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[nobody]

SA Canegrowers warns of sugar industry crisis amid health promotion levy

SOUTH AFRICA – The sustainability of South Africa’s sugar industry is facing significant threats as major sugar mills remain in business rescue and the potential increase in the Health Promotion Levy (HPL), commonly known as the sugar tax, looms.

Industry body SA Canegrowers has raised alarms over these developments, noting severe impacts on the market and employment.

Since the HPL’s implementation in 2018, the sugar tax has suppressed the market for locally produced sugar, resulting in the loss of more than 16,000 jobs.

Newly elected chairperson Higgins Mdluli criticized the lack of action on the promise to review the HPL under Phase 1 of the Sugarcane Value Chain Masterplan, stating that no meaningful engagement has taken place.

Mdluli called on the South African government to support the sugar industry to protect small canegrowers and the jobs they sustain. He advocated for the complete removal of the HPL, arguing that it hampers investment in the industry’s transformation, a key goal of the masterplan.

Research by the Bureau for Food and Agricultural Policy indicates that increasing the HPL would reduce land under sugarcane cultivation and decrease the amount of sugarcane delivered to mills, especially from small-scale farmers.

“We need the industry to do more than just survive. The more we grow and expand, the more we can invest in supporting small-scale growers. To advance transformation, we need to recognize the barriers to sustainability and growth,” Mdluli emphasized.

SA Canegrowers also urged the government to expedite the value chain diversification project through Phase 2 of the masterplan.

They explained that a coordinated effort involving canegrowers, retailers, millers, and the government is essential to address the various threats and opportunities in the sugar industry.

Bio-energy production

Concurrently, South Africa and the UK have entered into a new collaboration aimed at transforming sugar into energy on an industrial scale to address South Africa’s energy challenges.

The project, led by British agri-technology company AgriSound, in partnership with the UK Agri-Tech Centre and South Africa-based GYO Systems, focuses on improving sugarcane yields through enhanced monitoring of crop pests and innovative hydroponic technologies.

The initiative aims to increase bio-energy production in South Africa by deploying AgriSound’s ‘Polly’ insect listening device to track and mitigate damage caused by pests like the Eldana Stalk Borer.

The data generated from these devices will provide actionable insights to help growers sustainably harvest more abundant sugarcane crops within existing production areas, thus avoiding conflicts over land use.

The project has received a grant of over £200,000 from Innovate UK’s African Innovation Collaborations for Net Zero Places.

https://www.foodbusinessafrica.com/sa-c ... tion-levy/

[nobody]

Tanzania proposes legal amendments to strengthen national sugar reserves

TANZANIA – The Tanzanian government has proposed legal amendments to empower the National Food Reserve Agency (NFRA) to buy, stock, and reserve sugar as a national food reserve, ensuring its availability in the domestic market during shortages.

Minister for Finance, Dr. Mwigulu Nchemba, stated that this measure aims to maintain a constant supply of sugar and prevent hoarding by manufacturers while protecting local industries. The NFRA regulations will be amended to include sugar as part of food security.

Additionally, Dr. Nchemba proposed a charge of Tsh50 (US$0.019) per kilogram of sugar by-products. This measure is intended to boost revenue and empower the Sugar Board to enhance training and capacity building in the sugar industry. It will also support monitoring sugar production through the expansion of existing industries and encouraging new investments.

Tanzania faces a significant sugar deficit, with production reaching 460,049 tonnes in 2022/23 against a demand of about 800,000 tonnes for the 2023/2024 financial year.

Prime Minister Kassim Majaliwa announced initiatives to increase sugar production by 53.5 percent over the next two years, aiming to address this shortage.

Presenting budget estimates for the forthcoming financial year, Mr. Majaliwa revealed that the government plans to ramp up production to 700,000 metric tonnes by the end of the 2025/26 financial year.

As part of this effort, Tanzania will introduce a project in Kilombero District, Morogoro Region, to produce sugarcane seedlings on a 400-hectare block farm, among other initiatives.

Earlier this year, the Ministry of Agriculture authorized the NFRA to import over 300,000 tonnes of sugar to mitigate the crisis.

Last year, the government inaugurated the Mkulazi sugar factory, which has a production capacity of 50,000 metric tonnes, to help meet regional demand.

https://www.foodbusinessafrica.com/tanz ... -reserves/

[nobody]

Kenya’s Soin Sugar Factory set to resume operations

KENYA – Sugarcane farmers in Kericho and Kisumu County borders have received a significant boost following the set revival of Soin Sugar Factory in Soliat Ward, Kericho County.

