Global African Cashew Festival and Expo 2013 Dangote … Com-Wat… · Dangote Joins Sugar Cane...

Dangote Joins Sugar Cane Push In Nigeria

Global African Cashew Festival and Expo 2013

Commission To Investigate Sugar Industry Crisis

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Dangote Joins Sugar Cane Push In Nigeria Global African Cashew Festival and Expo 2013

Commission To Investigate Sugar Industry Crisis

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It was Ghana’s turn to host the 8th annual Cashew Festival and Expo 2013 which was held in Accra to assist the development of the value chain process.

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01

GHANA

Banana Industry Receives InvestmentThe Ghana Government has secured a loan of €7.3 million for investment in the banana industry to ensure the production of quality bananas for export. The country's export strategy is aimed at increasing the revenue base of non-traditional exports from US$2.5 billion to US$5 billion by 2017. [Business Ghana 07/09/13]

Ghana / Uganda Research Into GM CropsGhana and Uganda are making progress towards the quick adoption of genetically-modified [GM] crops as a means of fighting poverty and ensuring food security among people. Ghana and the EU signed an agreement for €7.2 million to help with the production and export of bananas to be used for the Banana Accompanying Measures Project [BAM].

Research by Ugandan scientists on bananas enriched with vitamin A and iron is beginning to show promising signs. The ongoing experiment known as bio-fortification at the Kawanda-based National Agricultural Research Laboratories [NARL] is the first of its kind in a developing country. Ongoing biotechnology-based research had prioritized saving staple crops from virulent pests such as weevils, nematodes and diseases like banana bacterial wilt [BBW], and fungal black ‘sigatoka’. In Uganda 10-million tonnes of bananas are produced each year, but up to 40% rots and goes to waste.

From a paltry 5,000 tonnes in 2005, Ghana now exports 65,000 metric tonnes of banana annually. Ghana exported 62,000 tonnes of bananas to the Eurozone last year. Bananas are the most exported fruits in terms of volume and they rank second after citrus fruit in terms of value. The European banana market is the largest in the world, with about 5.5 million tonnes imported per year. Since 2006 when the European Union [EU] opened its market, there has been a rise in exports of between 2-5 % annually from Ghana and the Cavendish variety, the most preferred, is cultivated by both small holder farmers and large companies. [Ghana Web 09/09/13]

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Global African Cashew Festival and Expo 2013

It was Ghana’s turn to host the 8th annual Cashew Festival and Expo 2013 which was held in Accra to assist the development of the value chain process.

Organised by the African Cashew Alliance [ACA], the event prompted farmers, processors, traders, exporters, service providers, retailers, equipment manufacturers and bankers to fashion out innovative ways to improve and sustain the industry.

The conference themed: “Value Chain and Gains-Focusing on the Potential to

Leverage Profit in Each Sector of the Cashew Industry in New Markets” gave farmers the platform to explore innovative business prospects in the areas such as beekeeping and production of cashew-apple juice.

According to ACA, African cashew-nut producers could triple revenue from exports in the next 7-years by increasing processing capacity and adding value to the crop. The target is to process half of the continent’s cashew crop locally by 2020 from about 10% of output currently.

Economies in Africa are seeking to remove bottlenecks hindering growth in the manufacturing industry and help ramp up the processing of raw goods before export. Value addition helps producers maximize returns and lessen the risk of price fluctuations in commodity markets.

Ivory Coast, the top cashew-nut exporter in sub-Saharan Africa, produces about 450,000 tons of the crop a year and plans to process 50% of its cashew crop within 3-years.

This is followed by Guinea Bissau at 150,000 tons and Tanzania at 140,000 tons. Other producers are Benin, Nigeria, Mozambique and Ghana, Kenya, Guinea, Madagascar, Senegal and Burkina Faso.

DELMAS Confirms Cashew AmbitionsIt is the second year the CMA CGM Group has taken part in this major event which attracts all the key players in the cashew nut economy, from producer to retailer.

