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
The Sugar Industries of East and Southern Africa
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
7
political weigh was indeed a major force in the passing of the Sugar Act in April 2002.
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.
The Sugar Industries of East and Southern Africa
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
The Sugar Industries of East and Southern Africa
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)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
54,000
48,000
76,000
109,000
145,000
111,000
137,000
130,000
Imports
1,000
15,249
39,844
6,377
10,172
6,734
4,700
27,594
Exports
0
0
0
0
0
0
0
0
Net Trade
(1,000)
(15,249)
(39,844)
(6,377)
(10,172)
(6,734)
(4,700)
(27,594)
Consumption
55,000
65,000
100,000
100,000
150,000
150,000
150,000
155,000
Ending Stocks
36,306
34,555
50,399
65,776
70,948
38,682
30,382
32,976
Source: International Sugar Organization, Yearbook 2000
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.)
The Sugar Industries of East and Southern Africa
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
8
situation might become more precarious were the mill to expand its own plantation. 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.
The Sugar Industries of East and Southern Africa
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).
The Sugar Industries of East and Southern Africa
Page 22
Table 10 – Tanzania: Sugar Balance 1993-2000
(tonnes, raw value)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
120,000
130,000
110,000
100,000
84,455
110,200
113,622
130,000
Imports
36,000
25,467
47,935
70,826
127,507
128,807
56,340
88,583
Exports
11,000
105,871
11,272
12,806
13,358
22,121
12,860
17,375
Net Trade
(25,000)
80,404
(36,663)
(58,020)
(114,149)
(106,686)
(43,480)
(71,208)
Consumption
120,000
115,000
120,000
160,000
175,000
200,000
200,000
207,500
Ending Stocks
80,929
15,525
42,188
40,208
63,812
80,698
37,800
31,508
Source: International Sugar Organization, Yearbook 2000
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.
The Sugar Industries of East and Southern Africa
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
10
Arms”.
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)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
146,598
150,000
150,504
166,449
174,024
172,600
210,000
190,000
Imports
0
124
0
0
2,470
2,564
20
4,438
Exports
50,854
45,000
68,531
74,572
62,671
86,800
3,495
47,191
Net Trade
50,854
44,876
68,531
74,572
60,201
84,236
3,475
42,753
Consumption
86,390
105,000
152,044
154,261
73,909
85,000
115,000
145,000
Ending Stocks
169,475
169,599
99,528
37,144
77,048
80,412
171,937
174,184
Source: International Sugar Organization, Yearbook 2000
Table 12 – Zambia Sugar Exports 1997- 2000
(tonnes, raw value)
2000
1999
1998
10
1997
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 20062008, which combines with a sugar quota for the LDCs in 2001-2008.
The Sugar Industries of East and Southern Africa
Page 24
European Union
Congo Rep. of
Others
Total
46,946
0
245
47,191
3,195
0
216
3,495
12,826
56,460
17,514
86,800
12,826
45,567
4,278
62,671
Source: International Sugar Organization, Yearbook 2000
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)
Year
1993
1994
1995
1996
1997
1998
Production
137,010
213,155
241,331
233,759
209,720
209,705
Imports
0
12,722
0
0
1,563
15,151
Exports
26,636
43,216
64,729
57,127
51,406
67,224
Net Trade
26,636
30,494
64,729
57,127
49,843
52,073
Consumption
161,885
148,593
164,025
173,366
177,684
158,313
The Sugar Industries of East and Southern Africa
Ending Stocks
50,203
87,271
99,848
103,114
85,307
84,626
Page 25
1999
2000
187,392
208,804
0
4,725
47,395
64,890
47,395
60,165
137,195
126,644
87,428
109,423
Source: International Sugar Organization, Yearbook 2000
Table 14 – Malawi Sugar Exports 1997- 2000
(tonnes, raw value)
European Union
Portugal
United States
Kenya
Unknown
Others
Total
2000
19,923
19,362
10,496
6,184
0
8,925
64,890
1999
36,807
0
10,588
0
0
0
47,395
1998
67,224
0
0
0
0
0
67,224
1997
21,695
0
0
0
26,395
3,316
51,406
Source: International Sugar Organization, Yearbook 2000
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.)
