David Malingha Doya
An end to sugar quotas in the EU, expected by the EU Council as early as 2017, might promote trade of the sweetener within Africa as Ethiopia and Nigeria planned to raise output, Ecobank Transnational said on Friday.
“There is a deficit of sugar in Africa, yet producers still export to Europe and import from Brazil,” Edward George, the head of soft commodities research at Ecobank, said last week. “This will change if and when Europe bans quotas.”
Producers in the EU, the largest sugar importer, can by law only sell a limited amount in the common economic area, and some local demand must be met by duty-free shipments from African, Caribbean and Pacific states that have preferential access to the market.
Africa produces less than it needs, according to the International Sugar Organisation.
The council, which represents governments of EU member states, wants an end to quotas in 2017, while the European Commission, the region’s regulatory arm, has proposed limits should end two years earlier.
The European Parliament voted to extend them to 2020. All three would be negotiating the quotas from April 11 to June 20, Martin van Driel, a team leader for sugar at the commission, said last week.
The curbs restrict sales to 13 million tons in the 27-nation bloc, which has faced sugar shortages in the past two seasons after imports from nations with preferential accords fell short of estimates.
“If the ban is effected, and European producers increase production, we will be crowded out of that market,” said Devesh Dukhir, the chief marketing officer at the Mauritius Sugar Syndicate. Most of the Indian Ocean island nation’s output goes to the EU.
Africa produced 6.85 million tons of sugar in 2008/09, less than the 8.7 million tons it consumed, said Peter Baron, the executive director of the International Sugar Organisation. Consumption in sub-Saharan Africa could reach 11.8 million tons by 2020, he said.
Illovo Sugar, Africa’s biggest producer, has operations in its home market, South Africa, as well as in Tanzania, Swaziland, Malawi and Zambia.
Ethiopia wanted production to exceed 2 million tons by 2020 from 300 000 tons now and had set up a fund to pay for expansion, said Shimelis Kebede, the deputy director-general of planning and projects at state-run Ethiopia Sugar.
“We expect to double our fund, which is currently 4.5 billion birr (R2.2bn), in two to three years,” he said. The nation, which imports the sweetener, wanted to be one of the 10 biggest exporters by 2025.
It planned to build 10 sugar-producing plants that could also make other cane by-products such as ethanol and electricity by 2020, he said. Each plant might cost $170 million (R1.5 billion), he said.
Nigeria, which has sub-Saharan Africa’s second-biggest sugar refinery in Lagos, would expand its fund for development of the crop to as much as 6 billion naira (R343m) this year, Hezekiah Kolawole, the acting director for planning at the National Sugar Development Council, said last week.
“In a couple of years Nigeria will turn from a net importer to exporter of sugar, just like it did with cement,” Ecobank’s George said.
Dangote Group, owned by Africa’s wealthiest man, Nigerian Aliko Dangote, controls Africa’s largest cement manufacturer and the Lagos sugar refinery.
Nigerian importers of sugar had had to pay a levy on incoming shipments since January, with proceeds going into the fund, Kolawole said.
The country, which produces 40 000 tons of sugar now, planned to raise output to meet annual consumption of 1.1 million tons, George said. – Bloomberg