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Sugar industry vital for economy growth

By  Franklin Alli

Local investors are putting plans together to increase at producing sugar in the country.  The local investors includes  Dangote Group and BUA .

Increased Sugar production is very key to the Nigeria manufacturing sector as well as in the well being of the average citizen. This is specifically due to its usefulness as a vital raw material for the food and beverages  sub-sectors, pharmaceutical and breweries. On the average, sugar constitutes about 15 per cent of the  raw material utilised by these sub-sectors.

Over the years, imported sugar had been the major source of sugar in Nigeria accounting for about 95 per cent of total consumption.

In 2001, the total quantity of sugar imported into the country was 1 million tons at a total cost of N45billion (Forty Five Billion Naira). This has gone up considerably in the last few years with sugar imports exceeding US $1 billion (One Billion United States Dollars) per annum while demand remains unsaturated.

Nigeria therefore expends huge foreign exchange on sugar importation to the detriment of the national economy.
The following key issues on sugar production are noteworthy . In India, the sugar industry pays about US$3.5billion to sugarcane farmers and tax boards collect over US$450 million each annually, thus generating employment, educational and technological development.

In Brazil also, the sugar industry constitutes the major source of the national income with sugarcane farms stretching over hundreds of kilometers, across states.

Sugar is one commodity that naturally has little or no substitutes and thus, there are relatively little or no threats from substitute products. The only exception, however, are variants of the same product such as sweeteners and honey which are rarely used by manufacturers due to their high prices and inability to source the required quantities.

It is as a result of this that sugar is viewed as the most economical, appropriate and convenient raw material for the Foods and Beverages industry.

Owing to its non-spoilage nature, sugar can be stored for a long time and the demand is usually all year round.
The sugar industry has wider investment prospects as it produces essential raw material for the foods & beverage industry and Nigerians have developed substantial proclivity for their use and consumption.

The identified inhibitors of the growth and development of this industry particularly the non-privatisation of the industries and unfavourable government policies could be said to be receiving required attention.

In the last few years, government has gone ahead to privatise the primary sugar companies namely, Savannah Sugar Company (SSC), Numan; Nigerian Sugar Company (NSC), Bacita, etc. These companies which have extensive plantations produce raw sugar from sugar cane.

Their major weaknesses are their state of disrepair, limitation of installed capacity (i.e. 60,000mt/pa for SSC & NSC, Bacita), limited land size of commercial all year round production.

In the light of the above key issues, including the existing supply gap in the market place, the current high demand for sugar and the recent Federal Government’s policies to achieve self-sufficiency and discourage dependency on foreign imported goods, the Dangote Industries Limited bid for ownership and control of the Savannah Sugar Company, as the core investor.

The objectives are not only to provide high quality sugar at affordable prices for industrial users and refined sugar for domestic users, but also to provide employment, technical and agricultural education to the Nigerian populace, while making foreign exchange earnings/savings from sugar export.

The transfer of ownership to Dangote took effect in 2003. When the company assumed control of SSC, only 20 hectares of land was under cultivation, and the sugar cane plants under cultivation were not economically productive. There was low staff morale and majority of the machines were in state of disrepair.

However, since acquisition of the Sugar Plantation, DIL has completely rehabilitated the cane fields and the machinery, and has invested over N12 billion into the business in the areas of factory rehabilitation, purchase of state of the art heavy machinery, spare parts for trucks, field canal construction, farm inputs such as fertilizers, high quality seedlings, chemicals and staff emoluments. The transformation of the plant has been tremendous. DIL has increased cultivation land from 20 hectares of cane plantation in 2003 to 6330 hectares of cane fields in 2009.

At the moment, the production of sugar at the plantation is about 50,000 tonnes a year. Recently, the company constructed a 16km canal at the cost of N500 million to ensure all year cultivation of the plantation in a bid to boost its sugar cane production. The Savannah Sugar is the only sugar company that maintains a sugar cane plantation without importing any major raw materials. It generates its own power and has a work force of about 5,000 at peak season, with a monthly salary spend of N150 million.

Top 9 sugar producers
* Brazil … 30 million tons (20% of global sugar production)
* European Union … 22 million (14.7%)
* India … 20 million (13.3%)* China … 10 million (6.6%)
* United States … 7 million (4.6%)
* Mexico … 6 million (4%)
* South African Development Community (SADC) … 5.7 million (3.8%)
* Australia … 5.4 million (3.6%)
* Thailand … 5 million (3.3%)
* Russia … 2.7 million (1.8%).


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