October 21, 2014

After ten years of investments being made into Africa’s sugar sector, production is being cut back, mills are closing, and future projects are being put on hold as cheap, heavily subsidized imports from Brazil, China, and India are being sold at lower prices than domestically produced sugar.  Africa is importing 5 million tons of sugar per year as global prices fell to 13.5 cents per pound in September and the International Sugar Organization predicts that there will be a global oversupply for the fifth consecutive year at the end of the 2014/15 season.  Higher sugar prices four years ago caused increased planting in producing countries such as Brazil, Thailand, and India just when African nations began exporting sugar.  Now Uganda, Mozambique, Zambia, and Malawi are all forecast to have oversupplies as neighboring stable markets such as Rwanda and Kenya have established high import taxes in order to protect their domestic industries.  In addition, certain transport corridors have been abandoned by truckers because of theft and crime leaving African sugar producers without African markets as well as overseas markets.  African countries initially began intensifying sugar production in order to gain access to the EU market – currently the EU buys approximately 35% of its sugar from Africa, but in 2017 the EU plans to do away with preferred trade policies in favor of free markets further eliminating what little market African sugar has.  Five Kenyan government-owned sugar mills are carrying a combined $500 million in debt, which the government is currently planning to write off, and even producer in countries with lower costs of production such as South Africa are seeing double digit decreases in sales.  To read further:

Read the article

To receive relevant news stories with summaries provided by GAI Research & Insight, subscribe to Global AgDevelopments, our free weekly enhanced eNews service