Sugar glut in Tanzania caused by illegal imports

Illegal importation of sugar is making the going tough to domestic producers, the executive Secretary of Tanzania Sugar Producers Association (TSPA), Ambassador Fadhili D. Mbaga has said.

Illicit sugar imports are often branded as unlicensed and undeclared commodities, which is being blamed for causing unfair competition and serious threat to the existence of domestic sugar industry.

Amb. Mbaga said for the last two years, domestic production has been ranging between 100,000 and 200,000 tonnes per year and the local producers were determined to increase production even further.

However, the local producers were concerned with continuation of unlicensed and undeclared sugar into the Tanzania market which distorted it.

His forecast is similar to that of the state- run Sugar Board of Tanzania (SBT) which in June said sugar production may rise by a fifth this season following improved rainfall and regional demand which spurred growers to plant more cane.

According to Tanzania Agricultural Trade Development Centre announcement this month, output might increase to 317,000 metric tonnes between June 2008 and March 2009, from 265,000 tonnes in the same period a year earlier.

Tanzania aims to produce 400,000 tons by 2010, while sugar imports for household consumption in Tanzania would probably fall to about 30,000 tons in 2008-09, from 50,000 tonnes last year.

However, both TSPA and SBT are concerned that licensing importation of sugar, which is done through SBT`s technical committee to which representatives of producers and importers are co-opted leaves much to be desired because all imports are handled at the port by Port Authorities and Tanzania Revenue Authority (TRA).

Licenced sugar importers are taxed 25 per cent while those importing without licenses are taxed 100 per cent and such licenses expire every month of June.

Nevertheless, there are illegal routes especially at border points which are used to smuggle in small quantities of sugar which are usually seized and confiscated by TRA.

SBT Director General, Mathew Kombe was quoted over the weekend saying that recent survey carried out by his Board at most strategic selling points throughout the country found out that at least 6,000 tonnes of sugar have been imported illegally per month since last September.

SBT was not issuing licences to private dealers to import sugar for the time being as all licences expired since last September.

How consignments were getting into the country remains a puzzle, according to Kombe.

Worst, the safety of the illegal imports could not be guaranteed, thus, posing health hazards to consumers.

During year 2009, said Amb. Mbaga, Tanzania`s producers plan to increase production to 300,000 tonnes following rehabilitation and expansion of the Kagera Sugar Company.

On the other hand, the small cane growers at Kilombero and Kagera sugar companies are expected to dramatically increase production and supply of sugarcanes to the two factories.

``We have had discussions with the government but with little success since we still see illegal sugar flooding the market`` Mbaga said.

He said that even the Tanzania Revenue Authority (TRA) has joined the fight against the unlicensed and undeclared sugar imports.

He, however, cautioned that the sector was not asking the government for total protection, but sort of governance that would ensure the business of imported sugar was clean one and was properly taxed.

Annually, as additional 70,000 tonnes is expected to be brought in by manufacturers for use in soft drinks, candies, cookies, juices and beers production.

Sugar rose to its highest in almost four months in London by Saturday on speculation that near-record crude-oil prices will spur demand for ethanol produced from cane.

White sugar for October delivery rose USD14, or 3.7 percent, to USD391.20 a metric ton on London`s Liffe exchange, the highest since March 3. The commodity added to a 20 percent gain last month that was the biggest since June 1989.

Records show that in 2000, Tanzania imported 92,415 metric tons of sugar valued at USD 21.1m while its sugar exports reached 18,007 metric tonnes worth USD 9.1m.

The Tanzania sugar sector is said to employ directly and indirectly more than 650,000people.
SOURCE: Guardian