Phasing out plan for the accompanying measures sugar protocol (2011 – 13) projects

SUGAR BOARD OF TANZANIA: FINAL REPORT

Sugarcane production is an important subsector in Tanzania’s agricultural sector. It contributes approximately 35% of the gross output of the food-manufacturing sector and some 7 to 10% of total manufacturing value added. Being among the largest agro-processing industries in the country, the sugar subsector is a major employer with direct labour force of approximately 18,000 people, indirect labour force of 57,000 people with 75, 000 households and dependents. The Tanzanian sugar cane production can be categorized into two subsectors: outgrowers subsector and estate subsector. The outgrowers are associated with estates because they don’t own sugar processing mills, thus sell their crops to the mills owned by estate subsector. There are four major players in the estate subsector owning five processing plants. These are Kilombero Sugar Company (owning two mills) in Morogoro, Mtibwa Sugar Estates (MSE) also in Morogoro, TPC Ltd in Kilimanjaro, and Kagera Sugar Ltd in Kagera Large-scale plantations have been the predominant model for sugarcane production in Tanzania and elsewhere in Sub-Saharan Africa. However, due to limited land for horizontal expansion of sugarcane estate farming, the sugar companies in Tanzania specifically Kilombero Sugar Company Limited (KSCL) and Mtibwa Sugar Estate in Morogoro region have strongly encouraged outgrowers production. Outgrowers schemes in Tanzania account for approximately 27% of all cane production and 48% respective mills’ throughput. However, their efficiency is hampered by several factors. Outgrowers production in Tanzania is constrained by several factors the main ones being poor management of outgrowers’ associations, poor infrastructure and haulage facilities, poor cane husbandry practices, lack of access to finance to invest in sugarcane production, high harvesting and production costs, and fire outbreaks in outgrowers’ fields before harvesting, and dependence on rain-fed agriculture. Despite the challenges faced, outgrower production is seen as an appropriate model to increase sugarcane production hence fill the existing supply gap of sugar in the country. Tanzania was affected by the reform of the European Sugar Market. The government developed a National Strategy on how to adjust to new EU Sugar market regime. The EU Commission in response outlined a strategy for the period 2006-2013 on how to support National plans for adjusting to the new price regime and drafted a Multi-annual Indicative programme for the period 2007-2010 thereby improving Tanzania’s competitiveness with other sugar-producing countries. The current programme known as Accompanying Measures Protocol (AMSP) 2011-2013 builds on the achievements of the previous Multi-Annual Indicative Programme (MIP) 2007-2010. It has been designed in line with the MIP 2011-2013 and it takes stock of the new Sugar Industry Development Plan and Strategy (SIDPS) 2011/12-2015/16.