This initiative is set to rejuvenate the local sugar industry and enhance the economic well-being of the farming community.

Paul Chirchir, Chairman of Soin Sugar Company, announced that the project is expected to be completed within 18 months.

The factory, which ceased operations in 2014 due to outdated technology, will be equipped with new milling technology to improve efficiency.

“We plan to start processing 1,500 tons of sugarcane per day and progressively increase to a capacity of 4,000 tons per day,” Chirchir stated.

Chirchir revealed plans to collaborate with the Sugar Board and other stakeholders to provide farmers with the latest sugarcane varieties that mature within 10-12 months. These fast-maturing varieties, combined with training in modern farming methods, are expected to help farmers achieve better returns while reducing production costs.

Previously, farmers incurred costs ranging from Kes800 (US$6.20) to Kes1,200 (US$9.30) per ton to transport sugarcane to distant factories such as Kibos and Muhoroni.

The revitalized factory will serve farmers in Soin/Sigowet, Ainamoi, and Belgut constituencies, aiming to expand its catchment area further. “We aim to expand the catchment area beyond Soin/Sigowet,” Chirchir noted.

In addition to sugar processing, the factory plans to diversify its operations into distillery, power generation, fertilizer manufacturing, and carton manufacturing, creating multiple avenues for local economic growth.

Kericho Governor Erick Mutai announced that his administration would allocate Kes50 million (US$387,566.85) for cash crop development, including sugarcane, to be distributed freely to Kericho farmers.

“The Soin Agriculture Research Center will develop fast-maturing, high-yielding sugarcane varieties with high sucrose content, similar to Brazilian varieties,” he said.

Governor Mutai also revealed plans to hire 30 agricultural extension officers to educate farmers on the best sugarcane varieties, fertilizers, and practices to maximize yields and returns. Additionally, an outlet for government-subsidized fertilizer distribution will be established in Kapsorok.

The revival of Soin Sugar Factory coincides with the planned construction of a Kes500 million (US$3.88M) industrial park in Kapsorok by the national and county governments, providing further growth opportunities for the company and the region.

https://www.foodbusinessafrica.com/keny ... perations/

[nobody]

Tanzania implements new regulations to stabilize sugar supply and control prices

TANZANIA – Tanzania has introduced new regulations on sugar production, importation, and distribution, aiming to stabilize the sugar supply and control prices within its borders.

The parliament has passed a bill containing amendments to the Sugar Industry Act, granting the National Food Reserve Agency (NFRA) exclusive authority to import, store, and distribute sugar for domestic consumption.

According to Tanzania’s Finance Minister, Mwigulu Nchemba, the newly amended Sugar Act will help prevent arbitrary shortages, hoarding, and price inflation of sugar.

“This amendment will monitor price stabilization. It is the government’s responsibility to intervene during market failures,” Nchemba stated.

The amended Sugar Act gives the Sugar Board of Tanzania (SBT) discretion in issuing import licenses, which will not be granted unless the SBT is satisfied that local production is below the required level.

Local producers must now declare their production costs and submit relevant information to the SBT at the beginning of every production season.

Additionally, domestic manufacturers must declare and publish the names of their distributors in every region in a widely circulated Tanzanian newspaper at the start of each production season.

The Act also directs the issuance of provisional licenses and the registration of sugar manufacturers, small-scale sugar plant operators, and industrial consumers through the SBT.

The Tanzania Sugar Producers Association (TSPA) anticipates raising production to 663,000 tonnes by 2026 to meet local demand.

TSPA Chairman Ami Mpungwe noted that sugar production had decreased significantly from 144,000 tonnes in 2017 to 30,000 tonnes in 2023, leading to acute shortages.

Seven sugar factories were issued permits to import sugar in 2023 to address this gap, aiming to reduce retail prices. The government has spent approximately US$150 million importing sugar to cover the deficit.

Due to shortages, retail prices have surged from Tsh2,800 (US$1.05) to Tsh4,000 (US$1.50) per kilo in shops across the country.

In response, the government recently engaged with local sugar producers to address critical industry issues, including sugar production, importation, and recurrent price hikes.

Earlier, the government proposed amending the Sugar Industry Act to grant the NFRA the exclusive mandate to import, store, and distribute gap sugar for domestic consumption.

