Zambia Sugar Production Up By 47,000 tonnes

by Tryson Tembo

Improved cane supply and farming practices have resulted in Zambia Sugar increasing sugar production for the 2018/2019 farming season to 400,000 tonnes from 353,000 tonnes in the previous season.

During the period under review, cane supply and quality have been trending above those of the past three years mainly due to improved bulk water supply and infield irrigation.

Zambia Daily Mail

Giant Dam Project, Irrigated Sugar Plantations Disrupt Ethiopian Communities

A giant dam and irrigated sugar plantations are “wreaking havoc” in southern Ethiopia and threaten to wipe out tens of thousands of indigenous peoples , a US-based thinktank has claimed. The Oakland Institute says that while the Ethiopian government has made considerable progress on human rights under prime minister Abiy Ahmed, it has yet to address the impact of state development plans on indigenous populations in the lower Omo valley, where people face loss of livelihoods, starvation, and violent conflict .

Acute hunger is now widespread, the organisation said in a report, due to blockage of the Omo River by Gibe III, Africa’s tallest dam. Since late 2015, the dam has stopped the river’s annual flood, a natural event that the valley’s inhabitants have relied upon for centuries for farming. As a result, entire communities have been tipped into destitution.

Responding to the report, Seleshi Bekele, Ethiopia’s minister of water, irrigation and electricity , said that while the government accepts there are problems, “the points raised in the paper are not properly documented or balanced.” Seleshi said solutions had been put in place to mitigate the impact of the dam, including small-scale irrigation and outgrower schemes.

According to the report, however, such promises have not materialised. Moreover, said the study, communities claim they were tricked into leaving their ancestral land in order to make way for sugar plantations built by the Ethiopian Sugar Corporation as part of its mammoth Omo-Kuraz sugar development project (OKSDP). The project, a 100,000 hectare (247,000 acre) irrigated agricultural scheme, is fed by the waters of the Omo.

Indigenous populations were told the sugar plantations would bring hundreds of thousands of new jobs to the region. They were pressed to give up nomadic livestock-herding and adopt sedentary lifestyles, as part of the Ethiopian government’s controversial “villagisation” programme, which has since been halted. Some were threatened with having their cattle seized or killed by police.

The report alleges that resettlement sites are not big enough to feed families, and that promised services – schooling, healthcare, grinding mills, food aid, and electricity – either remain undelivered or have been woefully inadequate. Only a small percentage of new jobs have materialised, with a large majority given to migrant workers from other regions of Ethiopia.

Seleshi countered that the Sugar Corporation had spent 79m Ethiopian birr (US$ 2.7m; June 2019) constructing infrastructure and social services in the valley, including schools and health centres.

This is Oakland’s fourth report on South Omo. In 2013 it accused the Ethiopian government of using killings, beatings and rapes in order to force indigenous communities to accept the sugar cane projects. It also accused western aid agencies of covering up evidence of the abuses. Other international groups such as Human Rights Watch and Survival International have also condemned the government for abuses in South Omo in the past.

Yet there are some signs of a change in approach. At an April seminar on South Omo’s livelihood challenges,  government minister Seyoum Mesfin told visiting academics and journalists that the new government recognised certain “development interventions in the pastoralist areas … came with a cost.” The minister ... and added that the government “will not allow a repeat of those situations”.

Full article...

South African Sugarcane Industry Hit By Competition, World Glut and New Soft Drinks Sugar Tax

In the wake of the appointment of a new South African cabinet, newly elected SA Canegrowers Chairman, Rex Talmage... saids the change in leadership offered the hope of a rescue plan for an "industry on its knees".

In the year under review, demand for refined sugar in the Southern African Customs Union countries was at its lowest in 35 seasons due mainly to the introduction of the Health Promotion levy (HPL) or sugar tax on soft drinks by the South African government in 2018.

Industry experts estimate that over 400 000 tons were displaced as a direct result of the levy over the 2018/19 season resulting in at least 600 000 tons being exported at record low prices on an over-supplied world market.

The quality of the South African crop during the 2018/19 season was the third highest in 19 seasons while the area harvested decreased from 252 049ha to 247 385ha.

Despite intense lobbying with the Department of Trade and Industry and the International Trade Administration Commission in 2018 for an increase in the Dollar-Based Reference Price (DBRP) import tariff from $566 to $856 per ton of sugar, the industry was granted a tariff of just $680 per ton. The new tariff has proven ineffective in stemming the tide of cheap imported sugar into the country.

The year under review also saw a deluge of sugar dumped on the South African market from neighbouring Eswatini. Eswatini is expected to produce about 743 000 tons of sugar in the 2019/20 season of which most will make its way onto the South African market free of any import tariff in line with the free trade agreements in the Southern African Customs Union (SACU) region.

While commercial growers have been hard hit, the worst affected are the over 20 000 small-scale growers who rely solely on the crop for their livelihoods.

Full article...

Zimbabwe Sugarcane Output Up 3rd Year In A Row

Zimbabwe sugar output to reach 500 000 metric tonnes this year, surpassing 2018’s 460 000 tonnes.

The Commercial Sugar Producers Association (CSPA) said members had initially projected to increase production from 95 tonnes per hectare to 97 tonnes but had since reviewed the figure upwards to over 100 tonnes.

Sugar milling company Tongaat Hulett has projected a productivity increase of from 15 tonnes per hectare to 120 tonnes per hectare.

The developments are partly attributed to increased irrigation capacity from full dams, despite the rest of Zimbabwean agriculture suffering from the effects of a crippling 2018/19 drought.

Sugar is second to tobacco in Zimbabwe’s foreign currency earnings from agriculture.

Tongaat Hulett, the South African firm, produces about 80 percent of the total sugar production while 20 percent is produced by private farmers. It produces from its plantations in Hippo Valley and Triangle.

