Sugar Annual Report 2012

An Expert's View about Tropical and Subtropical Fruits, Sugar Cane in Mozambique

Posted on: 19 Jun 2012

Mozambique’s sugarcane production is expected to increase to almost four million tons in Marketing Year (MY) 2012/13.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 6/7/2012 GAIN Report Number: Mozambique Post: Pretoria Annual Report Report Categories: Sugar Approved By: Corey Pickelsimer Prepared By: Almeida Zacarias & Dirk Esterhuizen Report Highlights: Mozambique’s sugarcane production is expected to increase to almost four million tons in Marketing Year (MY) 2012/13, based on an increase in the area planted to 50,000 hectares. As a result, post forecast that sugar production in Mozambique will increase by 16 percent to 470,000 MT Tell Quell (486,45MTRV). For the 2011/12 MY, Mozambique’s sugar production was estimated at 389,425 MT Tell Quell (401,325 MTRV), the largest crop since 1975, and almost 38 percent higher than the previous season. Mozambique’s sugar exports are expected to reach 250,000 tons in the 2012/13 MY, on increase local sugar production. Executive Summary Post forecast that sugarcane production will increase to almost four million tons in the 2012/13 MY, based on an increase in hectares planted. The sugarcane area is expected to increase to about 50,000 hectares in the 2012/13 MY, driven by new investments in sugarcane production and a sustainable increase in the efficiencies of Mozambique’s four commercial sugar mills. In the 2011/12 MY, the sugarcane area harvested increased by 11 percent to 42,700 hectares from the 38,584 hectares harvested in the 2010/11 MY. Post estimates that sugar production in Mozambique will increase by almost 16 percent to 470,000 MT Tell Quell (486,45 MTRV) in the 2012/13 MY, due to higher sugarcane production on increased area. For the 2011/12 season, Mozambique’s sugar production is estimated at 389,425 MT Tell Quell (401,325 MTRV), the largest crop since 1975, and almost 38 percent higher than the previous season. Mozambique’s sugar exports are expected to reach 250,000 tons in the 2012/13 MY, on increased local sugar production. Mozambique exported a record 198,181 tons of sugar at a value of $83.4 million in the 2011/12 MY. This represented an increase of more than 80 percent from the 107,989 tons exported in the 2010/11 MY, due to an almost 40 percent increase in sugar production. Sugar cane The structure of Mozambique’s Sugar Industry The sugar industry continues to be one of Mozambique’s agricultural success stories. It employs about 35,000 people, the second largest employer after the public sector and contributes 25 percent to total agricultural exports, the second largest commodity after tobacco. The Mozambique sugar industry consists of four major commercial sugar companies, each with their own sugar estates and mills. These four companies are: Maragra, Xinavane (both in the Maputo province), Marromeu and Mafambisse (both in the Sofala Province). The Mozambique government still owns shares in three of the four sugar companies (see also Table 1), but is in the process of decreasing their shareholding as privatization is an ongoing government objectives. Two South African sugar companies, Illovo and Tongaat-Hulett, have invested in Mozambique’s sugar industry. Illovo Sugar holds the majority share in Maragra and Tongaat-Hullett the majority shares in Xinavane and Mafambisse. Table 1 - The Structure of the Sugar Industry in Mozambique Company Ownership Shares (%) Maragra Sugar Manufacturer Maragra Sugar, Pvt Maragra SARL 26 Illovo Sugar Ltd. 74 Maragra Comercial, Pvt. Maragra SARL 75 Others 25 Xinavane Sugar Manufacturer, Pvt. Moçambique Government 12 Tongaat-Hulett Ltd. 88 Moçambique Sugar Manufact, Pvt. Tongaat-Hulett Ltd. 75 (Mafambisse) Moçambique Govenment 25 Sena Company, Pvt. Sena Holding Co. 65 (Marromeu ) Térios Group 22 Moçambique Government 13 Source: CEPAGRI. Feasibility studies are under way to establish Mozambique’s fifth sugar estate and mill in the Mopeia district of the Zambezia province. The project has been financed by South African investors, and the plantation is expected to cover 30,000 hectares. Planting of cane on the first 10,000 hectares could already take place in late 2012. Production After the end of the civil war in 1992, the Mozambican government began to rehabilitate and modernize the sugar industry. With its natural resources, such as quality soils, regular rainfall and favorable climatic conditions, Mozambique has a comparative advantage in producing sugar. As a result of the rehabilitation program, the area planted with sugar increased from about 4,000 ha in 1992 to more than 40,000 hectares in 2011. Sugarcane harvested for milling increased from 151,000 tons in 1992 to 3.4 million tons in 2011 (see also figure 1). Figure 1: The area harvested and production of sugar cane in Mozambique since 1992 Post forecast that sugarcane production will increase to almost four million tons in the 2012/13 MY, base on an increase in hectares planted. The sugarcane area is expected to increase to about 50,000 hectares in the 2012/13 MY, on new investments and on an increase in the processing efficiencies of Mozambique’s four commercial sugar mills. In the 2011/12 MY, the sugarcane area harvested increased by 11 percent to 42,700 hectares from the 38,584 hectares harvested in the 2010/11 MY. It is estimated that Mozambique produced 3.4 million tons of sugar cane in the 2011/12 MY, an increase of almost 25 