Local sugar producers told to compete

The Sugar Board of Tanzania (SBT) has urged local sugar producers to sell their product at competitive prices while the government is working on a plan to grant them permits to export the excess stock.

SBT Acting Director General, Mr Henry Semwanza told the 'Daily News' in Dar es Salaam admitted that there was excess sugar in the local market due to ‘untimed importation’ of the commodity. 

He was reacting to complaints from local producers that cheap imported sugar in circulation has made them suffer massive losses.

“It is true there is excess sugar supply in circulation and the government is considering granting export permits to local producers to offload excess stock to relieve them from further losses”, remarked Mr Semwanza.

Despite the excess supply in the circulation, he observed that there was still a big demand for sugar in the market, particularly upcountry where prices have slightly dropped because transport costs have also gone down.

Generally, he said sugar prices have dropped slightly and stabilized compared to the situation that engulfed the market last year whereby the government was forced to intervene by fixing prices at 1,700/- per kilo, down from 2,600/-.

Tanzania Sugar Producers Association (TSPA) Executive Secretary, Mr Fadhili Mbaga, said the excessive sugar in the local market has made local manufacturers owe sugarcane producers more than 100bn/- for their supplies.

He said since the imported sugar in the local market will last till next month, it was reasonable for the government to grant export permits to the local manufactures to offload the unsold stock in order to reimburse the arrears to sugarcane farmers. 

Mr Mbaga said the presence of surplus sugar in the local market was a sign that importation exceeded the target which was aimed at filling the gap when plants closed.

Tanzania is a deficit sugar producing country, because local production does not suffice the existing demand. Normally, the demand gap is covered by licensed imported sugar that has to arrive in the country at the time when all factories have closed for maintenance or have less stock for sales.

The impact of imported sugar worsened when 19,500 tons that came beyond 2011-12 importation deadline of end of May was released at the Dar es Salaam port. For example, as of mid September this year the Tanganyika Planting Company (TPC) had lost 18 per cent of the market share equivalent to 4,500 tons that it couldn’t sell.

According to TPC market report, to compete with cheaper imported sugar the factory was compelled to drop selling price twice- in July by 2.5 per cent and in early August (3.3 per cent).

Low sales have driven TPC into a huge cost of keeping the unsold stock and September had 16,300 tons of sugar in various hired storage facilities.
Source: The Daily News, http://www.dailynews.co.tz, reported by Sebastian Mrindoko in Dar es Salaam
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