At least 65 percent of the produced sugar is for domestic use while the rest is for export.

Before the land reforms of the year 2000, sugar cane production was a sole preserve for Tongaat Hulett.

CAJ News

Flooding losses cause Rwanda sugar company to seek upland cane cultivation

Kabuye Sugar Works, Rwanda's sole sugar procedure, seeks to grow sugar cane at higher elevations because of seasonal flooding problems which cut output by 3000 and 4000 tonnes of sugar annually, worsening periodic shortages of the commodity, most of which is imported.


Kabuye'e annual output is 10,000 tonnes, compared to a demand of 50,000 tonnes.


Meanwhile, a government official has announced that a second sugar plant is being planned.

African Agriculture

Why figures of purported agricultural investments into Africa can be so misleading

Chido Makunike 

Even if you're not particularly interested in farming news and developments, you cannot fail to be impressed by chancing across a headline like 'U.S. to Invest U.S.$6 Billion in Nigeria's Agric Sector.'


U.S.$6 billion is a huge chunk of money. Such an investment over a relatively short period is/would be a very significant development for all involved. One would expect to begin to see huge results from such a  massive injection of money into an economy in fairly short order, even if the pay-off time for the investment is much more long term.

But over the years of hearing about all kinds of billions purportedly spent from local and foreign sources on Africa's agriculture, it has become clear that such loosely touted figures can hide as much as they reveal, and can sometimes even be almost meaningless.

Excerpts from the article:

'Foreign investors from the United State of America (USA) would invest $6 billion into Nigeria's agricultural sector, the Minister of Agriculture and Water Resources Akinwunmi Adeshina has said. '

'The Minister said the funds would be invested on sugar-cane plantation in the north and cassava plantation in the southern part of the country. (He) said the funds would be invested on sugar-cane plantation in the north and cassava plantation in the southern part of the country.'

How was the valuation of the investments at $6billion arrived at? Who did the calculating - the investors or the government of the destination country? What is the break down of that valuation? Does the $6 billion refer to new capital/cash to be invested, or does it include many none-cash factors as well? Over what period of time is the  $6 billion to be injected into the Nigerian economy? How much of it will be new capital from outside Nigeria, and how much of it is in locally-sourced money or the contribution to the 'investment' of the host government (tax credits, free or subsidized land, etc, etc)?   

Does the phrase '$6 billion into Nigeria' mean the total value of the two investments cited, or just that part of them that will actually, directly be spent/invested in Nigeria? For instance, if $500 million of those $6 billion are to be spent on importing machinery from the U.S., it is misleading to account for that $500 million as going 'into Nigeria.'

In the case of this example, Nigeria would still certainly benefit from the $500 million portion of the $6 billion that actually 'goes into (or remains in) the U.S.' But how to value this benefit to Nigeria is far from straightfoward.

Is part of that $6 billion valuation composed of aid from the U.S. government, or is it strictly commercially sourced funds? If a big chunk of the $6 billion is in aid (not at all unusual in such big deals), is that portion of it going to be spent in Nigeria, or actually to pay suppliers, consultants and others mainly in the aid-originating country, in this case the U.S? Again, this would be far from unusual, but vastly changes the meaning of what a mere dollar figure represents in actual economic terms.

For example, suppose country A donates $100 million worth of tractors to poor country Z. Country A would stimulate its tractor manufacturing sector by paying them to supply the machines to be donated to country Z. But over the years country Z may have to try to fork out that much or more in spare parts, repairs, etc to keep the tractors running, particularly if the choice of machines (obviously dictated by donor country A) was inappropriate for the conditions of country Z.

Either a lot more than $100 million goes back out of poor country Z to rich donor country A for those spare parts (further stimulating the tractor industry of country A while having declining cost-benefits for country Z), or the tractors soon simply rot because the cost of maintaining them is beyond what country Z can afford. Both scenarios are part of the long, sorry annals of 'development cooperation.'   

Another example of why context, detail and explanation are so important in a story headlined this way: Job-creation is one of the most hoped for investment benefits in a high unemployment country like Nigeria, or any other.

$100 million spent on tractor imports and maintenance over X years would have a much smaller social and economic footprint than a similar $100 million in the same X years spent on wages and salaries. The money spent on wages would have a tremendously bigger multiplication effect than the money spent on equipment imports, so in terms of overall value/benefits to the Nigerian/target economy cannot be calculated the same way. So throwing out a phrase like '$100 million investment' without providing these details and nuances may be thinly, narrowly and arithmetically correct but yet still tell very little.

Shallow and misleading as the heading and article were, they were picked up and re-distributed without question by hundreds of news outlets around the world. And that's how so much of the figures about inward investment and aid to Africa that are thrown about often have very little connection to how much actual,  correct, while at the same time revealing very little about how much actual, real-world meaning and impact they will result in. Unfortunately, sometimes the more you read and hear, the less you know.

African Agriculture
   

Land conflicts cause South African sugar investor to abandon Tanzania for Mali

A subsidiary of South African sugar concern Illovo has given up a ten year effort to set up a plantation in Tanzania over long running land squabbles with locals. The Tanzania Daily News reported in January that the company is now seeking to establish the operation in Mali.

Kilombero Sugar Company had initially planned to invest in about 8,000 hectares out of a potential 23,000 hectares for cane cultivation, but the endless compensation claims from locals them decide the project was more trouble than it was worth.

The Sugar Board of Tanzania (SBT) is reported to have said the total land, if fully developed, had the potential to produce 240,000 tonnes of sugar every year. Tanzania suffers from periodic shortages of sugar which have to be plugged with imports.

Many villagers had refused to vacate the land, and others engaged the courts in long-running disagreements over fair compensation for their land. An agreement by the villagers in 2011 to seek an out of court settlement to the dispute was achieved when the investor had apparently lost interest.

An SBT official is reported to have ‘blamed politicians for instigating confrontations between villagers and the investor.’

