How to sweeten the sugar industry.

Visitors to Tanzania's capital, Dar es Salaam, cannot help but notice a huge building which dominates the city centre. The multi-storey Sukari (Sugar) House is the headquarters of SUDECO (Sugar Development Corporation) and also shares a very important rental client, the Parastatal Sector Reform Commission (PSRC) which is responsible for over-seeing the divestiture of the state-owned sugar corporation. Like most of Tanzania's state-owned assets, SUDECO has fallen on hard times due to a severing of government subsidies and now, its future hinges on a successful privatisation programme.

The production capacity of the Tanzanian sugar industry requires massive renovation work and repairs and, as SUDECO Chief, Mr George Mbati, explains, is in dire need of secure foreign and domestic resources. "It is hoped this exercise of privatisation will attract both international and local capital which is badly needed in order that the mills can be rehabilitated," says Mr Mbati. "The sugar sector is up for privatisation: All the factories are programmed for privatisation, effective in 1997."

Tanzania's sugar production has fallen steadily in recent years and is unable to suffice domestic demand. Total production for the 1996/97 season is expected to be about 100,000 tonnes, worth an estimated $45m or half of Tanzania's through-put production capacity of 200,000 tonnes. Annual production for the 1995/96 season was 120,000 tonnes. The country's domestic demand is currently running at 280,000 tonnes a year, with the deficit being imported under the country's liberalised trade regulations. But despite insufficient amounts, SUDECO is "tenaciously" holding on to a 10,000 tonne quota for the European Union which is worth two and a half times the import parity price. The main customer for this quota is Tate and Lyle.

Out of the country's five sugar mills which produce 'plantation white' or raw sugar, only two are currently profitable enterprises. Summarising the state of Tanzania's mills, Mr Mbeti explained that two factories at central Kilombero are operating with obsolete and broken equipment. If they were repaired, their combined production capacity would be 76,000 tonnes per year.

At Kagera on Lake Victoria near western Bukoba, there is a giant mill which was commissioned in 1982 and is capable of an output of 56,000 tonnes per year. Its current production rate, however, is a miserable 6,000 tonnes. The main reason for Kagera's low output is a problem with cane supply which has been exacerbated by local growers who harvest 'rain-fed cane' instead of irrigation cane. The African Development Bank (ADB) has funded a study on rehabilitating the mill and a draft study by the US-based company, Arkel, is almost ready. Mr Mbati explains that the aim here is, "hopefully, to attract investors to assist in rehabilitating the factory including the irrigation component."

A certain amount of success at other mills however, can comfort the SUDECO Chief. The Mtibwa mill near Dodoma is operating at 100% capacity, producing 34,000 tonnes each year. "A very prominent feature of this factory," comments Mr Mbati, "is a large outgrowers scheme, delivering approximately 60% of the cane through-put to the factory." At northern Moshi, the TPC mill is operating at just over 50% capacity and still producing an annual output of 38,000 tonnes. The main problems at Moshi stemmed from three factors: A dilapidated power house at the mill; transport problems for farmers; and a pest known as 'White Grub'. White grub is a beetle which attacks the roots of the sugar cane plant and is known to effect up to 20% of the land under cultivation - about 7,000 hectares. Salinity is another problem faced by growers at Moshi.

According to Mr Mbati, all that the Tanzanian sugar sector requires to make it a net sugar exporter, is sufficient capital invested into the industry. Indeed, even of those mills which are not running at full capacity, only two are nonprofit making: "Except for Kagera and Kilombero, the other mills are profitable enterprises."