The Sugar Industries of East and Southern Africa
Page 26
Table 15 - Swaziland: Sugar Balance 1993-2000
(tonnes, raw value)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
458,327
473,809
418,969
458,299
457,437
537,096
571,051
552,979
Imports
0
6,956
0
0
0
0
0
0
Exports
363,281
266,746
275,204
241,306
229,274
256,527
215,609
339,298
Net Trade
363,281
259,790
275,204
241,306
229,274
256,527
215,609
339,298
Consumption
103,328
141,005
174,009
188,350
186,918
249,500
275,105
245,808
Ending Stocks
186,009
259,023
228,779
257,422
298,667
329,736
410,073
377,946
Source: International Sugar Organization, Yearbook 2002
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)
European Union
Iran
Malaysia
Russian Fed.
Saudi Arabia
United States
Others
Total
2000
181,637
21,086
24,354
45,648
23,195
34,022
30,442
339,298
1999
169,493
0
0
0
0
17,655
28,461
215,609
1998
216,519
0
0
0
0
3,350
36,658
256,527
Source: International Sugar Organization, Yearbook 2000
The Sugar Industries of East and Southern Africa
1997
178,706
0
0
0
0
27,641
22,927
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)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
1,282,157
1,777,253
1,731,604
2,470,622
2,419,427
2,984,892
2,546,886
2,690,741
Imports
61,676
53,801
44,198
0
0
0
0
0
Exports
51,562
318,097
389,780
971,767
984,204
1,087,088
996,029
1,291,110
Net Trade
(10,114)
264,296
345,582
971,767
984,204
1,087,088
996,029
1,291,110
Consumption
1,302,632
1,479,995
1,381,357
1,330,444
1,656,086
1,366,806
1,222,870
1,296,167
Ending Stocks
1,135,335
1,168,297
1,172,962
1,341,373
1,120,510
1,651,508
1,979,485
2,082,959
Source: International Sugar Organization, Yearbook 2002
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. Smallscale 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.
The Sugar Industries of East and Southern Africa
Page 28
Table 18 - South Africa - Exports 1997-2000
(tonnes, raw value)
Iran
Japan
Korea
Persian Gulf
Saudi Arabia
United States
Unknown
Angola
Kenya
Mauritius
Mozambique
Nigeria
Tanzania
Others
Total
2000
157,572
215,268
128,782
122,904
102,450
4,626
273,843
5,796
32,108
21,821
9,056
30,200
13,155
173,529
1,291,110
1999
64,614
165,221
129,635
40,000
40,000
0
112,459
4,922
22,602
13,770
18,759
0
18,259
365,788
996,029
1998
235,000
226,000
162840
0
30,000
69,922
0
3,966
40,539
38,714
10,382
0
21,093
248,632
1,087,088
1997
101,909
121,364
135,600
0
77,201
34,793
193,256
2,174
0
36,584
0
0
0
281,323
984,204
Source: International Sugar Organization, Yearbook 2000
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
The Sugar Industries of East and Southern Africa
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
11
cane fields. The perspective in the immediate future is to reach 325,000 tonnes.
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.
The Sugar Industries of East and Southern Africa
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)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
603,957
530,223
571,515
623,880
658,445
666,841
395,691
603,561
Imports
0
0
21,636
33,650
41,210
41,434
38,814
41,743
Exports
575,460
551,543
554,887
649,253
610,289
638,694
565,978
449,836
Net Trade
575,460
551,543
533,251
615,603
569,079
597,260
527,164
408,093
Consumption
39,380
39,366
39,399
40,341
42,132
42,683
42,356
41,527
Ending Stocks
253,367
192,681
191,546
159,482
206,716
233,614
59,785
213,726
Source: International Sugar Organization, Yearbook 2000
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.
The Sugar Industries of East and Southern Africa
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
12
authorities assume the responsibilities.
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, Richeen-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.
The Sugar Industries of East and Southern Africa
Page 32
European Union
United States
Others
Total
2000
439,935
5,402
4,499
449,836
1999
554,970
6,079
4,929
565,978
1998
615,178
18,583
4,933
638,694
1997
579,866
24,660
5,763
610,289
Source: International Sugar Organization, Yearbook 2000
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)
Year
1993
1994
1995
1996
1997
1998
1999
2000
Production
50,890
523,822
511,881
336,731
574,091
571,943
583,358
571,289
Imports
201,153
44,732
24,700
2,468
31,500
11
0
0
Exports
33,489
221,547
168,227
179,311
222,047
242,641
142,725
217,155
Net Trade
(167,664)
176,815
143,527
176,843
190,547
242,630
142,725
217,155
Consumption
228,716
253,193
292,236
286,859
335,046
305,325
375,999
373,714
Ending Stocks
11,255
105,069
181,187
54,216
102,714
126,702
191,336
171,756
Source: International Sugar Organization, Yearbook 2000
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.