A company official said Kilombero had given up its efforts to set up the plantation in Luipa, Kilombero District of Morogoro Region and was pursuing opportunities in Mali, which “has friendly investment policies and good incentives."

An editorial in the Daily News put the blame on government for not compensating the villagers as stipulated in the country’s land laws.

Authorities are making fresh moves to attract new investors.

African Agriculture

Good weather, more growers to see Uganda sugar production up 26% in 2012

Good weather and increased cultivation by small scale farmers is expected to increase sugar production in Uganda from 259,413 in 2011 to 327,075 tonnes this year. just over the country’s annual requirement of 320,000 tonnes.

Strong rains have been experienced in areas that saw drought in 2011, according to a sugar sector official quoted by Reuters.

The expected 2012 would represent a reversal of two years of a recent trend of year to year decline. Last year's output was significantly down from 2010's production of 292,051 tonnes.

The sugar output for 2011 had been predicted to be 350,000 tonnes before drought and a criminally set fire at Kinyara Sugar Works, the country’s second biggest sugar refiner, reduced the actual yield to 259,000 tonnes. The shortfall was made up by duty-free imports in 2011, which Ugandan refiners this year then complained left them with higher-priced stocks that could not compete.

African Agriculture

Nigeria, China ink deal to invest $2.55 billion in biorefinery projects

by Jim Lane

In Nigeria, Bloomberg and several local outlets are reporting that the Nigerian government has signed a $2.55 billion development deal with Global Biofuels, to construct 15 integrated biorefineries throughout the West African nation. According to reports, the first pilot plant will be completed in Ilemeso, in Ekiti State by Q4 2012, and projects thereafter will be completed in Ondo, Osun, Kwara, Kogi,Benue, Gombe, Bauchi, Zamfara, Kano, Kaduna, Nasarawa and Plateau states. Project cost for the initial pilot plant is $108M, while full-scale plants are expected to cost $183 million each.

According to Global Biofuels, $1.78 billion, or 70 percent of the financing will come from the Chinese government. The remainder will come from NEXIM Bank, ECOWAS Bank for Investment and Development, Africa Finance Corporation; Fond Gari, and First Bank of Nigeria. The projects expect to generate 100 tons of total biomass per hectare, per yearn, using two cropping cycles per year, with total tonnage including tops, leaves, stalks and the primary crop. That equates to roughly 20 tons of total biomass per growing season, per acre.

But the massive Nigerian investment is just one of several announced in recent weeks and months in West Africa.
Nigerian Export-Import Bank:$695M

Just last week, the Nigerian Export-Import Bank gave $695 million to five companies investing in renewables including $12 million for a jatropha project and $56 million for a sorghum ethanol project.

The majority of the funding went to a sugarcane project that will include a bagasse co-generation component while the rest of the funding was for waste-to-energy projects.

Just before the US Thanksgiving holiday, the Ondo State Commissioner for Agriculture, Ademola Olorunfemi, said that the state would approve development of three sugarcane plantations and ethanol plants, with a focus on the production of biofuels and rural economic development. The Commissioner also said that the plants could provide materials for the bio-pharma industry.

The projects, whose goals center around industrialization and employment, indicate a new direction for the economy of this agriculture-heavy area of Nigeria.
Dangote Group, $7.7B

The same week, Aliko Dangote, the president of Dangote Group, announced an investment of $7.7 billion in Rivers Energy City, home of the budding $2 billion fertilizer and ethanol plant project put on by Indorama Eleme Petrochemical Company. His investment, says a top government source, will span into the methane and ethanol industries and provide thousands of jobs in the upcoming energy city.
Global Biofuels: $91M

In August, Global Biofuels has announced plans for ethanol plants across the West African region, with $91 million in sellers credit from COZA of Hong Kong and WEMET of China. The final project is expected to cost over $183 million, and produce 72 million liters of ethanol from 1.95 million tons of sorghum per year, and 216 gigawatts of electricity. Total land use as reported would be 65,000 ha in Nigeria and 32,500 ha in neighboring Economic Community of West African States member countries.

Also in August, Nosak Distilleries Ltd said it would raise production capacity at its Lagos facility to 540,000 liters per day from its current 350,000 liters per day. It also announced plans to commission a new 150,000 liter per day facility in Calabar, Cross River. Its first facility was commissioned in 2001 and together the company supplies about 70% of local ethanol demand.
The Bottom Line

Announcements of MOUs should be taken for what they are – an understanding that steel will go into the ground, as opposed to the actual construction of actual capacity. However, the trend is clear, scale is happening, project financing is becoming easier to source, especially overseas, and China is definitely expanding its ambitions with respect to countering the US lead in advanced biofuels technology, with a Chinese lead in actual gallons of renewable fuel.


Biofuels Digest

The plight of smallholder sugar cane farmers in Swaziland

As a consequence of a 37% decline in the value of the Euro against the Rand since 2002, the smallholder sugar farming sector in Swaziland is facing a severe financial crisis. This was a major factor contributing to a 21% decline in the sucrose price between 2002 and 2005. With smallholder farmers responsible for investment in on-farm capital equipment including irrigation systems, the decline in the sucrose price has had profound effects on their financial viability. This is further compounded by the high interest rates charged on their finance.
Currently, newly established smallholder sugar farmers pay some 31% of total earnings in interest for both seasonal and capital loans.  In many cases, this leaves insufficient funds to cover even the repayment of the seasonal loan.  This is contributing to growing levels of indebtedness amongst smallholder sugar farmers.  This is proving a direct challenge to the operation of farmer associations as this leaves no income for distribution to members. Some of the farmers are finding their own solutions to the income needs of their families and such activities have led to a deterioration in the efficiency of smallholder sugar production.

