Sugar companies were at the end of the year engaged in furious negotiations with Prof. Jumanne Maghembe, the former minister for Agriculture, Food Security and Cooperative s, though this may finally have been a mistake.
If this was a question sent to Parliament for an answer, it should most likely have come under Dr Mary Nagu, the minister responsible for Investment and Empowerment.
Why the flooding the country with imported sugar went to the food security portfolio was a result of ideology, which many people are now learning to doubt, that protecting local factories is the same as ensuring food security. It was at this time that sugar prices were rising as imports were being curbed.
In their encounter with Prof. Maghembe, the sugar companies told him that cheap imported sugar was killing local factories, noting that about 242,000 tonnes worth $157.3 million had been brought in.
In the usual sentiment characterizing the country’s sociopolitical tradition, this would have been seen as a scandal, and it is surprising that the sugar firms did not get at least one MP to seek out the minister in Parliament, as to who issued ‘permits’ for the huge stocks of imported sugar.
It would naturally have implied that some bribe was offered, otherwise in his normal thinking capacity – in a Julius Nyerere mind frame – the minister would have protected local producers against imports.
As a matter of fact, local producers of sugar have over-used that sentiment in the country to the extent of taking it for granted, but it seems that they failed to take up a more combative position on the matter because of the spiralling price of sugar.
On the one hand local producers were making valid claims that they were producing enough for the country’s needs, in which case no large imports were needed, but either the factory managements of the agents purchasing the sugar were more interested in the markets across the border, as is the case with maize produce. That means shortages were rising and so other traders had to seek supplies from surplus countries overseas, and then local firms complained.
Indeed, it can be said that the minister had little room for manouvre because sugar prices were rising and this was leading to higher agitation at the political level, so if imports could be found to curb the situation so much the better.
The difference is that this time around the game that was played on former Industries and Trade minister Iddi Simba could not be done, as in 1998 it could be believed if MPs said that the permits the minister issued for the beverages industries to import sugar caused the rise in the price of sugar which, for some incomprehensible reason, was believed by Parliament and the minister was forced to resign.
So this time sugar factories could not use price rises on the one hand and imports on the other as weapons, as this time no special permits were issued since the import-export regime is more relaxed.
When the sugar factories talk about imports ‘killing’ them the reference is to the need for them to operate at lower costs and thus be able to mount competition at the pricing level, which is giving them problems despite most of them being tied up with multinational firms, coming in during their privatisation.
It means that foreign firms which acquired majority shares in local sugar firms wish to use the minority stake that the government habitually retains when it privatizes to make it a weapon for its protection against the dictates of market forces.
This is what happened when they successfully lobbied with President Benjamin Mkapa in 1998 after he had visited Kilombero Sugar Co. and found stacks of sacks of sugar piled up to the godown’s roof. He was given the ‘cheap imports’ complaint, and thus acted.
The president’s decision in 1998 and the way in which NGOs treated it in a cavalier fashion despite its huge ravages oin the condition of children in the country in the following years is an example of how local intellectual sentiment is incapable of noticing big parastatal and quasi-parastatal interests and how they harm civic rights.
President Mkapa slapped an additional import duty of Sh350 per kilo of imports, which was like adding another Sh350 to the price of sugar at that time, which was Sh350, in which case the price went up to Sh700 and never climbed down.
It momentarily reached Sh1,000 per kilo and that is when Parliament moved to impeach Iddi Simba, when the import ban was biting, not just the added duty. As no ban on imports could be moved in 2011 when the sugar firms were complaining, prices just rose.
What is amiss in all these complaints is that the country’s business sentiment, as well as the operational climate, is still backward, as the sugar firms need to list on the stock exchange, be purchased in part or entirely by biofuel firms and perhaps beverages monopolies, etc, who will pump in new capital.
Those who produce more cheaply in South Asia and other places must be having equipment which diminished the labour element and its cost, and local sugar firms scarcely have that sort of equipment, so they enter into production agreements with peasants in surrounding areas, and this sort of contract farming is usually pegged on acceptable prices, etc.
In a different sort of environment, a major sugar firm would move to purchase the land from the peasants and mechanise production, not expensive contracting.
Whether or not the majority foreign shareholders have this sort of idea, that the place their shares or stock on DSE and thus be available for capital infusion from agriculturalists or agribusiness firms in other countries, or too much still depends on the interest of the minority shareholder who wants the status quo to continue.
MPs serve on boards of directors and visiting parliamentary committees feel at ease and with the required influence, and in like manner MPs can with ease contrive this or that scenario as to ministers being ‘bribed’to let down local firms, as that sort of charge has special resonance when the complaining firm or the source of the complaint is a partially privatized firm or a parastatal.
The sense of belonging is heightened, as MPs still live psychologically in the era of socialism, parastatals being our image, identity. Thus, the greater difficulty to lining up sugar producing companies on the stock exchange and obtaining share funds for them to modernize production systems is likely to be the minority interest, the state’s.
At the same time regional harmonisation as well as other dictates of the world trade regime have gone far enough to prevent a free hand by MPs to succeed in pushing the government towards socialist solutions like President Mkapa’s Sh350 custom duty rise per kilo of sugar, touching off malnutrition of thousands of children and break-up of families by that measure. That is why sugar firms will finally be reformed too.