Tower of Babel in sugar industry

27Feb 2016
Lydia Shekighenda
The Guardian
Tower of Babel in sugar industry

Sugar producers have allayed public fears over possible shortage of the commodity, saying there is enough stock to last until April when they will be required to import around 120 metric tonnes as a temporary measure to cover the deficit.

The Sugar Board of Tanzania says annual production of domestic sugar from the four local factories, namely Mtibwa, Kilombero, Kagera and Tanganyika Plantation Company (TPC), stands at around 300,000 metric tonnes while the annual demand is 420,000 metric tonnes, thus the deficit has been covered by imports.

Speaking to journalists in Dar es Salam yesterday on behalf of sugar producers, Ami Mpungwe, the Kilombero Sugar Company Ltd board chairman, said that the factories have enough stock of 32,000 tonnes which will last up to April, this year.

“The factories have a stock of 32,000 tonnes of sugar which is being sold to wholesalers, and some factories are still producing the commodity until April this year,” Mpungwe said.

He dismissed claims by some sugar dealers that local factories were facing a shortage of the commodity, and that is why they have hiked the price of sugar.

“We assure the public that we have enough stock and our factories have not increased the price of the commodity. Sugar prices from all the factories range between 1700/- and 1800/- per kilogramme … there is no factory which has hiked the price after the government banned imports,” he said.

Mpungwe described the claims by sugar the cartel as propaganda because the group was not happy with the government decision to ban sugar importation since they benefited from the system.

He explained that the government has set up a system which will only allow the importation of the amount to cover the deficit, especially when the factories cease production.

“Some dealers are not happy with the government decision to come up with the new system of importing the commodity because they were benefiting through the importation of illegal sugar…they are using malicious tactics such as hiking the sugar price so as to weaken government efforts to protect local factories,” Mpungwe said.

Mpungwe however said that sugar producers were determined to see that production of the commodity increased to cover the deficit.

Sugar Board of Tanzania development planning and liaison manager Abdul Mwankemwa said that sugar factories have not increased the price of the commodity, although the retail price had been hiked.

“We have enough stock to last until April and two factories, TPC and Kagera Sugar, have not shut down production… Sugar to cover the deficit will be imported through a new system designed by the government,” he said.

Seif Ali Seif, chairman of Kagera Sugar, said that the government’s decision intends to build a strong economy and to promote the local sugar industry.

The system which the government is trying to put in place was applied in Uganda and in West Africa and was successful, he said, noting that most SADC countries were exporting sugar, thus it was possible to do so in Tanzania.

During privatization the sugar industry was growing at 23.5 per cent, but currently the growth rate had dropped due to unregulated importation of the commodity.

Last week President John Magufuli banned sugar imports to protect the local sugar industry, which for many years has been hard hit by the continued supply of cheap and illegal sugar from abroad.

The president said the country could not achieve its envisaged industrialization targets if local factories were not protected from and empowered against such cheap imports.

"We have domestic factories that buy sugarcane from smallholder farmers. These factories produce sugar, provide employment and are a source of government revenue. But although we have enough of our own stock, there are people in government still arbitrarily issuing permits to import sugar," he said yesterday at the State House in Dar es Salaam.

"These people are undermining this government's efforts ... I am now making it clear that no more sugar import permits will be issued unless under special circumstances," the president underlined.

He said some of the sugar being imported into the country had expired and was unfit for human consumption. But a dealer who preferred anonymity told The Guardian that it appeared the government preferred to favour producers under the pretext of protecting local industries at the expense of consumers. He said local producers should have been left with the role of production.

According to the dealer, local producers were not telling the truth as far as the status of sugar production and the stocks in their warehouses were concerned, noting that since producers were given import permits to fill the gap the whole concept of protecting local industries was rendered meaningless.

“Sugar producers have been curtailing the product to create scarcity in the market. There is no doubt they will start playing this game, creating high demand in the market, hence hiking prices,” he elaborated.

He also expressed fears that by giving importation permits to local producers to import the sweetener there was likelihood for the product to fetch higher price both in wholesale and retail prices, despite tax exemptions that may be offered by the government.

He also pointed out that there are some areas that were getting sugar from Kilombero and Mtibwa before the two plants stopped production. “Now, given the fact that such areas are compelled to get the product from TPC in Moshi and Kagera definitely the price will go higher due to transportation costs,” he said.

Information made available to The Guardian yesterday had it that the TPC and Kagera Sugar have inadequate stocks.