Tanzania plans to import 50,000 metric tonnes of sugar this year to plug a deficit that has pushed up the prices of the commodity at a time the country is battling a shortage of rice.

The Sugar Board of Tanzania (SBT) said the consignment will have to come in early March through to the end of April to put a lid on rising prices.

The government is set to advertise tenders to local and international firms, wand has placed a ceiling of 5,000 metric tonnes of sugar for each successful firm, meaning at least 10 companies might be picked. SBT said the imported sugar will only be sold locally.

Deadline for imports

Henry Semwaza, the acting director-general at SBT said no consignment will be accepted for clearance if it arrives later than April 30.

“All licenses for importation shall be deemed cancelled after the expiry of this date and the same shall be surrendered to the Board bearing customs endorsement,” he said.

An import levy of $3 per tonne shall be applicable.

According to Mr Semwaza, all applicants shall commit to distribute the imported sugar at a price not exceeding Tsh1,500 ($1) at wholesale and the importers will be responsible for distribution and storage of the sugar at all points of wholesale trade.

SBT said that sub-wholesalers will be expected to sell the sugar acquired from wholesalers at price not exceeding Tsh 1650 ($1.048) per kilogramme and retail price will not be more than Tsh1,800  ($1.14) per kilogramme.

Currently, the retail cost of sugar in the country stands at Tsh2,000 ($1.23) up from Tsh1,800 ($ 1.10) in September.

During the rainy season most sugar mills in Tanzania close down causing a sugar shortage.

“Production has been hurt by heavy rains since the fields are soggy and the sugar produced is of low quality,” said George Mlingwa, the chairman of Tanzania Sugarcane Outgrowers.

Thus, reduced output plus smuggling have added to the deficit in the country.

Tanzania’s annual sugar consumption stands at 480,000 tonnes but the country’s main producers — the Tanganyika Plantation Company (TPC), Kilombero Kilombero Sugar Company Ltd in Morogoro region, Mtibwa Sugar Estates also in Morogoro and Kagera Sugar Ltd in Kagera region — only manage to produce an average 400,000 tonnes.

Last year, the SBT outlined nine projects whose implementation will see the country triple its annual sugar production by 2016.

The projects are in various stages of implementation in Rufiji in the Coast Region, in Kasulu District in  Kigoma region and in Ikongo area in the Mara region.

A first in five years

For the first time in five years, Tanzania is also importing rice following a shortfall in local harvest and runaway inflation.

READ: Dar forced to import rice to stabilise price of local harvest

The country has been forced to temporarily lift a ban on rice imports and allow business people to bring in at least 60,000 tonnes.

The Bank of Tanzania monthly economic review for December shows that inflation rate stood at 12.1 per cent in November 2012 dropping slightly from 12.9 per cent in October.

Mohamed Muya, Permanent Secretary in the Ministry of Agriculture, Food Security and Co-operatives, told The EastAfrican that the government took the decision in a bid to bring down the prices of food on the local market, which have contributed to the high inflation rates.

While the move to import rice may stabilise food prices, similar interventions were previously criticised for encouraging dumping of cheap rice into the local market, thus denying regions such as Rukwa in southwestern Tanzania that produce surplus but fail to transport their harvest to the market due to poor infrastructure, an opportunity to trade with other areas.

Increasing sugar and rice imports have sent jitters throughout Tanzania with processors concerned that cheap products will undercut their business.

Tanzania banned the export of sugar in 2011, to protect its domestic stock, testing its commitment to open trade in the region as other East African Community states battled a biting deficit.

Presently, the premium prices offered in neighbouring countries are said to be luring exporters into selling the commodity in some regions along the borders.

Statistics from the Kenya Sugar Board (KSB) shows Kenya imported 504 tonnes of sugar from Tanzania in the 11 months to November 2012. In 2011, the country recorded negligible imports from Tanzania.

Uganda exports to Kenya

Uganda on the other hand exported 30,299 tonnes of sugar to Kenya in the 11 months to November 2012, an exponential increase from the 73 tonnes reported in the 11 months to November 2011.

Kenya has been increasing its sugar imports as the industry tries to compensate for falling local production.

Data from KSB shows that Kenya imported 223,333 tonnes of sugar in the first 11 months of 2012. This is in comparison with the 118,923 tonnes imported within the same period in 2011.

While Kenya’s sugar demand has been on the rise, production remains low mainly due to erratic weather conditions.

Ordinarily, sugar imported into the region is levied and a common external tariff of 25 per cent and value added tax of 18 per cent is charged.

ALSO READ: Kenya, Uganda tussle over bitter sugar import levy

Two weeks ago, Mauritius sugar miller Alteo Ltd said it was seeking strategic partners in East Africa to increase its sugar output as it also plans a major foray into the region.

Alteo, formed after the July 2012 merger between two Mauritius sugar producers — Deep River Beau Champ Ltd and Flacq United Estates Ltd — said it was in talks with several potential investors to run several sugar projects in the East African region. 

Chairman Thierry Lagesse said the investment will see the company increase production to over 400,000 tonnes annually in the near future, an almost five-fold rise from the current 91,000 tonnes.