It is essential that this downward cycle of declining efficiency be halted and reversed, before the financial effects of EU sugar sector reform are felt through the wider economy in Swaziland.  Without such reversal and support, newly established smallholder sugar farms will become financially non-viable. The key to reversing this downward cycle is the financial restructuring of smallholder loans, and concerted efforts to improve efficiency.

Financial restructuring of existing loans is essential, since without it smallholder farmers will see no personal benefit from the implementation of measures to improve yields, increase sucrose content and reduce seasonal costs. Put simply, under current circumstances the benefits of any improvements in production efficiency are not realised as the beneficiaries of such are the owners of the capital they have borrowed. The argument goes thus, “why improve when the one to benefit from such will be the bank, not me?”. Also, the average operating costs in the smallholder sugar sector increase 40% since 2002.

Review of operating costs of smallholder sugar farmers

(based on seasonal loans extended) 

	2001	2003	2005	% change
Capital Costs per hectare (R)	22,000	26,000	29,000	+32%
Seasonal Costs per hectare (R)	10,000	11,000	14,000	+40%

If a form of financial restructuring can be undertaken which ensures that smallholder farmers gain the financial benefit of any innovations adopted and which also ensures that, over time,  financial institutions get their money back (with in a additional a small return), then a sustainable basis can be laid for Swazi smallholder sugar production, which enables it to survive the financial consequences of EU sugar sector reform. In the absence of such a financial restructuring the current downward cycle of declining efficiency and escalating indebtedness will continue.  This will be bad for smallholder sugar farming in Swaziland and bad for the financial institutions which have lent extensively to the smallholder sugar farming sector.

Why the Current Situation is Financially Unstainable The table below indicates the sucrose price (Emal 1,666 per tonne) which would be required to meet current loan obligations under the currently prevailing circumstances in which: average investment costs per ha are  Emal. 29,000;  seasonal loans amount to Emal. 14,000 per ha; the cane yield is 100 tons per ha;  the sucrose content is 13.5% the interest on capital loans is 15.5% and the repayment period 7 years; the interest rate charged on seasonal loans is 15.5%. It further indicates the escalating scale of indebtness under different price scenarios under these assumptions. Price (Emal/ton) Income Repayments (Emal) Net income SHF (Emal/ha) Debt Situation (Emal) 1,000 13,500 22,787.3 -9,287 +9.287 1,100 14,850 22,787.3 -7,937 +7,937 1,200 16,200 22,787.3 -6,584 +6,584 1,300 17,550 22,787.3 -5,237 +5,237 1,400 18,900 22,787.3 -3,887 +3,887 1,500 20,600 22,787.3 -2,537 +2,537 1,600 21,600 22,787.3 -1,187 +1,187 ...... ...... .... ..... .... ...... ...... .... .... .... 1,666 Breakeven Price .... .... It further indicates the escalating scale of indebtedness under different price scenarios under these assumptions.

What type of financial restructuring is required

Analysis undertaken by the Swaziland Sugar Association suggests that, for the smallholder sugar-farming sector to be placed on a sustainable financial basis, two things need to happen:

a)  seasonal loans need to be provided from a grant financed seasonal loan revolving fund on which a nominal administrative charge of 4% is charged;

b) the interest rate paid by farmers on capital investment loans needs to be brought down to 7% (and the repayment period extended to 10 years), so as to ensure that there is a real incentive to adopt innovations which improve yields, increase sucrose content and reduce seasonal costs.

The question arises how can this be achieved without pushing the financial institutions involved in lending to the sugar sector into financial difficulties?

…how this can be achieved…

The issue of seasonal loans and capital loans need to be tackled differently.  For seasonal loans the requirement is for the mobilization of grant financing to constitute the revolving fund.  This would need to mobilise Emal.14 million per 1,000 ha of smallholder sugar production involved in the scheme.  A tripartite approach involving contributions from the sugar industry (both as a whole and from the millers directly), the Government of Swaziland and international donors offers the best way forward for the constitution of this scheme.

For capital loans four  steps appear to be required:

1) a harmonization of interest rates by the financial institutions across all smallholder farmers involved in the scheme;
2) the unilateral reduction of interest rates charged by the financial institutions involved in the scheme to 12% and extension of the loan repayment period to 10 years;
3) the provision of an annual interest rate subsidy  of 5% from the specially constituted Restructuring and Diversification Fund, envisaged under the “Budget Support/ Levy swap” arrangement

4)  the linking of access to the interest rate subsidy facility and seasonal loan facility to the adoption of an agreed code of conduct on  best farming practices and best financial management practices. 

Such a scheme would restore financial stability to the smallholder-farming sector and lay the basis for the introduction of measures to improve yields, increase sucrose content and reduce seasonal costs.   These improvements would then equip the smallholder sector to be better able to cope with the consequences of EU sugar sector reform.

The "Budget Support/Sugar Levy Swap" Arrangement This simple proposal aims to address both the principal and most direct form of government revenue losses arising from the consequences of EU sugar sector reform and the need to secure the early release of financing for stakeholder led restructuring and diversification initiatives. It involves the Government of Swaziland seeking from the EU additional annual budgetary support equivalent to the earnings currently derived from the “sugar levy” (some €3.6 million).   Such a programme would extend over the eight year time frame of the EU sugar sector assistance programme.        In parallel with this, the government of Swaziland would set the “sugar levy” at zero while the Sugar industry through the Swaziland Sugar Association would raise a “restructuring levy” equivalent to the “sugar levy”, which would be paid into a “Restructuring and Diversification Assistance Fund”.  This fund would then provide financial resources for support to specific targeted restructuring and diversification initiatives, designed to minimise the adverse effects of EU sugar sector reform on the Swazi economy and society. The first priority for this fund would be the provision of a 5% interest rate subsidy on smallholder capital investment loans and a contribution to the seasonal loan revolving fund.

