Tanzania sugar sector to get $8m from EU in 2009

Tanzania will this year access $8 million from the European Union as part of the support programme by the European Union for funding sugar producers.

The director of the Sugar Board of Tanzania, Mathew Kombe, told The EastAfrican the money is the second tranche for the year 2007/8 after the first disbursement of $7.96 million on the same programme.

Mr Kombe said the fund is part of the $233 million offered by the EU as an assistance package to 18 countries in the African, Caribbean and Pacific bloc (ACP) for 2007-2017 to address the impact of new lower prices in the European market.

“Another $2.8 million is in the pipeline for the same purpose for year 2010, and we expect $5.6 million after 2010. However, due to budgetary rules in the EU, this had not been decided as yet,” he said.

The EU strategy is important for countries such as Tanzania — whose sugar sector employs over 66,000 people direct and indirectly — since it will act as a cushion mechanism when the EU adapts the new price regime.

The new sugar price regime is a result of a political agreement reached by EU agriculture ministers late in 2006, restructuring the system of EU production quotas and reducing in price by 36 per cent over a period of four years.

Recently, Tanzania reviewed its National Adaptation Strategy for accessing funds from the EU support programme with sugar industries asking for $340 million to make them competitive.

However, the EU has said it can only manage to support Tanzania sugar sector to the tune of only $14 million through the period to 2013.

Although the National Adaptation Strategy was prepared in consultation with players in the sugar industry, the sector is still pessimistic, saying the amount offered by the EU is not enough for them to maintain their competitive edge.

Although Tanzania, being one of the beneficiary countries that negotiated the sugar protocol under the ACP bloc, didn’t get what it asked for, it will continue to benefit from other trade agreements such as Everything But Arms (EBA), which benefits Least Developed Countries.

During the transition period until this year, the EBA concession is gradually granting quota preferences and partial duty free access to sugar imports from the LDCs. All agriculture products are included in EBA, whose concessions came into effect in March 2001.

The European Commission says that the EU reforms in the sugar sector were necessary due to pressure from the World Trade Organisation as well as European consumers, who paid prices for sugar within the European market two to three times higher than world market prices.

According to negotiated agreements, in addition to support the adjustment to the new price regime, the EU will also open its markets.

This means that from 2009 onwards, all LDCs including Tanzania can export sugar to the EU without quota restrictions. Before, these amounts were limited to only 20,000 tonne.