Laurent Demain, General Manager CMA CGM Ghana, Jamilla Easah, DELMAS Commercial Manager and Goeffrey Cole, DSG Country Commercial Director, were there to present the CMA CGM Group’s activities and the logistics and operational problems linked to transporting this type of product, which for CMA CGM represents more than 40% of production in West Africa.

Pictured left to right: Jamilla Easah, Laurent Demain, Goeffrey Cole

CASHEW / GROUNDNUT


CASHEW / GROUNDNUT

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GHANA

Cashew Industry To Receive Stimulus Package The cashew industry will receive a stimulus package from government in 2014 as an intervention measure to boost production, processing and export. The government remains committed to roll out a divestiture of the cashew industry to promote growth and sustainability and is to provide incentives to enable businesses to thrive including tax holidays, the free zone enclave instrument and assurance to repatriate profit.

The Ghana Cashew Industry Association, called on financial institutions to augment access to credit to the cashew farmers to enable them to expand their businesses. It noted cashew farmers were credit-worthy as they were well-organised, had well-established markets, enough local processing capacity, strategic linkages in the value-chain and interventions of government through the Cashew Development Programme [CDP]. The CDP had been implemented by government to improve living conditions of farmers and increase foreign exchange earnings.

Ghana could add 25,000 MT of processing raw cashew nut to the current 27,000 MT of processing capacity to enable the country to become the biggest processing-capacity country in Africa. Ghana produced more than 20,000 MT of raw cashew nuts in the year 2012, largely centered in the Brong Ahafo Region. The country is considered to be the hub for trading cashews by neighbouring countries including Cote d’Ivoire and Burkina Faso. In total, more than 80,000 MT of raw cashew nut was exported in 2011. On the processing side, Ghana has an installed processing capacity of more than 18,000 MT. [GNA 17/09/13]

KENYA

Logging Threatens Revival Of Cashew Nut Plant Revival of a cashew nut processing factory in Kilifi County might not be possible as logging of cashew nut trees by salt and oil factories threatened plans to establish the facility. Coast leaders have urged the government to set aside funds to open the defunct Kilifi factory to create employment. Before closure, the factory employed 5,000 people. The Cashew Nut Growers Association is trying to support farmers with new tree varieties that mature after 3-years. [Business Day 03/09/13]

MOZAMBIQUE

United States Provides Aid Of US$15 Million For Cashew Production The United States government plans to donate US$15 million to Mozambique to support cashew production via the “Food for Progress” programme of the Department for Agriculture. The aid was intended to boost productivity of the cashew sector, as well as to expand its sale and improve the product’s access to the market. The funding will benefit producers and small and medium-sized companies that process cashew nuts which the country exports to the European Union, the United States and the Middle East.

In 1974, Mozambique was the world’s largest cashew nut producer, producing 42.7% of the world’s cashews and, after independence, in 1975, the government adopted protectionist measures, which prevented unprocessed cashews from being exported. Problems with financing the economy and inefficient production processes led to a downturn in the sector and the industry in the 1980s, which led to its total disappearance, with factories closing and thousands of people made unemployed. In June of this year the National Cashew Institute [Incaju] estimated that cashew production in Mozambique this year would total 110,000 tons, recovering from poor performance in 2012, in which the country produced just 64,000 tons of cashews. [Macauhub 23/09/13]

NIGERIA

Government To Revive Groundnut PyramidsThe Minister for Agriculture, Dr. Akinwumi Adesina, indicated the determination of the government to revive the groundnut pyramid in the northern parts of the country and reclaim the country’s former prime position as the largest groundnut producing country in Africa. Adesina disclosed that the plan to rebuild the pyramids included increased production, processing and marketing of groundnut along the value chain in the country and beyond. To this end Nigeria has entered into partnership with the World Leading Center to develop groundnuts that are resistant to roset disease and aims to raise production in the next 3-years. [Leadership 25/09/13]

