Nigeria depends almost exclusively on sugar imports in the form of brown sugar, largely imported from Brazil.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
Required Report - public distribution
GAIN Report Number: NI
Russ Nicely, Regional Agricultural Counselor
Marcela Rondón, Regional Agricultural Attaché
& Michael David, Agricultural Specialist
Nigeria depends almost exclusively on sugar imports in the form of brown sugar, largely imported from
Brazil (98 percent) despite privatization of all government -owned sugar resources. The Nigerian sugar
industry has been reinvigorated by privatization; however, production remains insufficient to meet
Nigeria?s consumption needs. Sugar refining has flourished as new entrants increased competition in
the sugar industry and refining capacity is estimated at 2.1 million tons while total demand is estimated
at 1.45 million tons. The five percent duty on imported raw sugar continues to promote expansion and
new investments in refining capacity, but not production.
In order to improve Nigeria?s sugar subsector, the Nigerian government (GON) decided to privatize
all its sugar estates. The National Sugar Development Council (NSDC) was set up in 1993 and its
first task was to arrange the privatization of the country?s nationalized sugar companies. The
rehabilitation of the estates has been very slow due largely to the huge capital required and lack of
electricity/power to run sugar mills. The privatization process was completed in 2008 and the NSDC
next aims to implement an out-grower program that will eventually run in all 14 sugar producing
locations in the country. However, to date, the program has only been launched at the Savannah
Sugar Company Limited, which is currently the only sugar producer in Nigeria, and also at Josepdam
Sugar Company. The rehabilitation of the other sugar estates is at various stages of development.
Nigeria?s sugar requirements are mainly met through imports of raw sugar from Brazil (95%) that is
refined locally. Currently, there are only two major companies refining sugar in Nigeria: Dangote
Sugar remains the dominant player with an installed refinery capacity of 1.44 million tons; followed
by the BUA Group with a capacity of 720,000 and they are also working on regenerating the
infrastructure at Lafiaji in Kwara State; Flour Mills of Nigeria is doing the same in Sunti and has a
second refinery coming on line in June 2012. The combined refinery capacity to date is 2.3 million
tons of sugar per year, far exceeding national consumption needs estimated at 1.45 million tons.
Despite the overcapacity, it is reported that two other investors are planning on establishing addition
sugar refineries, potentially with the aims at export markets.
Because of Nigeria?s beneficial tariffs on raw sugar (subject to a duty of just 5% and exemption
from the development levy) about 98 percent of all imports come in the form of raw sugar and
refined locally while the remainder is imported is refined sugar.
Exchange Rate: $1 = 158 Naira
Nigeria?s domestic sugar production in MY2012/13 is forecast at 65,000 tons (raw value), up from the
estimate 60,000 tons in MY2011/12. Dangote-owned Savannah Sugar has completed the first phase of
its rehabilitation program, with about 6,700 hectares of newly planted sugar cane fields. Josepdam
Sugar Company has embarked on an aggressive nursery establishment to produce enough sugar cane
seeds for field expansion. Currently it has 1,250 hectares of seed cane; however, the available raw
material is not adequate to start operations. It is expected that milling operations will begin during
MY2012/13. Other sugar estates are in varying stages of rehabilitation. For example, Golden Sugar
Company (Sunti) owned by Flour Mills of Nigeria (FMN) has developed 2,000 hectares of land and
planted over 1,000 hectares of sugarcane (which uses a center-pivot irrigation) but also are not at the
minimal level for the milling stage.
FMN also expects to start milling at a second refinery in Lapos during June 2012, but will utilize
imported brown sugar.
Savannah Sugar reported a decrease in sugar cane yield from 66 tons per hectare in 2011/12 to 60 tons
in 2010/11. The average yield of refined sugar from a ton of cane is estimated at approximately 0.961
or 9 percent.
With privatization completed, the NSDC has shifted its focus to support the development of the
industry, including monitoring, research and development, promotion of mini plants, supporting an out-
grower program, and establishing a price support mechanism to ensure that farmers receive a fair price
from the newly privatized estates. The NSDC aims to implement an out-grower program that will
eventually run in all 14-sugar producing locations in Nigeria. The NSDC, in collaboration with the
private operations, aims to assist farmers in the acquisition of fertilizers, pesticides and improved seed
cane with the help of the Central Bank of Nigeria (CBN) and local commercial banks. The out-grower
program will deliver inputs and credits to cooperatives at a low interest rate -7 percent compared to up
to 28 percent or at more traditional lending rates.
On April 2, 2012 the Minister of Trade and Investment, Dr. Olusegun Aganga, announced that that the
long waited Nigerian Sugar Master Plan (NSMP) had been finalized. According to Minister Aganga,
the NSMP policy will ensure an increased annual sugar production of 1.797 million tons of sugar.