The benefits of the scheme 

The implementation of this scheme will put money into the hands of sugar farmers at the end of each season, with the amount of income distributed at the end of the season depending on the success achieved in adopting innovations to improve yields and sucrose content.  The successful adoption of measures to improve yields and sucrose content would be greatly improved if farmers know they would get the benefits of such innovations come the end of the sugar season.  What is more it would seem reasonable to assume that efforts to contain the escalation in seasonal costs would stand a good chance of success, if this directly increased the money paid out to smallholder sugar farmers at the end of the season.

In terms of the interests of the financial institutions, this scheme would still provide the financial institutions with a rate of interest above that recently charged for car loans in Swaziland.  It would furthermore remove the burden of seasonal loans, repayment of which is becoming more and more difficult.  It would also, of course, remove the threat of substantial defaults on sugar sector loans which overhangs the financial institutions involved, since this scheme would ensure that the financial institutions eventually got their money back.

 Swaziland Sugar Association

Zimbabwe's sugarcane-derived biofuel goes on the market

Emerging African biofuel giant Green Fuel Limited of Zimbabwe has re-introduced locally made ethanol motor fuel blend that is 9 cents cheaper at the pump than gasoline.

The company has a US$600 million ethanol production and processing unit in Chisumbanje Estates, Manicaland province, The sugar cane-based fuel has been warmly received by motorists, according to a Green Fuel manager quoted by Newsday.

The pump price of the blend is US$1.36 a liter – 9 cents lower than straight gasoline.

In a statement, Green Fuel said that while the pricing structure needs to be competitive for sustainable production, the company anticipates a drop in local blend prices in reaction to its presence in the petroleum market.

The company said it has created thousands of jobs for local people among numerous other positive spinoffs from the project. “In the last three months, seven banks opened branches at the local growth point Checheche Business Center.”

Green Fuel said over 4,500 jobs have been generated around the ethanol plant, filled mostly by Zimbabweans returning home from the Southern African region.

Economist Eric Bloch said the biofuel project could create thousands of direct and downstream jobs, and reduce Zimbabwe's dependence on imported fuel.

But independent economist Bekithemba Mhlanga said that while the introduction of the ethanol-blended fuel is positive, its future is uncertain.

VOA

Zimbabwe sugarcane farmers get outsourcing lifeline

by Emilia Zindi

Hundreds of farmers in Zimbabwe’s Lowveld sugarcane growing area who were set to lose farms for failing to utilise land productively have been thrown a lifeline after sugar milling company Tongaat Hulett Zimbabwe unveiled a US$3,5 million credit facility.

Under the facility, the farmers are expected to receive fertiliser, seed, pesticide, herbicide, fuel and tillage services during the 2011/2012 summer cropping season. The firm has also pledged to settle their water and electricity bills.

Commercial Sugarcane Farmers’ Association of Zimbabwe chief executive Mr Daniel Tsingo said the initiative would ensure growers rehabilitate farms where the crop is more than 10 years old.

Under the scheme, the firm will provide tractors, rippers, disc harrows and ridgers for land preparation. Agro-chemicals and labour are also part of the package.

Each farmer will get assistance on 10 hectares over two seasons with the more than 600 farmers in the region expected to rehabilitate a cumulative 12 000 hectares.

“If the crop is fed well, one would produce between 80 and 100 tonnes of raw sugarcane. Eight tonnes of the cane can produce a tonne of sugar,” said Hezekiah Mhunduru, one of the beneficiaries of the scheme. “This scheme is different because there is no demand for collateral. All we have to do is pay back through the harvest we will deliver to the company. Also important to note is the fact that there is no way input prices can be inflated. Everything is in black and white.’’

Mr Micah Sinaravo said: “I really appreciate this scheme because I do not have the requisite equipment to make for a viable farming venture. This initiative has come at the right time.”

Most farmers in the region were allocated properties under the land reform programme. They, however, failed to fully utilise the farms owing to crippling financial challenges. The farmers could not rehabilitate flood irrigation systems and plant the crop anew.
This resulted in large portions of land lying idle for years.

Local district lands committees subsequently recommended that the farms be repossessed, a move the Ministry of Lands and Rural Resettlement thwarted.

Sunday Mail

Zimbabwe sugar cane farmers expect bigger harvest over 2010

Sugarcane farmers in Zimbabwe's Lowveld region are happy with the producer price of US$585 per tonne which millers are offering this season. Last season millers were buying the crop at US$525 per tonne.

Commercial Sugar Cane Association of Zimbabwe secretary-general Mr Darlington Chiwa said the new producer price would allow them to recoup production costs. ''The price is even higher than regional prices," he said.

Chiwa said the high returns would enable farmers to rehabilitate their plantations this year since some of them had already outlived their lifespan of 10 years.

Like cotton farmers, sugarcane producers are paid an initial price that would be topped up when prices firm on the international market where they are determined.

Sugarcane farmers are expecting to sell about 462 000 tonnes of the commodity this selling season, up from 413 000 tonnes last year.

Zimbabwe Sugar Cane Development Association secretary-general Mr Fafter Gono concurred with Mr Chiwa that the price was high enough for farmers to break even.

Prior to the land reform programme, sugarcane production was a monopoly of Tongaat Hullet, a South African company that still controls the milling and marketing of the crop.

Herald

Tanzania sugar agro-industrial complex gets government support

The Tanzanian government’s dream of realising a ‘green revolution’ resulting in part from the implementation of the national Kilimo Kwanza initiative is fast becoming a reality at Kagera Sugar Company Limited.

Prime Minister Mizengo Pinda made a working tour of the agro-industrial complex in Kagera Region  and was visibly impressed by the massive scale on which it was engaged in making an emphatic contribution to the development of agriculture in Tanzania.

He described the firm as one the most successful commercial agricultural projects Tanzania currently boasts, adding that the investment it was making in irrigation was sure to make agriculture “the pride of our country for many generations to come”.