Following a meeting led by Tanzania’s Minister of State in the President’s Office, Kitila Mkumbo, the government assured manufacturers of its commitment to ensuring the safety and security of their investments.

https://www.foodbusinessafrica.com/tanz ... ol-prices/

[nobody]

Südzucker Group reports 45% decline in Q1 earnings

GERMANY – Südzucker Group, Europe’s largest sugar producer, has announced a 45 percent decline in its first-quarter earnings, primarily due to rising costs and lower sugar prices.

The company reported an operating profit of US$167.9 million for the quarter ending May 31, compared to US$307.14 million in the same period last year.

Group revenues for the quarter saw a slight increase, rising to US$2.78 billion from US$2.74 billion in the previous year. While revenues declined in the special products, CropEnergies, and starch segments, they increased in the sugar and fruit segments.

In April, Südzucker had warned that high costs related to energy, raw materials, logistics, and packaging, combined with weak sugar markets, would negatively impact first-quarter earnings.

The company has also cautioned that second-quarter earnings are expected to decline, although specific figures were not provided.

In May, sugar futures hit an 18-month low due to anticipated large sugar harvests in Brazil but have since experienced a slight recovery. Despite falling prices, Südzucker’s sugar revenues rose by 16.5 percent to US$1.17 billion, driven by substantially higher exports from the EU to global markets.

The company has reaffirmed its forecast that full-year group operating profit will fall to between US$544.4 million and US$653.3 million, down from US$1.03 billion in the previous fiscal year, which ended in February.

It also projects that full-year sugar sector operating profit will decrease to between US$217.8 million and US$326.7 million from US$607.6 million last year, burdened by rising costs and expected low prices.

Südzucker highlighted that its results are still subject to market volatility caused by the ongoing war in Ukraine.

The EU’s decision to grant Ukrainian agricultural products, including sugar, duty-free access to the EU market has introduced uncertainties, despite restrictions on volume.

The company plans a moderate increase in its sugar beet cultivation area for the autumn/winter 2024 harvest compared to the previous year, expecting an average harvest overall.

Südzucker Group, a subsidiary of Südzucker AG, operates globally with special products, starch, and fruit segments.

Its product portfolio includes sugar, speciality sugar products, glucose syrups, functional ingredients, frozen and chilled pizza, portion packs, ethanol, animal feed, starch, fruit preparations, and fruit juice concentrates.

During the financial year 2023/2024, the company produced 4.1 million tonnes of sugar, operating 23 sugar factories across Europe and two refineries.

https://www.foodbusinessafrica.com/sudz ... -earnings/

[nobody]

Kenya’s cane production to surge 37.7% in 2024/25, research finds

KENYA – Kenya’s sugar cane production is set to see a significant boost of 37.7 percent year-on-year, increasing from 530,000 tonnes in the previous year to 730,000 tonnes in 2024/25.

This follows a report from BMI research firm, titled “Sugar Production Review 2024,” which provides insights into the effects of the recent lifting of the ban on sugar milling in the country.

The report attributes the projected increase in production to the four-month ban on sugar milling imposed by the Agriculture and Food Authority (AFA) in July 2023.

This measure aimed to curb premature sugarcane milling, which had risen due to the below-average rainfall experienced between 2020 and 2023, a period known as the three-year La Niña.

To address the issue, AFA only allowed factories to process sugarcane if they could prove the maturity of their crop.

Despite the sharp decrease in production caused by the ban, the report anticipates a 3.2 percent year-on-year increase in sugar consumption, from 1.15 million tonnes in 2023/24 to 1.18 million tonnes in 2024/25

This increase in consumption is attributed to the growing demand for sugar in the bakery and hospitality sectors, supported by a lower inflation rate.

Confectioneries and baked goods were identified by Kenya’s 2023 Economic Survey as the fastest-growing subsectors of the country’s food processing industry.

Additionally, the growth in the tourism sector, which contributed KES1 trillion to Kenya’s economy in 2023, is expected to further drive sugar demand.

However, despite the rise in production, Kenya’s sugar sector is projected to face a deficit, peaking at 658,000 tonnes in 2023/24 and narrowing to 496,000 tonnes in 2024/25.

In response to these challenges, the Ministry of Agriculture and Livestock Development issued a Policy on the Revitalisation of the Sugar Industry in June 2023.

This policy acknowledges the ongoing struggles of the sugar industry, including low productivity and quality of sugar, inefficient processing, limited capture of value added, and low adoption of technology.

Sugarcane farmers are now calling on the government to pass the Sugar Bill 2022, which has received approval from the National Assembly and the Senate.

The bill proposes the reintroduction of the Kenya Sugar Board to manage the sector’s affairs. It also introduces a 4 percent Sugar Development Levy on both domestic and imported sugar.