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CASHEW / GROUNDNUT

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CASSAVA


CASSAVA

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GENERAL

Cassava Brown Streak Disease Spreading to West AfricaCrop-damaging cassava brown streak disease may expand from eastern to western Africa, threatening to destabilize food security. The virus is rapidly spreading and may reach Nigeria, where production and consumption is the highest on the continent. According to the Food and Agriculture Organization [FAO] donors need to give US$100 million to rid the disease, increase surveillances and fund research. Sub-Saharan Africa produced 140.9 million MT of cassava in 2011, about half of the global harvest, with about 60% of output coming from Nigeria and Ghana. While cassava diseases have affected east and central African nations including Uganda, Kenya and Tanzania, programs running for the past 4-years that introduced disease-tolerant and resistant crops have helped mitigate the effects. [Business Week 12/09/13]

CAMEROON

Industrial Cassava Processing Underway in Sangmelima Cassava producers in Sangmelima, South Region are to launch a cassava processing plant. The plant will focus on the production of starch for both national and international markets. Jointly funded by the Chamber of Commerce, Industries and Crafts of Cameroon [CCIMA} and the Sangmelima council to the tune of FCFA 1.2 billion, the plant will see the newly created Société de Transformation Industrielle de Manioc [SOTRAMAS] manage the process of about 48,000 MT of cassava per year. [Business in Cameroon 14/09/13]

NIGERIA

Delta Government Assigns 6,000 Hectares to Boost Cassava ProductionDelta State government has allocated 25-ha for the establishment of a processing plant in Abraka to enhance cassava production in Nigeria for export. It has also set aside an additional 6,000-ha for the development of commercial cassava farms to supply the plant. 18 large-scale cassava processing plants each with 72,000 MT processing capacity, are to be established in various parts of the country under the programme aimed at having Nigeria make an in-road in the global cassava market.

Nigeria is seeking to reduce the N127 billion import bill on wheat flour through the incorporation of 20% high quality cassava flour into the production of composite flour with wheat to produce bread. President Goodluck Jonathan has established a N10 billion cassava bread fund. Meanwhile Nigeria has secured contracts to supply 3.2 million MT of cassava chips to China and arrangement are underway for the Africa Export-Import Bank to provide a loan facility of US$40 million to cassava chip exporters and these projects are expected to earn over US$800 million from meeting the supply contracts to China. [This Day 30/08/13]

CASSAVA


CASSAVA

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GENERAL

Liffe Makes Cocoa Delivery Proposal to Warehouse OwnersThe NYSE Liffe is seeking feedback from warehouse owners on a proposal to set minimum delivery rates for the first time for cocoa tied to its futures contracts. NYSE Liffe is proposing a minimum delivery rate of 250 MT of cocoa a day for warehouses storing as much as 30,000 tons. Depots holding more than 30,000 tons would have to delivery 500 tons. The exchange said in June last year it would introduce minimum delivery rates “in due course” after they started the same minimum load-out rules for robusta coffee. The European Warehousekeepers Federation has been contacted by NYSE Liffe about load-out rates on cocoa. Withdrawals of cocoa are mostly limited to no more than 200 tons a day per warehouse, referring to depots in Antwerp, Belgium. A buyer taking 75,000 tons, the maximum allowed by Liffe for any of its contracts, might wait about 18 months if the beans are in the same depot. [Bloomberg 20/09/13]

ICE Cocoa Hits One-Year High On Demand Outlook, Crop WorryICE cocoa hit a 1-year high on signs of improved demand and worry over supplies in West Africa, the top growing region. December front-month cocoa on ICE Futures US rose US$35, or 1.3%, to finish at US$2,636 per tonne after touching a 1-year high of US$2,642 per tonne on 16/09. The ICE March contract closed up US$34, or 1.3%, at US$2,640 per tonne after peaking at US$2,646, a 1-year high for the second month.

The risk that black pod disease could curtail output if recent rainfall persists in West Africa has heightened supply worries, brokers said. Traders have been cutting their production forecast for Ivory Coast's upcoming main crop, and a plunge in insecticides and anti-fungal treatments have prompted concern over bean quality. The supply concerns against a backdrop of stronger-than-expected demand have led some traders to increase their deficit forecasts and have driven speculators to boost their bullish investment.