(Note sugar production in 2011/12 is estimated at 65,000 tons, Nigeria produces less than 2 percent of
its total consumption). The Federal Government of Nigeria has not unveiled the details of the ambitious
plan but it is expected that the policy document will target industrial infrastructure development,
improvement of the business environment through simplified regulations, development of appropriate
technologies, and the focus on creating a structure for institutionalized capacity building skill
development that will provide jobs to youths.
Government of Nigeria incentives in the sugar sector include:
A low duty of 2.5% on the import of machinery for the industry, chemicals for sugar production
have zero duty;
An import duty of 20% on refined sugar, as well as a development levy of 10% and VAT of
Provision of infrastructure including access roads, boreholes, power lines, land acquisition, and
health care facilities for new sugar estates;
100 percent foreign ownership of sugar complexes is allowed;
Providing a credit support scheme for sugarcane growers in collaboration with the Central Bank
of Nigeria (CBN) and commercial banks.
Nigeria?s overall sugar consumption in MY2012/13 is forecast at 1.265 million tons, unchanged from
MY2011/12. The forecast is based on population growth as well continued industrial demand. Sugar
use in industrial activities such as manufacturing soft drinks, pharmaceuticals, biscuits, other beverages
and confectionary products demand is steady, while demand for direct household consumption remains
firm despite rising international prices. Soft drink production alone accounts for about half of total
industrial usage. Last year the price of sugar in the domestic market rose from 205,000 Naira ($1,297)
per ton to 230,000 naira ($1,455) in tandem with rising international prices. During the same period, the
price of sugar cane also increased from $26.80 per ton to $28.50 to the delight of local farmers.
Post forecasts Nigeria?s raw sugar imports in MY2012/13 to rise to 1.45 million tons, up unchanged
from the revised estimate in MY2011/12. The bulk of Nigeria?s sugar imports are shipped as raw sugar
and refined locally. In MY2010, Nigeria imported 1.4 million tons of raw sugar and only 100,000 tons
of refined sugar. The bulk of Nigeria?s sugar imports, both raw and refined, come from Brazil. Nigerian
sugar exports to neighboring countries are expected to continue in MY2012/13, especially as Dangote
refinery exports refined sugar to Ghana, Niger and Senegal. Sugar refined in Nigeria can be found in
most West and Central African countries.
The government of Nigeria aims to move quickly from dependence on imports of raw sugar to
eventually producing 100 percent, with at least 70 percent of domestic sugar production by the medium
term. The privatization of government-owned, fully integrated sugar companies is a key element of
GON?s overall strategy of achieve this goal. Privatization has undoubtedly improved the management
of the sugar refineries, but has not stimulated new substantial investments in production, infrastructure,
The import duty on refined sugar is 20%, and when other taxes, such as the development levy (10%)
and VAT (5%) are assessed, the effective duty is about 35%. The GON imposed the high duty on
refined sugar to protect the local refineries and sugar producing estates and to encourage new
investments in local refining capacity. Raw sugar imports attract a much lower duty (only 5 percent)
and are exempted from payment of the sugar development levy.
The refining industry is further helped by the government?s public health policy of requiring all sugar
intended for direct consumption to be fortified with Vitamin A as part of a national effort to eradicate
Vitamin A deficiency, which costs about 750 Naira ($5) per ton. However, local refineries are allowed
to supply non-fortified sugar to industrial users, such as the Coca Cola Company, which led the
industrial user complaints stating that fortified sugar induces undesirable changes in color, taste, and
appearance in their products.
Production, Supply and Demand Data Statistics
Sugar, Centrifugal Nigeria 2010/2011 2011/2012 2012/2013
Market Year Begin: Nov 2010 Market Year Begin: Nov 2011 Market Year Begin: Nov 2012
USDA Official New Post USDA Official New Post USDA Official New Post
Beginning Stocks 75 75 75 75 75
Beet Sugar Production 0 0 0 0 0
Cane Sugar Production 60 60 65 65 65
Total Sugar Production 60 60 65 65 65
Raw Imports 1,400 1,253 1,400 1,325 1,325
Refined Imp.(Raw Val) 100 146 125 125 125
Total Imports 1,500 1,399 1,525 1,450 1,450
Total Supply 1,635 1,534 1,665 1,590 1,590
Raw Exports 0 0 0 0 0
Refined Exp.(Raw Val) 200 200 200 200 200
Total Exports 200 200 200 200 200
Human Dom. Consumption 1,310 1,209 1,340 1,265 1,265
Other Disappearance 50 50 50 50 50
Total Use 1,360 1,259 1,390 1,315 1,315
Ending Stocks 75 75 75 75 75
Total Distribution 1,635 1,534 1,665 1,590 1,590