Saturday, July 13, 2024

Production capacity of sugar turns sour, import process ridiculed as sluggish


Ethiopian Sugar Industry Group (ESIG), a state owned estate, is projected to fulfill the production of 2.27 million quintal of sugar, which is half of its capacity. The sluggish import process for the sweet despite performance bond provision by the supplier raises criticism among sector experts.
The group which manages about eight active farms with milling facilities stated that several external and internal challenges hampered its activities making it to not attain its maximum potential.
According to Reta Demeke, Public Relations Head at ESIG, the millers have so far produced 858,000 quintals of sugar this season, which mostly picked up at the end of the rainy season.
“Owing to various reasons, production this year has been a shadow of what it was last year. Some of them, a few weeks ago have run out of production,” Reta elaborated.
Astonishingly, Wonji Shoa, the oldest sugar estate in the country has been out of operation as from mid-November. Similarly, Omo Kuraz 2 has halted its production a month ago, while Arjo Dedessa and Tana Beles resumed production last month.
As Reta informs Capital, sugar millers are now operating in Metehara, Kuraz 3, Tana Beles, Fincha, and Arjo Dedessa.
“Most of them started production late because of several challenges including lack of parts and external challenges,” Reta highlighted.
As per the PR head’s explanation, sugar production is a chain process which primarily is supposed to be done in the preceding seasons.
“Foreign experts who engaged on projects before left the country during the pandemic and the ripple effect is catching up with us now,” Reta explained whilst pointing out reasons of why some projects have been delayed.
The sector’s character is often cyclic, for instance, plantations ought to be carried out at least 14 months prior to this year’s sugar production. According to the head, because of challenges some of the operation was not conducted as per the sector demand.
Ethiopian sugar millers have a capacity to produce over 4 million quintal per annum, while the actual demand is estimated at about six mllion quintal.
“On the consideration of circumstances for this year, we have projected to produce 2.27 million quintal of sugar,” he said.
Besides local production, the Group is also importing sugar to fill the gap. For this year, the bid was opened early November in 2022, to which a company relatively new to the Ethiopian market, Osirius Group, was selected to supply 200,000 metric tons of sugar owing to its lowest bid offer compared to other two bidders.
Currently, the process to start shipment faced delays unlike the past experience owing to the US Company providing its performance bond later than expected. At the moment, the Group has opened the letter of credit to precede the import that will be loaded from Brazil.
“Regarding import such kind of obstacles was not seen in the past, but the process is currently ongoing,” Reta said.
Sector experts opined that due to lower local production and delays on import, the market has been widely covered by francovaluta.
They criticized that the government procurement process has become defunct, “Since the opening of the bid, the process has taken almost half a year. The sugar is yet to be imported. This shows that government’s lead procurement process is failing.”

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