The Sugar Industries of East and Southern Africa
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
13
an uncertain economic environment.
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.
The Sugar Industries of East and Southern Africa
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.
The Sugar Industries of East and Southern Africa
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 6070 million.
May & Sept.
1998
Six years to maturation.
100,000 tonnes of sugar,
10,000 h of land
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
85,000 tonnes of sugar
Loans from the African
Development Bank, Australia,
Sweden, Spain and Ethiopia. (F.C.
Shaffer involved?)
8 million litres of alcohol
May 1999 –
Ethanol
plant on line
in 2002
Komenda Sugar Factory
Plans to rehabilitate the
factory to produce sugar,
canned pineapple, oranges,
tomatoes
Ghana
The Sugar Industries of East and Southern Africa
Jan. 2002
Page 36
Kenya
Busia factory - China National
Machinery and Equipment Import
and Export (CMEC International)
(Aug. 1998).
Plans scrapped (July 2000)
4,000 – 10,000 tdc
16,000 h of land
Aug. 1998 –
July 2000 –
July 2001
5-8 billion shillings (USD 70
million)
Consortium of Swedish and South
African companies to build Busia
(July 2001)
Kenya
Kenana (Sudan) to invest in
Muhoroni and Miwani.
Cooperation and investment
July 2001 –
June 2002
Government told to close down
both factories.
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)
Mozambique
Sena Sugar Estates (government +
Mauritian consortium) in the Luabo
and Marromeu mills
USD 70 million
Mozambique
Mafambisse - Technical
studies/management by F.C.
Schaffer 1990/1999.) TongaatHulett 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.)
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.)
Mar. /Apr.
2001
July 1998
Apr. 1998
USD 12 million to reach
100,000 tonnes by 2003
Marromeu run by a Mauritian group
The Sugar Industries of East and Southern Africa
Sept. 2001
Page 37
(Lagesse) – Sugar Sena Estates.
Namibia
Nigeria
Caprivi sugar project (north-eastern
border of Lake Liambezi, 30 km
from the Zambezi river). October
1998: FC Schaffer & Associates
completed study.
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)
Operational by 2008
1998-2001
Approximate cost USD 255
million (over N$2,5 billion).
7,500 direct jobs, 45,000
people to benefit directly or
indirectly.
Rehabilitate 11,000 h;
expand plantation of the two
estates by 4,000 h. (plus
new equipment)
Apr. 1998
Rehabilitate the two factories
at USD 155 million
Nigeria
Sunti Sugar Co.
250 tdc mini-mill
Apr. 1998
Lafiaji plan upgrades to
process 200 tdc.
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)
40,000 t refinery to process
imported raws (April 1998).
Apr. 1998 –
Apr. 2000
New refinery with 700,000
tonnes of refined sugar (April
2000)
U.S. Trade and Development (USTDA) 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)
Nigeria
Construction started for a new
sugar factory in Hadejia – 3,000 tdc
July 2000 –
2002
State government proposed a
three-plant sugar company, one
with 10,000 tdc, and the other two
with less than 1,000 tdc.
Nigeria
US Trade and Development
Agency grants USD 310,000 to
The Sugar Industries of East and Southern Africa
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)
100,000 tonnes of sugar
(USD 86 million)
Feb. 1998
Nordzucker reported as
withdrawing from the project. New
partners sought. (Aug. 1999)
South Africa
Tongaat-Hulett attempt at buying
Transvaal Sugar fails
Sudan
Kenana Sugar Company [KSC] and
the OPEC Fund for International
Development [OPECFID]
Agreement for repayment
guarantee signed between KSC,
the OPEC Fund, the SudaneseFrench Bank and the British Trade
Bank.
Aug. 2000?
Complete the major
component for the final
expansion project and
providing power for the
factory, and expanding other
projects.
