September 9, 2010

U.S. sugar imports to hurt economy

A decision by the US government to open its market to more sugar imports is likely to have a negative impact on low producers of the commodity worldwide including Tanzania. The US, which is the biggest consumer of the white sugar as a raw material for its food and beverage sector, is reportedly to have offered a better price that will make more producers to seize the opportunity. Already, global sugar prices rose to a five-month high in response to the move by the US Department of Agriculture which is trying to avert a looming shortage in the domestic market.

Tanzania Sugar Producers Association (TSPA) Executive Secretary, Ambassador Fadhil Mbaga said that the country still imported the commodity at times of shortage. "We can not export to the US as the local demand is still high compared to the production. This means the countries which used to export sugar to Tanzania will switch gear to the US market which offers a better price", he said.

The current demand for white sugar in the local market stands at 120,000 metric tonnes while the production is pegged at 40,000 metric tonnes. The total domestic demand for brown sugar is 330,000 metric tonnes per year. "Our capacity to produce sugar is still low and we have at some occasions to import to cover the deficit", Mbaga said.
Tanzania has for the last two years failed to export sugar to the European Union (EU) market following a decision to subsidize the producers. This move saw the price of the commodity going down from Euro 497 to 335 per metric tonne. Tanzania was given a 20,000-mt quota to export sugar to the EU but it has failed since the subsidy to the local producers was granted. Tanzania used to export 20,000mt per year to EU. The amount was calculated from the country's output capacity. "Since 2007 we did not export to Europe (EU) due to a low price as a result from a move to protect EU factories," Mbaga said.

According to the Sugar Board of Tanzania (SBT), the country expects to produce 318,000 metric tonnes this year; an increase of 27 per cent. SBT Director General, Mr Mathew Kombe told the 'Daily News' that the US market is tough to penetrate. "We need to analyze a few things first before commenting if we can tap the US market.", he said.
In 2008, developing countries exported 400,000 metric tonnes to the EU; a 33.6 per cent increase. The International Sugar Organization (ISO) in its first assessment of the 2010/11 crop said it expects world sugar production to rise from 11.5 million tonnes cent this year to a record 170.38 million tonnes. This will create a global surplus of 3.2 million tonnes. (Tanzania Daily News)


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