Speculators raised their net long in ICE cocoa futures and options for a 9th straight week to the highest since February 2008. They have likewise increased a net long in cocoa futures and options on NYSE Liffe, exchange data showed. Liffe December cocoa closed up £23, or 1.4%, at £1,722 a tonne. [Business Recorder 17/09/13]

Cocoa Shortage Seen Lasting Until 2015-16Cocoa supplies will probably trail demand until at least the 2015-16 season as prices paid to farmers in West Africa are too low to encourage more production. Global production will be 129,000MT lower than demand in the 12 months starting Oct. 1. That follows a shortage of 119,000 MT this year. Governments in West Africa have already sold most of their next crop forward and local prices next season probably won’t be significantly higher to incentivize farmers to increase output. This means incentives for 2014-15 husbandry will be similar to current levels and that a potential increase in production would only come in the following year if the West African regulators are able to sell the 2014-15 crops forward at higher prices.

Cocoa futures traded in London rose to the highest in almost a year at £1,685 [US$2,665] a ton on Sept. 5, entering a bull market, as dry weather threatened crops in West Africa, the top growing region, just as demand started to recover. Bean processing is forecast to grow 2.5% this season and in 2013-14.

Ivory Coast, the world’s largest producer, sold 1.05 million tons of cocoa from its 2013-14 crop. The sales were done by the end of July. Ivory Coast’s output may be 1.4 million tons in 2013-14. Both Ivory Coast and Ghana, the second-biggest producer, sell most of their crops forward before harvesting starts. Cocoa prices, at £1,676 a ton in London on 12/09, will need to rise to £1,800-2,200 to ensure supplies meet or exceed rising demand, creating a sustainable cocoa market. [Bloomberg 12/09/13]

CAMEROON

Cameroonian Cocoa Purchases Fall In AugustCocoa purchases by local grinders in Cameroon slumped over 44% year-on-year to 2,562 tonnes in August, the first month of the 2013/14 harvest. The figures from Cameroon National Cocoa and Coffee Board [NCCB] showed that Sic-Cacaos, a subsidiary of Swiss-based chocolate manufacturer Barry Callebaut bought all 2,562 tonnes. [Public Ledger 20/09/13]

Cameroon Targets Unlicensed Traders to Improve Cocoa QualityThe Cameroonian government and cocoa industry have launched a campaign to improve crop quality in the 2013-14 season by targeting unlicensed traders. [NASDAQ 05/09/13]

Cameroon Refurbishing Cocoa Drying Ovens To Meet EU RulesCameroon has begun refurbishing old cocoa ovens in an effort to comply with tougher EU quality rules, after the bloc rejected about 2,000 tonnes of beans last year due to smoke contamination. The Cocoa and Coffee Interprofessional Board [CCIB] noted 144 cracked ovens had been refurbished in the South West Region, from a planned total of 1,500 ovens.

The region, which accounts for around 40% of Cameroon's cocoa exports of nearly 200,000 tonnes a year, is home to most of the ovens used by farmers due to heavy rains that hinder natural drying. On 1 April, Brussels introduced a stricter rule on polycyclic aromatic hydrocarbons [PAH] contamination. It limits the level of benzo[a]pyrene in cocoa beans and derived products, including chocolate, to 5 parts per billion. [EuroActiv 04/09/13]

Cameroonian Cocoa Growers Worry Over Output In 2013/14Months of dry, cool weather in Cameroon's cocoa-producing Centre, South and East regions have sparked fears of a drop in production in the recently opened 2013/14 season. The cocoa season runs from August 1 to July 31, with the main harvest period from October to January/February and the light crop harvest from April/May to July. [Public Ledger 28/08/13]

Cameroon Offers Aid to Improve Cocoa Crop QualityCameroon's government and cocoa industry will provide XAF100 million [US$200,000] to farmers in aid during the crop's ongoing season to purchase new equipment in a bid to improve the country's cocoa quality. Of the country's cocoa output for the just-completed 2012-13 season, less than 1% was reported to be of premium grade--blamed in part on poor post-harvest handling, storage, and the mixing of superior and inferior beans by some exporters and traders. The new aid plan was reached when Trade Minister Luc Magloire Mbarga Atangana and top executives of the National Cocoa and Coffee Board [NCCB] and the Cocoa and Coffee Inter-professional Board [CCIB] met with cocoa farmers.