The bill allocates 15 percent of the levy to factory development and rehabilitation, another 15 percent to research and training, and 40 percent to cane development and productivity enhancement.

https://www.foodbusinessafrica.com/keny ... rch-finds/

[nobody]

Tanzanian government seeks investor collaboration to manufacture industrial sugar locally

TANZANIA – The president of Tanzania has directed the county’s Ministry of Agriculture to sit down with investors and come up with an absolute plan on how they can locally manufacture industrial sugar to cut down billions spent on importation.

President Suluhu Hassan said, As the government, we are willing to change the policy as long as it will help members of the business community to conduct their business with ease.”

She said when she laid the foundation stone for the expansion of the factory at Kilombero Sugar Company Limited (KSCL).

Expansion of the factory, a subsidiary of South Africa’s Illovo Sugar, is expected to cost a total of Sh800 billion. So far, out of the money, Sh470 billion has already been spent on the ongoing expansion of the factory, according to the Treasury Registrar, Mr Nehemiah Mchechu.

President Hassan said the expansion of the factory will increase production, save the foreign currency that’s spent on imports, and ensure that the country has enough sugar for domestic consumption.

The sugar industry has been a source of national debate in Tanzania especially with regular price rise.

The price hikes have been a source of blame game between the industry players and the government leaving consumers to be taken advantage of.

According to Mr Mchechu, the government owns a 25 percent stake in KSCL, while Illovo Sugar Africa holds 75 percent.

With the factory expansion, he said, it will increase production from the current 127,000 metric tonnes to 272,000 metric tonnes, contributing 50 percent of all sugar produced in the country.

The money for the ongoing expansion project has been codenamed K4 and was sourced through retained earnings, bank loans, and shareholders’ loans.

“This project has great benefits. It will have the capacity of processing 420 tonnes of sugar per hour, and this means that by December, all the sugar cane from farmers will have been processed. As such, even in times of El Nifio, the country could still be safe in terms of sugar availability,” Mr. Mchechu underscored.

Upon completion of the factory, its capital is expected to increase to Tsh 1 trillion (US$370m), with the government owning more than Tsh250 billion.

That is not all, next year, the government also plans to begin construction of a factory that will produce spirits and will hold a 25 percent share in this new venture as well.

https://www.foodbusinessafrica.com/tanz ... r-locally/

[nobody]

Kenyan cane farmers face reduced earnings as pricing committee cuts prices

KENYA – Sugarcane farmers in Kenya are preparing for a decrease in their earnings following a price cut by the Sugarcane Pricing Committee.

The Committee, which includes representatives from the Agriculture and Food Authority (AFA), the Ministry of Agriculture, farmers, millers, and sugar-producing counties, has set the price of sugarcane at KES 4,950 (US$34.54) per tonne for August.

This represents a decline from KES 5,125 (US$39.42) per tonne in June and a significant drop from KES 6,100 (US$46.92) per tonne in February 2024, marking an 18.85 percent reduction over the past six months.

Jude Chesire, Acting Director at the Sugar Directorate, explained that the price adjustment follows the expiration of the interim cane pricing committee and the absence of a Cabinet Secretary to appoint a new one.

“The price of cane per tonne in the interim for August is guided at KES 4,950,” Chesire stated.

The price cut is attributed to increased sugarcane supply, driven by ample rains and a state-backed fertilizer subsidy.

Cornelly Serem, AFA Chairman, noted that improved cane production has led to a rise in crushing volumes from about 17,000 tonnes per month last year to approximately 80,000 tonnes currently.

This surplus has contributed to lower retail prices of sugar, which now range between KES 139 (US$1.07) and KES 180 (US$1.38) per kilogram, down from KES 180-200 (US$1.54) in March 2024.

The resumption of full crushing capacity by factories has also facilitated the increased supply of cane, as farmers resumed harvesting mature cane that was previously restricted during a period of reduced miller capacity.

However, the Kenya Sugarcane Growers Association has expressed strong objections to the new pricing. Richard Ogendo, the Association’s Secretary General, criticized the price cuts as undermining the gains achieved by recent sector reforms initiated by President William Ruto.

“This means there are people in the Ministry of Agriculture who do not appreciate efforts being made by President Ruto to put more money in the pockets of cane farmers,” Ogendo said.

In response to the sector’s challenges, the government had suspended cane crushing for four months in July 2023 to prevent the harvesting of immature cane.