percent from the 2010/11 MY’s 2.9 million tons, due to an increased in area harvested and new sugar varieties that increased yields. Table 2 illustrates the area harvested, the yield and sugar cane production in Mozambique for the 2010/11 MY (actual), 2011/12 MY (estimated) and 2012/13 MY (forecast). Table 2: The production of sugar cane in Mozambique Season Area harvested (HA) Yield Cane crushed (MT) (MT/HA) 2010/11 38,584 76.3 2,945,000 2011/12 42,700 79.6 3,400,000 2012/13 50,000 81.0 3,980,000 PS&D Table Sugar Cane for Centrifugal Mozambique 2010/2011 2011/2012 2012/2013 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 Market Year Begin: Jan 2013 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 40 44 52 Area Harvested 39 43 50 Production 2,945 3,400 3,980 Total Supply 2,945 3,400 3,980 Utilization for Sugar 2,945 3,400 3,980 Utilizatn for Alcohol 0 0 0 Total Utilization 2,945 3,400 3,980 1000 HA, 1000 MT Sugar Production Since 2000, sugar production in Mozambique shows a sustained increase as economic and political stability have attracted new investments especially in the sugar industry where Mozambique has a competitive advantage in the production of sugar due to its favorable natural agro-ecological conditions. Figure 2: The production of sugar in Mozambique since 1992 Post estimates that sugar production in Mozambique will increase by almost 16 percent to 450,000 MT Tell Quell (465,750 MTRV) in the 2012/13 MY, due to higher sugarcane production on increased area planted. For the 2011/12 season, Mozambique’s sugar production is estimated at 387,754 MT Tell Quell (401,325 MTRV), the largest crop since 1975, and almost 38 percent higher than the previous season. Table 3 illustrates the production of sugar in Mozambique for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). Table 3: The production of sugar in Mozambique Season Cane crushed (MT) Sugar production Cane/sugar (MT*) Ratio 2010/11 2,728,541 281,726 9.69 2011/12 3,440,000 387,754 8.80 2012/13 3,980,000 450,000 8.80 *Tel Quell x 1.035 = Raw value, Refined x 1.07 = Raw value Consumption Domestic sugar consumption in Mozambique for 2011/12 MY was estimated at 172,073 tons compared to the 193,400 tons in the 2010/11 MY. The sugar industry explained that the 11 percent decline was due to an increase in overall food inflation in Mozambique. Sugar consumption is expected to stay constant at 172,000 tons in the 2012/13 MY as food inflation is expected to stabilize. Figure 3 illustrates the growth in sugar consumption in Mozambique since 1999. About 80 percent of all sugar consume in Mozambique is brown unrefined sugar as there is no “white end” refining mills in Mozambique. The 20 percent white sugar consume is imported, mainly from South Africa. Figure 3: The growth in sugar consumption in Mozambique since 1999 Trade Mozambique’s sugar exports are expected to reach 250,000 MT in the 2012/13 MY, in-line with increased local sugar production. Mozambique exported a record 198,181 tons of sugar at a value of $83.4 million in the 2011/12 MY (see also Figure 4). This represented more than an 80 percent increase from the 107,989 MT exported in the 2010/11 MY, due to an almost 40 percent increase in sugar production. Mozambique exports sugar to basically only two markets, namely, the European Union (EU), under the new Economic Partnership Agreements (EPA) introduced in 2009, and the United States under the Tariff Rate Quota, both agreements allow preferential access. All sugar exported in 2011 went to the EU market as the income realization in that market was higher than in the United States market. In 2010, Mozambique exported 82,989 MT to the EU market and 24,989 MT to the United States. Post expects Mozambique will services both the EU and United states markets in the 2012/13 MY. Figure 4: Mozambique’s sugar exports from 1994 Table 4 illustrates the exports of Mozambique sugar to the different markets for the 2008/09 (actual), 2009/10 (actual), 2010/11 (actual) and 2011/12 (estimate) and 2012/13 (forecast) marketing years. Table 5: The exports of Mozambique sugar to different markets Year EU USA SACU Total Value Market Market market Exports 2010 82,989 24,989 107,989 US$50 million 2011 198,181 198,181 US$83 (estimate) million 2012 (forecast) 230,000 20,000 250,000 US$92 million Source: CEPAGRI Import Mozambique’s sugar imports are relatively small at 30,000 tons and amount to less than 10 percent of total production. In fact, most of Mozambique’s sugar imports fall under the arrangement that is called “toll refining”. “Toll refining” is where Mozambique exports raw sugar to South Africa in exchange for white refined sugar at a payment of $80 per ton. PS&D Table Sugar, Centrifugal Mozambique 2010/2011 2011/2012 2012/2013 Market Year Begin: Jan 2010 Market Year Begin: Jan 2011 Market Year Begin: Jan 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 74 74 69 91 146 Beet Sugar Production 0 0 0 0 0 Cane Sugar Production 330 292 350 402 465 Total Sugar Production 330 292 350 402 465 Raw Imports 0 0 0 0 0 Refined Imp.(Raw Val) 165 30 155 30 30 Total Imports 165 30 155 30 30 Total Supply 569 396 574 523 641 Raw Exports 300 112 300 205 260 Refined Exp.(Raw Val) 0 0 0 0 0 Total Exports 300 112 300 205 260 Human Dom. Consumption 200 193 200 172 172 Other Disappearance 0 0 0 0 0 Total Use 200 193 200 172 172 Ending Stocks 69 91 74 146 209 Total Distribution 569 396 574 523 641 1000 MT
Posted: 19 June 2012

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