South African sugar industry is a success story

The sugar industry in Southern Africa is a success story.

It is expanding against all odds, owing to favourable fluctuations in the market.

These are placing rival producer countries in precarious situations, more so with the global economic recession.

Key countries in the sub-region — such as South Africa, Swaziland, Mozambique and Zambia — have embarked on ambitious projects to increase sugar production for both domestic and external markets.

The exception is Mauritius, which from 1997 to date has reduced its sugar factories from 17 to eight, and has been downsizing the labour force.

The move is deliberate; the nation hopes to surmount internal and external market forces.

The reduction of sugar mills in Mauritius is aimed at improving the throughput of the existing companies following the laying off of many workers.

The Action Plan for 2005-2015 hoped to address some of the problems plaguing the sugar industry.

For a while now, this Indian Ocean island has been recording losses in both production and income despite a 17 per cent dependence on external revenue from sugar exports.

A number of major sugar growers in the country have now abandoned the crop altogether, sold their farms or stopped investing in sugar production.

This has badly hit the sugar industry, a pillar of the country’s economy.

Not just for export

To many people in Mauritius, sugar-cane growing is the same as sugar civilisation. The crop is not simply for export.

Take, also, Mozambique: the South African-based Tongaat-Hulett had, by last year, invested more than $47 million in expansion of the sugar industry.

According to the agricultural processing and land management group, more than 800,000 hectares of land for sugarcane planting will be developed in the next few years as part of its investment in the neighbouring country.

In Zambia, the Associated British Foods group, the major stakeholder in the Zambia Sugar Company, is also expanding.

More than 27,000 hectares will be brought under sugar cane growing, with an anticipated yield of more than 3.2 million metric tonnes to feed the Nakambala refinery in Mazabuka, southern province.

When that happens in two years, the Nakambala mill will be the second largest in Africa, pushing up refined sugar production from the current 200,000 tonnes to 440,000 tonnes annually.

Development of the first 10,447 ha of land into cane fields is expected to be completed in the first quarter of next year.

Sources at Zambia Sugar Plc say the expansion will be achieved through a combination of own efforts and those of affiliated outgrower and small-scale grower schemes.

Their contribution to the company’s sugar production is between 57 per cent and 10 per cent, respectively.

The increase in the primary production of sugar follows a huge investment of about $150 million, which was committed to the Nakambala Expansion Programme two years ago.

It was meant to increase the mill crushing capacity to almost 50 per cent.

The expansion programme raised Zambia’s refined sugar export to Europe from 45,000 tonnes in 2005 to about 60,000 tonnes now.

As for South Africa, it produced 644,000 tonnes of refined sugar last year, compared with 604,000 tonnes the previous year.

The drop in production for 2006/2007 was partly blamed on poor yields in project countries, resulting in lower raw sugar exports.

Exports from these countries last year stagnated at about 210,000 tonnes, compared with 245,000 tonnes in 2007.

The poor yields last year and this year were caused by a shortage of established industrial logistics, support and service locations for the Tongaat-Hulett group in Swaziland, Mozambique and Zimbabwe.

All the same, Mozambican operations at Mafumbisse and Xinavane helped to increase South Africa’s overall profits for sugar exports from $8.8 million in 2007 to $25 million last year.

The company’s overall revenue from both its internal and external sugar operations reached $710 million last year, almost 11 per cent above the previous year’s revenue.

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source: theeastafrican.co.ke