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July 02, 2008

Tanzanian sugar production to rise by 20%

Sugar production in Tanzania may rise by a fifth this season following improved rainfall and after regional demand spurred growers to plant more cane, the state- run Sugar Board of Tanzania said.

Output may increase to 317,000 metric tons between June 2008 and March 2009, from 265,000 tons in the same period a year earlier, said Matthew Kombe, director general of the board. The east African nation aims to produce 400,000 tons by 2010.

Sugar imports for household consumption in Tanzania will probably fall to about 30,000 tons in 2008-09, from 50,000 tons last year. An additional 70,000 tons is expected to be brought in by manufacturers for use in soft drinks, candies, cookies, juices and beer, Kombe said.

Sugar rose to its highest in almost four months in London yesterday on speculation near-record crude-oil prices will spur demand for ethanol produced from cane. White sugar for October delivery rose $14, or 3.7 percent, to $391.20 a metric ton on London's Liffe exchange, the highest since March 3. The commodity added to a 20 percent gain last month that was the biggest since June 1989.

Sekab, the biofuel company owned by Jonkoping, Sweden-based Nefab AB, has begun developing Tanzania's first large-scale sugar plantation for conversion to fuels such as ethanol, Kombe said. The 20,000 hectare experimental farm in Bagamoyo, about 70 kilometers (44 miles) north of Dar es Salaam, is expected to start producing 160,000 tons of sugar annually by 2010, he said.

About 12,000 small-scale farmers and major companies, including Illovo Sugar Ltd., Africa's biggest sugar producer, grow cane in central and northwestern parts of Tanzania.

Exporters in Dubai, India, Guatemala, South Africa and Brazil often sell white and brown varieties of the sweetener to Tanzania, said Kombe.

Bloomberg

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