“I have witnessed almost 10,000 hectares of land covered by a green blanket of sugarcane. I have also witnessed a huge fleet of modern agricultural machinery clearing land at a rapid pace for further expansion of the plantations,” he added.

The PM explained that he was further impressed by way the company was making deliberate efforts to support outgrowers and neighbouring communities socially and economically. Accordingly, he appealed to more and more residents of the area to engage in sugarcane farming “and thus benefit from the existence of a reliable market for their crop just next door.”

He also called on more players in the industrial sector generally to emulate Kagera Sugar in fully supporting Kilimo Kwanza, an initiative resulting from partnership between the government and the private sector, including the Tanzania National Business Council.

Kagera Sugar general manager Ashwin Rana briefed the PM on how they have been deploying modern technology towards the realisation of “a truly modern commercial agriculture.

“Bulldozers initially clear the bush and flatten the myriad anthills, before computerised land plane machines laser level the ground, followed by ploughing and ridging on a scale never before seen in East Africa,” said the GM, adding that over 1,500 hectares of new farmland is put under sugarcane at the company every year.

“The latest technology is employed to make the most economical use of the land and ensure efficient irrigation and drainage for maximum production. This has been achieved through high definition, infra-red Lidar aerial surveying, followed by GPS and Laser technology used to prepare and level the land and install drainage and irrigation canals,” he noted.

Rana pointed out that the firm has the largest centre-pivot installation in sub-Saharan Africa, covering 4,000 hectares of sugarcane, “whereas the system comprises pump stations on the Kagera River which feed a network of massive underground pipes that cover the sugarcane fields”.

He said over 100 kilometres of underground piping has been installed on the estate to ensure availability of water “literally at the flick of a switch.”

“These in turn feed the automated centre pivots that irrigate the sugarcane 24 hours per day throughout the season, ensuring optimum growing conditions and high yields. This modern state of the art system pumps water from the Kagera River, transforming the area into a luscious green belt producing over 100 tonnes of sugarcane per hectare,” he elaborated.

The GM also explained that they have already embarked on Phase II of the irrigation infrastructure by installing a further 42 pivots during the current season to cover an additional 3,000 hectares of land at a cost of 25 billion/-.

“The communities neighbouring our company, notably sugarcane growers, have also been benefited immensely from our activities because their farms progress rapidly largely owing to the material and other support we extend to them from time to time,” he said.

GM Rana explained that the support has been in the form of offers of use of tractors and ploughs, supply of seedcane and technical advice, and guarantees for loans requested by outgrowers from banks and other financial institutions.

He said this has had a positive effect on the lives and economies of the local communities because it has helped them generating more wealth and, by extension, alleviating poverty.

Kagera Sugarcane Outgrowers Association chairman Annas Swaibu confirmed the reports, saying: “Our community of outgrowers is extremely grateful for the ongoing support and the cordial relations they have with the company. The cooperation has really improved our lives.”

GM Rana meanwhile revealed that his company has spent some 180 billion/- since it was privatised, chiefly in agricultural and irrigation infrastructure as well as in factory rehabilitation and expansion.

“The company’s strategic plans recognise that the use of irrigation is a crucial necessity for the success of any large-scale agricultural project. The added benefit of irrigation is that sugarcane yields can go from 50 to over 100 tonnes per hectare as well as give the assurance of having a good crop irrespective of adverse weather conditions,” he added.

He said that would ensure that the most efficient use was made of available land and water resources, “leading to predictable – possibly optimum – crops harvests.”

He added that the company would ultimately have the ability to grow and process 1 million tonnes of sugarcane, producing 100,000 tonnes of sugar a year.


IPP Media

Tanzania sugar agro-industrial initiative receives government support

The government’s dream of realising a ‘green revolution’ resulting in part from the implementation of the national Kilimo Kwanza initiative is fast becoming a reality at Kagera Sugar Company Limited.

Prime Minister Mizengo Pinda made a working tour of the agro-industrial complex in Kagera Region yesterday and was visibly impressed by the massive scale on which it was engaged in making an emphatic contribution to the development of agriculture in Tanzania.

He described the firm as one the most successful commercial agricultural projects Tanzania currently boasts, adding that the investment it was making in irrigation was sure to make agriculture “the pride of our country for many generations to come”.

“I have witnessed almost 10,000 hectares of land covered by a green blanket of sugarcane. I have also witnessed a huge fleet of modern agricultural machinery clearing land at a rapid pace for further expansion of the plantations,” he added.

The PM explained that he was further impressed by way the company was making deliberate efforts to support outgrowers and neighbouring communities socially and economically.

Accordingly, he appealed to more and more residents of the area to engage in sugarcane farming “and thus benefit from the existence of a reliable market for their crop just next door”.

He also called on more players in the industrial sector generally to emulate Kagera Sugar in fully supporting Kilimo Kwanza, an initiative resulting from partnership between the government and the private sector, including the Tanzania National Business Council.

Kagera Sugar general manager Ashwin Rana briefed the PM on how they have been deploying modern technology towards the realisation of “a truly modern commercial agriculture.

“Bulldozers initially clear the bush and flatten the myriad anthills, before computerised land plane machines laser level the ground, followed by ploughing and ridging on a scale never before seen in East Africa,” said the GM, adding that over 1,500 hectares of new farmland is put under sugarcane at the company every year.

“The latest technology is employed to make the most economical use of the land and ensure efficient irrigation and drainage for maximum production. This has been achieved through high definition, infra-red Lidar aerial surveying, followed by GPS and Laser technology used to prepare and level the land and install drainage and irrigation canals,” he noted.

Rana pointed out that the firm has the largest centre-pivot installation in sub-Saharan Africa, covering 4,000 hectares of sugarcane, “whereas the system comprises pump stations on the Kagera River which feed a network of massive underground pipes that cover the sugarcane fields”.