7 Jan. 2002
USD 10 million loan.
Kenana to produce 500,000
tonnes
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.
Commercial production in
2003, with 150,000 tonnes
(75,000 tonnes for exports).
(July 1998)
July 1998 –
Jan. 1999 –
Aug. 2001
Investors from Sudan, Egypt, Libya,
South Africa, and the Arab
Authority for Agriculture Investment
and Development (AAAID).
16,000 jobs
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
Total output 300,000 tonnes.
(Aug. 2001) then rising to
500,000 tonnes.
The Sugar Industries of East and Southern Africa
Page 39
Swaziland
Mhlume Sugar Co.
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.
Tanzania
Kilombero: Illovo Sugar,
E.D.&F.Man
Increase from 30,000 tonnes
to 110,000 tonnes by 2001
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.
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).
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.
Increase from 170,000 to
250,000 tonnes by 2000
Feb. 1998
2001
Mar. 1998
Production of 40,000 tonnes
in 2001, then 72,000 tonnes
by 2006
Jan. 2000
Investment of USD 75-80
million.
Nov. 1998 –
Dec. 2001
Double production to
140,000 tonnes in five years
(2,600 to 5,000 tdc)
Co-generation project: 30
mw.
Uganda
Kakira outgrowers propose setting
up a 1,000 tdc mill
United
States
Illovo Sugar – Monitor Sugar
Mid 2002
Illovo buys Monitor Sugar
from C.G.Smith for USD
The Sugar Industries of East and Southern Africa
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 cogeneration facility.
Financing from PTA Bank –
Nairobi (related to a line of
credit extended to the bank
by Exim Bank of India).
June 2002
India’s ISGEC to supply
USD 5 million in equipment.
Zambia
Luena Sugar Project (60 km south
of Kawambwa, Luapula Province)
12,000 hectare plantation
133,000 tonnes of sugar per
year
Identified in
1975 –
Talks in
1999
109.0 million litres of alcohol
per year.
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.
Apr. 1998Nov. 1998
Zimbabwe
Hippo Valley
Potential to expand to
70,000 tonnes after
completion of the TokweMurkosi 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
Project would have used the
equipment from the Mount
Edgecombe mill (SA) closed
in 1995 (?)
The Sugar Industries of East and Southern Africa
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.
The Sugar Industries of East and Southern Africa
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
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
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
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
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
0.92
(3.52)
(1.25)
4.05
8.16
(1.06)
3.41
4.83
(0.37)
(2.07)
3.47
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
0.99
0.81
0.44
2.16
2.40
2.65
1.85
1.92
2.19
1.66
1.65
36.45
35.94
33.46
33.26
38.81
38.67
40.80
45.27
47.15
47.42
47.81
Opening stocks
Production
Imports
Disappearance
+/- per cent
+/- Consumption
+/- per cent
2001/02
Stocks as $
of consumption
Source: F.O.Licht's International Sugar and Sweetener Report - World Sugar Balances
The Sugar Industries of East and Southern Africa
Page 43
World Sugar Production by Regions – 1970/71 – 2001/02 September/August (1,000 tonnes,
raw value)
West Europe
1970/71
1975/76
1985/86
1991/92
1995/96
1999/2000
2000/01
2001/02
11,522.0
14,108.0
18,030.4
19,919.7
18,962.7
22,312.2
21,463.7
18,470.0
10,379.0
14,626.8
16,756.1
16,973.1
19,184.8
18,208.9
15,992.2
European
Union
(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
12,677.0
11,954.0
12,224.1
10,632.4
9,791.1
7,223.9
7,120.0
7,072.0
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
East Europe
Poland
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
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
2,972.0
3,205.0
3,686.8
3,937.3
6,157.7
5,470.6
5,029.3
5,467.2
2,590.0
2,933.0
3,290.7
3,418.7
5,631.7
5,087.3
4,605.1
5,102.6
73,026.0
82,873.0
98,770.2
117,146.9
125,595.6
134,213.9
129,111.1
135,967.2
Asia
Oceania
Australia
World Total
Source: F.O.Licht's International Sugar and Sweetener Report - World Sugar Balance
The Sugar Industries of East and Southern Africa
Basic Information of Sugar Mills and Refineries in East and Southern Africa
Outgrowers
Workers
Country
Mill
Company
Capacity (*)
Total
KENYA
BUNGOMA
KENYA
Factory
Field
Women
Nzonia Sugar Co. Ltd. (F.C.