Additionally, in December, the government approved KES 600 million (US$3.9 million) in funding to boost local sugar production and stabilize prices.

This initiative aims to promote the cultivation of fast-maturing, high-sucrose cane varieties by 2027, aligning with the expiration of the COMESA safeguard.

https://www.foodbusinessafrica.com/keny ... ne-prices/

[nobody]

Sugar millers petition government to halt duty-free imports

KENYA – Kenya’s sugar millers have called on the government to halt duty-free sugar imports and take measures to stabilize local prices, citing an ongoing sugar crisis and financial strain on local producers.

The Kenya Sugar Manufacturers Association (KSMA) has petitioned the Treasury Principal Secretary, urging the implementation of stringent measures to curb illegal sugar imports which they claim are exacerbating the crisis.

Stephen Ligawa, the newly elected KSMA CEO, expressed frustration over the government’s failure to act despite prior assurances.

At a meeting with the Agriculture PS in May, millers and farmers were promised that the government would address the import issue and stabilize sugar prices.

However, Ligawa noted that the situation has only worsened, leading to significant financial losses for millers.

“The average cost of production per tonne of sugar is currently higher, resulting in losses of between KES18,000 (US$138.23) and KES20,000 (US$153.59) for every tonne produced over the past three months,” he explained.

In November 2023, the Common Market for Eastern and Southern Africa (COMESA) granted Kenya a two-year extension to regulate the import of cheap sugar.

Kenya is permitted to import up to 350,000 tonnes of sugar from the COMESA region to address local deficits. This safeguard has been crucial for Kenya’s sugar industry since 2002, aimed at protecting it from cheap imports.

Meanwhile, the Agriculture and Food Authority (AFA) has announced a reduction in sugar cane prices for August.

Millers are now required to pay farmers KES4,950 (US$38.01) per tonne, down from KES5,125 (US$39.36). This reduction has been met with criticism from the Kenya Sugarcane Growers Association, which argues that it undermines the progress achieved through sector reforms initiated by President William Ruto.

Richard Ogendo, the association’s secretary general, pointed out that cane prices were KES6,100 (US$46.84) per tonne when the President introduced the reforms.

He attributed the price drop to the influx of imported sugar, suggesting it reflects a lack of market research and policy alignment.

https://www.foodbusinessafrica.com/suga ... e-imports/

[nobody]

Kenya sees surge in domestic sugar production, plummeting prices

KENYA – Kenya’s domestic sugar production experienced a boost in the first half of 2024, reaching 485,802 tonnes by the end of August.

This increase led to a marked decrease in sugar prices, according to a report by the Agriculture and Food Authority (AFA).

Despite the overall rise, production saw a decline in April and May. The report attributes this drop to maintenance closures at key mills, including Transmara and Sukari, as well as brief shutdowns at Mumias and West Valley.

However, production surged in June and July, reaching 75,500 and 84,500 metric tonnes, respectively, following the resumption of operations at these mills.

Among the top producers, the West Kenya Sugar factory led with 97,260 tonnes, followed by Naitiri with 65,420 tonnes, Kibos with 57,000 tonnes, and Butali with 53,204 tonnes. Transmara, with 38,435 tonnes, was fifth.

On the lower end, Nzoia Sugar, Chemili, South Nyanza (Sony), Muhoroni, and Mumias produced 11,605, 17,575, 16,610, 11,984, and 24,397 tonnes, respectively.

Kenya operates 17 sugar factories with a combined crushing capacity of 55,300 tonnes of cane per day.

AFA’s report highlights that Kenya’s annual sugar consumption is 1.1 million metric tonnes, with 950,000 metric tonnes used for household consumption. Monthly consumption averages 80,000 metric tonnes.

The increased production has led to a decline in sugar prices. Since the resumption of milling in December 2023, prices have fallen from KES9,500 (US$73.65) per 50kg bag to KES5,128 (US$39.76) .

Similarly, cane prices have dropped from KES6,050 (US$46.91) per tonne to KES4,950 (US$38.38). AFA notes that this trend has led to requests for sugar exports due to the surplus.

However, the Kenya Sugarcane Growers Association has criticized the price drop, arguing that it undermines sector reforms initiated by President William Ruto in May 2023.

Richard Ogendo, the association’s secretary general, attributed the price reductions to an influx of imported sugar and called for thorough market research before allowing further imports.

The Kenya Sugar Manufacturers Association has petitioned the government to suspend duty-free imports and stabilize local sugar prices to support domestic farmers.

https://www.foodbusinessafrica.com/keny ... ng-prices/