He said over 100 kilometres of underground piping has been installed on the estate to ensure availability of water “literally at the flick of a switch”.

“These in turn feed the automated centre pivots that irrigate the sugarcane 24 hours per day throughout the season, ensuring optimum growing conditions and high yields. This modern state of the art system pumps water from the Kagera River, transforming the area into a luscious green belt producing over 100 tonnes of sugarcane per hectare,” he elaborated.

The GM also explained that they have already embarked on Phase II of the irrigation infrastructure by installing a further 42 pivots during the current season to cover an additional 3,000 hectares of land at a cost of 25 billion/-.

“The communities neighbouring our company, notably sugarcane growers, have also been benefited immensely from our activities because their farms progress rapidly largely owing to the material and other support we extend to them from time to time,” he said.

GM Rana explained that the support has been in the form of offers of use of tractors and ploughs, supply of seedcane and technical advice, and guarantees for loans requested by outgrowers from banks and other financial institutions.

He said this has had a positive effect on the lives and economies of the local communities because it has helped them generating more wealth and, by extension, alleviating poverty.

Kagera Sugarcane Outgrowers Association chairman Annas Swaibu confirmed the reports, saying: “Our community of outgrowers is extremely grateful for the ongoing support and the cordial relations they have with the company. The cooperation has really improved our lives.”

GM Rana meanwhile revealed that his company has spent some 180 billion/- since it was privatised, chiefly in agricultural and irrigation infrastructure as well as in factory rehabilitation and expansion.

“The company’s strategic plans recognise that the use of irrigation is a crucial necessity for the success of any large-scale agricultural project. The added benefit of irrigation is that sugarcane yields can go from 50 to over 100 tonnes per hectare as well as give the assurance of having a good crop irrespective of adverse weather conditions,” he added.

He said that would ensure that the most efficient use was made of available land and water resources, “leading to predictable – possibly optimum – crops harvests”.

He added that the company would ultimately have the ability to grow and process 1 million tonnes of sugarcane, producing 100,000 tonnes of sugar a year.


IPP Media

Sugar firm cuts Zimbabwe, Mozambique production forecasts

by Carli Lourens

Tongaat Hulett Ltd., South Africa’s second-largest sugar producer by market value, cut production forecasts for Zimbabwe and Mozambique in the financial year through March 2012.

Tongaat expects to produce 360,000 metric tons to 380,000 tons in Zimbabwe, and 250,000 to 270,000 tons in Mozambique, the company said in a presentation on its website today.

In November, it forecast 380,000 to 400,000 tons for Zimbabwe and 270,000 to 290,000 tons in Mozambique. The company didn’t give a reason for the cut and officials weren’t available to comment when Bloomberg News called Tongaat’s main office.

For this fiscal year, output from the two southern African nations will be below or near the low-end of the forecast range, the presentation shows. Tongaat will probably produce 333,020 tons in Zimbabwe in the year ending March 30, compared with the 330,000 to 350,000 tons forecast in November.

In Mozambique, the latest estimate of 165,744 tons compares with a target of 185,000-205,000 tons.

Tongaat forecasts 835,000 tons from South Africa in 2012- 13, compared with 445,694 tons in the current financial year.

The company, with 14 sugar plants in six countries, has the capacity to produce a million tons of sugar in South Africa, 600,000 tons in Zimbabwe and 327,000 in Mozambique.

Businessweek

Mauritius planters turn their backs on sugar cane

by Jean Paul Arouff

Sugar, a centuries-old pillar of the $10 billion economy of the Indian Ocean island of Mauritius, accounts for roughly 3 percent of gross domestic product and is a major employer.
"The sugar industry can co-exist with property development and energy production but land abandonment by small planters represents a threat to the industry," said Cyril Mayer, CEO of Harel Frere, a sugar manufacturer and property developer.

Mayer said unless the price of sugar per tonne rose to 15,000 Mauritius rupees ($502) from 12,700 rupees currently, small planters will continue to leave sugar cane cultivation.

The Chamber of Agriculture said in June Mauritius sugar output will fall to 450,000 tonnes this year from 467,234 tonnes in 2009 largely due to a reduced area under cultivation.

The country has been losing about 2,200 hectares of sugar cane fields annually. In 2009, it lost 1,900 hectares and the forecast is maintained for this year.

Sugar producers have been hit hard after the European Union cut its guaranteed price for African, Caribbean and Pacific (ACP) sugar by 36 percent. The final tranche took effect last October.

"I am confident that we will achieve rapidly the 15,000 rupees per tonne of sugar. We should continue to implement the sugar sector reform programme and also keep on cutting cost," said Jacques d'Unienville, CEO of Omnicane, a leading producer.

He said a Bank of Mauritius decision to slash the key interest by 1 percentage point will also help the industry by containing the appreciation of the rupee against the euro.

Large-scale producers are diversifying their revenue by producing electricity and ethanol and have shed human labour for machines. But small-scale farmers have found it harder to cope.

Omnicane said it will produce between 175,000 and 180,000 tonnes of refined sugar in 2011 up from 100 000 tonnes this year as it refinery reached cruising speed.

D'Uniemville said Omnicane also sees big potential in ethanol production.

"Last year Mauritius exported 100,000 tonnes of molasses. I think we could use some 80,000 tonnes of it to produce 20 million litres of ethanol.

"Mauritius imports around 125,000 litres of gasoline per year. We could use a percentage of the ethanol produced locally as additive to the gasoline. Tests have already been conducted and it showed it can be done," he said.

Cyril Mayer said Mauritius which produces 18 percent of its power from burning bagasse, the waste generated when crushing sugar cane, can increase this production to 25 percent by 2025.

"What we need is to develop and spread high fibre content sugar cane around the island. Our neighbour Reunion island is already doing it," he said.