Schaffer)
3,000 tdc
2,780
70
80% of cane
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
MALAWI
DWANGWA
Dwangwa Sugar Corp. Ltd.
(Illovo)
4,000 tdc
3,395
300 (10 % of
cane)
MALAWI
SUCOMA
Sugar Corp. of Malawi Ltd.
(Illovo)
7,200 tdc
5,099
250 (10 % of
cane)
(Nchalo)
MAURITIUS (2)
BEAU
CHAMP
3,750 tdc
MAURITIUS (2)
BEAU PLAN
2,261 tdc
The Sugar Industries of East and Southern Africa
20
80% of cane
2,587
The Sugar Industries of East and Southern Africa
(closed)
MAURITIUS (2)
BELLE VUE
MAURITIUS (2)
BRITANNIA
(closed)
MAURITIUS (2)
HIGHLANDS
(closed)
5,000 tdc
BBHM Consortium (Espitalier,
Lagesse)
BBHM Consortium (Espitalier,
Lagesse)
1,050
2,735 tdc
212
690
526
1,388
2,600
MAURITIUS (2)
MEDINE
4,051 tdc,
20,000 dap,
500 drc,
3,000,000
aap
MAURITIUS (2)
MON
DESERT
ALMA
3,383 tdc
MAURITIUS (2)
MON LOISIR
Lagesse Group
3,546 tdc
MAURITIUS (2)
MON
TRESOR
BBHM Consortium (Espitalier,
Lagesse)
2,504 tdc
MAURITIUS (2)
RICHE EN
EAU
2,828 tdc
807
MAURITIUS (2)
SAINT FELIX
1,378 tdc
1,749
MAURITIUS (2)
SAVANNAH
MAURITIUS (2)
UNION
FLACQ
6,600 tdc
MAURITIUS (2)
UNION
SAINT AUBIN
2,593 tdc
Espitalier Noel
Page 45
2,791 tdc
2,234
376 (field)
550
2,102
279
398
1016
1,172
940
1,544
4,722
204
363
The Sugar Industries of East and Southern Africa
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
5,036
800 drc
SOUTH AFRICA
GLENDALE
Illovo Sugar (4)
SOUTH AFRICA (5)
KOMATI
Transvaal Sugar
SOUTH AFRICA (5)
MAIDSTONE
Tongaat - Hulett (2)
SOUTH AFRICA (5)
MALELANE
Transvaal Sugar
SOUTH AFRICA
MEREBANK
Illovo Sugar (4)
Page 46
Distillery only
9,000 tdc
886
10,500 tdc
5.874
512
Distillery only
The Sugar Industries of East and Southern Africa
SOUTH AFRICA (5)
SOUTH AFRICA (5)
NOODSBER
G
Illovo Sugar (4)
PONGOLA
Illovo Sugar (4)
6,720 tdc
1,058
1,150 drc
5,000 tdc
536
600 drc
SOUTH AFRICA (5)
SEZELA
Illovo Sugar (4)
10,800 tdc
5,329
SOUTH AFRICA (5)
UMFOLOZI
Illovo Sugar (4)
6,000 tdc
5,852
700 drc
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
TANZANIA
KAGERA
Kagera Sugar Ltd. (same owner
that Mtibwa)
2,500 tdc
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+
4,500
500 drc
Page 47
128
2,500
The Sugar Industries of East and Southern Africa
TANZANIA
RUEMBE
Kilombero Sugar Co. Ltd.
(Illovo)
2,400 tdc
700 inc.
Msolwa
UGANDA
KAKIRA
Kakira Sugar Works (Madhvani
Group / State)
3,000 tdc
6,500
1,600
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
500
40
BULAWAYO
(ex-Tate & Lyle) acquired by
CABQ (Botswana registered)
190 drc
(ex-Tate & Lyle) acquired by
CABQ (Botswana registered)
305 drc
ZIMBABWE
ZSR Corp.
refinery
ZIMBABWE
HARARE
ZSR Corp.
refinery
(1,800
unioniza
ble)
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 48
2,100 ha
4,900
540
3,200 –3,500
The Sugar Industries of East and Southern Africa
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/
Page 49