- Tanzania sugar shortage is sparking unrelenting hike in prices.
- The government of Tanzania has approved the import of over 100,000 tonnes of sugar.
- President Samia has pledged to increase sugar production by 2025.
A biting sugar shortage in Tanzania is causing the price of the commodity to skyrocket over the last few months. On the one hand, the sugar shortage is blamed on heavy rains at the end of last year while on the other hand, there are allegations of hoarding and price setting by industry cartels.
With little to no evidence of the latter, the speculations remain just that, mere allegations. However, what is undisputed is sugar shortage and the attendant surge in prices for the sweetener.
Sugar shortage in Tanzania has persisted for almost an entire year now. So profound is the problem that President Dr Samia Suluhu Hassan was forced to issue a public statement explaining the government’s plan to resolve the issue.
Suluhu acknowledges sugar shortage in Tanzania
The president first acknowledged the persistent sugar shortage, but warned against hoarding, welcomed imports, and then pledged to increase domestic production significantly by 2025.
However, it is no easy fix, the president admitted and said it may take up to an entire year before the country can increase its production capacity to meet and surpass the demand.
“I am confident that by next year we will have completely ended the sugar deficit in the country…we will increase production and we will even start exporting the product,” the president said in her address at the 17th President’s Manufacturer of the Year Award (PMAYA) event.
Underscoring the president, Katavi Regional Commissioner Ms. Mwamvua Mrindoko issued a stern warning to traders against sugar hoarding to effect hikes in the price of sugar.
“The authorities will not hesitate to take legal measures against traders hiking sugar prices on the pretext of a shortage,” she warned.
“There are some unscrupulous businesspeople in Katavi who want to make big profits by raising sugar prices…There is no justification for hiking sugar prices just because there is a shortage in the market,” she insisted.
The RC told traders that the government has already issued indicative prices, and no trader has the right to demand prices higher than the set indicative prices.
The Tanzania Sugar Board (TSB), the government agency that oversees the sugar production subsector, announced that the government indicative sugar prices for wholesale sugar should be no more than US$1.5 (TSH2,800) and US$1.8 to (TSH3,200) for retail prices.
“These are the prices, traders found to be selling at higher prices will face the full force of the law,” she warned.
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Tanzania forced to import sugar to bridge its deficit
While traders attempt to make the most of the shortage, the government of Tanzania has not stopped emphasizing the indicative sugar prices but allowed imports of the commodity to bridge the gap.
It is difficult to control the very basic law of supply and demand. The first law of supply has it that, when the supply of a product falls, there is a direct and opposite reaction in price i.e. low supply equals high prices.
To stabilize the market prices, the government of Tanzania has allowed the importation of sugar effective immediately. The first batch of sugar consignment entered the country over the weekend creating a buzz.
The arrival of the sugar cargo warranted a press conference and reporters were informed that the consignment arrived aboard the cargo ship the JPO Aquarius. How much exactly was onboard was not specified but it is known that this first batch is part of a 100,000 tonnes that the government approved to imported.
Speaking to reporters gathered at the Dar es Salaam port, the Sugar Board of Tanzania (SBT) Planning, Monitoring, and Evaluation Manager, Mr George Gowele said; “We are grateful to the TPA (Tanzania Ports Authority) for giving us priority and fast-tracking offloading of the cargo. The containers arrived today and already the cargo has been offloaded.”
Tanzania Minister for Agriculture, Mr Hussein Bashe announced the importation as early as last year. He said while the government is working to increase production, traders are allowed to import sugar.
The government issued the sugar importation license to all major sugar producers in the country. These are Mtibwa Sugar, Kilombero Sugar/Illovo, Bagamoyo Sugar, TPC Limited, and Kagera Sugar.
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Tanzania’s sugar industry, an untapped economic powerhouse
Tanzania is the third-largest sugar producer in East Africa but its domestic production does not meet demand in the country. As President Samia pledged, Tanzania is working to increase its sugar production capacity.
Tanzania envisions to meet and surpass the country’s domestic demand for sugar and even start exporting by 2025.
The sugar production sector is one of Tanzania’s key agro-processing industries that is envisioned to help achieve the country’s industrialization agenda. Through value addition, the sugar production industry calls for the setting up of manufacturing plants for value addition.
In so doing, the sugar industry will help Tanzania industrialize. According to government figures, the output of the sector has grown by 16.6 per cent increasing from 307,431 tonnes to 359,219 tonnes between 2013 and 2019.
Through the Tanzania Sugar Board, the government announced that as of 2021 the country’s sugar output clocked 367,000 tonnes.
What remains the dilemma is that demand for the product seems to be growing at a much faster rate than production growth. As of 2019, Tanzania’s demand for domestic sugar was 470,000 tonnes, which is a 23 per cent deficit.
However, following the presidential executive order, it is expected that sugar output will grow at an average rate of 33 per cent annually by 2025. Should the country achieve this rate of growth, then it will be able to close the demand gap.
To meet this goal, the government has taken strategic steps to improve the sector’s performance and increase its output capacity. First on the list was the passing of favorable policies to attract investment in the sector.
“To encourage domestic production, the state has been making land available for large-scale farmers. In 2015 the government offered 40,000 ha of land to prospective sugar farmers in two plots of 20,000 ha each in the southern agricultural region,” reported Asoko Insight, a research institution.
After the 2015 policy changes, in 2020, the government issued investors with 20,000 hectares worth of arable land to farm sugar.
“More recently, fiscal policies have also been introduced to ease supply burdens related to imported feedstock for sugar producers,” notes the researcher.
Further still, as of July 2021, the Tanzania Revenues Authority (TRA) waived a 15 per cent import tax on sugar for industrial use. This move came into play with the passing of the 2021/22 National Budget.
In Tanzania, there are only five major sugar producers, these are Kilombero Sugar Company, with 37 per cent market share, Tanganyika Planting Company (TPC) with 29 per cent market share, Kagera Sugar (24 per cent), Mtibwa Sugar Estates (9 per cent) and Manyara Sugar (1 per cent).
“The government retains a minority stake in Kilombero and TPC, having ceded majority stakes to foreign owners. Mtibwa and Kagera are both now subsidiaries of Supergroup Companies, a local conglomerate with interests in transport and logistics as well as industrial manufacturing,” the researcher details.