Reuter

South African drought may cut sugar output

by David Carte

KwaZulu-Natal is in the grip of severe drought and the SA Sugar Association (SASA) has cut its estimate of the sugar crop in the year to March to less than 2mt. That is 26% less than the record crop of 2.7mt in 2002/2003.

The listed sugar companies say damage will be real but limited because all three have diversified geographically and by product since the last industry-crunching drought in 1991.

The KZN coast is uncharacteristically even drier than the Free State and Gauteng, which are also waiting anxiously for the first summer rains. Cane in the fields around the new Durban International Airport is stunted and looks like grass.

Said Phil Barker, CFO of Crookes Bros: "The drought has affected KZN operations but these account for only 10% of operations today. The rest of our production is grown under irrigation around Komatipoort, in Zambia and Swaziland. That part of the crop is fine."

He said there was some concern when the world sugar price weakened earlier this year but it has subsequently improved. The strong rand is a major depressant on Crookes, which has diversified into bananas, deciduous fruit, barley and wheat.

Tongaat  aims to double its sugar production to 1.9mt (1mt) mainly by developing new lands in Swaziland, Mozambique and Zimbabwe. Development of cane production in SA appears to have been thwarted by land claims and other socio-political considerations.

The annual report says that in 2009 the area under cane in KZN decreased by 10 454 hectares to 130 594 hectares and this coupled with the reduction in yields limited sugar production in 2009 to 564 000 tons (2008: 644 000 tons). Sugar cane production per hectare of cane has declined by 30% from average levels of 64 tons per hectare.

Don MacLeod, deputy chair of Illovo, said only 40% of revenues and 18% of operating profits stemmed from KZN. Of that 18% only half was directly sugar production. The rest was downstream products derived from sugar, such as furfuryl alcohol and other chemicals.

"All our lands in Tanzania, Mozambique, Malawi are irrigated. That said, the strong rand is a problem."

The moral of the story: world sugar prices are good thanks to bad weather in a number of countries, also because a huge part of the global crop is going to ethanol for fuel. These positives are being offset by the strong rand.

All three of the listed sugar producers might have diversified production - but profit growth in sugar this year could be a lot more subdued.

The SASA estimates the crop to March each year, which means there are six months to go. Good rains in KZN could yet save the crop. But the worst case scenario - ploughing in reject cane and planting again, as in 2001, would be expensive and a major harness on profitability.

One sugar beneficiator said that the sugar industry has applied for a 21% increase in protection against imports.

The SA Sugar Association would say only: ""The industry is discussing a range of challenges with the government regarding its sustainability including the amount of imports coming into the country."

The SASA says imports in the year to March came to 102 000 tons, of which 90% came from Brazil. From April to August imports came to 55 566 tons, of which 90% also came from Brazil.

Moneyweb

South African sugar production hurt by low rainfall

by Edward West

Tongaat Hulett, a large-scale agri-processing business and one of SA's biggest sugar producers, has said local production is being hurt by low rainfall in the KwaZulu-Natal north coast region.

Peter Staude, CEO of the KwaZulu-Natal sugar, starch and property development group, said local sugar production in the 2010-11 season was expected to fall slightly from 2009-10, when 564 000 tons were produced.

Mr Staude was updating shareholders about the group's operations during the annual general meeting recently.

Rainfall on KwaZulu-Natal's north coast fell to 252mm during the January-June cane-growing months this year, compared with a long-term mean of 491mm. The anticipated decline in production was in spite of the hectares under cane supplying the mill increasing by about 2000ha.

Turning to maize, Mr Staude said the total South African maize harvest for this year was projected at more than 13-million tons, the largest crop in 29 years. The group converts more than 600 000 tons of maize a year into starch and starch-based products for use in food manufacturing and a range of industrial products.

The price of maize in SA through to this month was trading close to the world price, which would in turn contribute to the competitiveness of the starch operation.

Sales of starch and glucose continued to reflect the contraction in consumer spending, particularly in prepared foods, confectionery and canning.

A key focus for the group, including its other southern African operations, was to increase sugar production from 957 000 tons milled in the 2009-10 season to the installed milling capacity of 1,9-million tons a year, with a reduction in the cost of production.

Sugar production in Zimbabwe for the 2010-11 season was expected to be 330 000- 350 000 tons, up from 259 000 tons in 2009-10. In Mozambique, sugar production was expected to be 230 000- 250 000 tons, from 134 000 tons in 2009-10.

Unseasonal rain in Mozambique and rehabilitation work on the Hippo Valley mill in Zimbabwe caused sugar production to start later than expected.

Exchange rate movements in the past few months had not been in Tongaat's favour, with the rand now 16% stronger against the euro than in 2009-10. Movement in the rand, dollar, euro and Mozambique meticais affects Tongaat's revenue streams, costs and the conversion of profits into rand.

Business Day

Mozambique cancels biofuels contract with foreign investor

Mozambique's government has voided a 2007 contract with Procana to begin ethanol production from sugar.


Agencia Informacao Mocambique reported December 30 that the renewable-fuel project centered on a proposed 30,000 hectare sugar plantation at Massingir, in the country's southern Gaza province.

Procana's initial investor was the London-based Central African Mining and Exploration Co., which in August established Bioenergy Africa, which received 94 percent of Procana's shares. Bioenergy subsequently renamed itself Sable Mining and is registered in the Caribbean's British Virgin Islands.


According to the contract, Procana was to have invested more than $500 million in the project, which was to have been the first major biofuels project to come on-stream in Mozambique. The Massingir factory was slated to produce both sugar and ethanol, with the byproducts being recycled to produce both fertilizer and generate electricity.

According to Deputy Education Minister Luis Covane, the contract was voided because Procana failed to comply with its contractual obligations, telling journalists, "In the two years since the provisional authorization in 2007, only 800 hectares of land was cleared. The company made no use at all of the remaining 29,200 hectares."

UPI