Atangana noted in August, during the launch of the 2013-14 cocoa season that farmers would benefit from an overhaul of dilapidated cocoa-drying ovens and new tarps. The minister wanted to make sure that the government and other stakeholders invest XAF100 million to salvage cocoa quality this season. In addition control brigades will be mounted nationwide to control and intercept cocoa of poor quality. As part of the effort, the government intends to refurbish 2,500 cocoa-drying ovens in the South West region, which accounts for at least 40% of the country's national cocoa output. [Wall Street Journal 06/09/13]

COTE D’IVOIRE

Cargill Invests 1.8 Billion CFA Francs Cargill is to invest 1.8 billion CFA francs in training for 60,000 Ivorian cocoa growers under the framework of a partnership agreement signed in 2011 with the National Agency for Rural Development [ANADER] to enable them to achieve UTZ and Rainforest Alliance certifications in sustainable agriculture.[Ecofin 14/09/13]

Cocoa Plant Disease Pushes Into Ivory Coast HeartlandSwollen shoot disease is pushing deep into Ivory Coast's primary cocoa-growing regions despite government efforts to combat it and could hurt output over the long term. In the decade since it struck the centre-west growing regions, the disease has spread to 12% of all Ivorian cocoa farms.

For now, experts say the impact on output is being masked by production from new plantations. The disease causes a drastic reduction in yields in the first season following infection and then typically kills trees within a few years. When it emerged in the centre-west region, the disease soon killed off 8,600 hectares of cocoa in Sinfra and Bouafle, leading to a 66% drop in output there. It has since also been found near Issia, in the Daloa region that accounts for a 25% of the Ivorian crop.

In 2008 the CCC started a project to map the affected zones, which is still unfinished. Its preliminary surveys show the disease has affected 12% of cocoa farms across Ivory Coast. Around 150,000 ha of Ivory Coast's 2.5 million ha of cocoa farms are either threatened or have already been destroyed.

Hoping to fend off an epidemic like the one that destroyed nearly 200 million trees in Ghana in the 1940s, Ivory Coast said last year it was seeking 46 billion CFA francs [US$92.6 million] from international agencies to help fight the disease. While researchers are working to develop new varieties of cocoa capable of resisting swollen shoot infection, for now farmers are forced to chop down infected trees. And rather than replant and risk another infection years down the line, many farmers choose to abandon cocoa entirely in favour of less vulnerable crops such as rubber.[World Bulletin 06/09/13]

COCOA


COCOA

07

CAMEROON

Cameroonian Cocoa Purchases Fall In AugustCocoa purchases by local grinders in Cameroon slumped over 44% year-on-year to 2,562 tonnes in August, the first month of the 2013/14 harvest. The figures from Cameroon National Cocoa and Coffee Board [NCCB] showed that Sic-Cacaos, a subsidiary of Swiss-based chocolate manufacturer Barry Callebaut bought all 2,562 tonnes. [Public Ledger 20/09/13]

Cameroon Targets Unlicensed Traders to Improve Cocoa QualityThe Cameroonian government and cocoa industry have launched a campaign to improve crop quality in the 2013-14 season by targeting unlicensed traders. [NASDAQ 05/09/13]

Cameroon Refurbishing Cocoa Drying Ovens To Meet EU RulesCameroon has begun refurbishing old cocoa ovens in an effort to comply with tougher EU quality rules, after the bloc rejected about 2,000 tonnes of beans last year due to smoke contamination. The Cocoa and Coffee Interprofessional Board [CCIB] noted 144 cracked ovens had been refurbished in the South West Region, from a planned total of 1,500 ovens.

The region, which accounts for around 40% of Cameroon's cocoa exports of nearly 200,000 tonnes a year, is home to most of the ovens used by farmers due to heavy rains that hinder natural drying. On 1 April, Brussels introduced a stricter rule on polycyclic aromatic hydrocarbons [PAH] contamination. It limits the level of benzo[a]pyrene in cocoa beans and derived products, including chocolate, to 5 parts per billion. [EuroActiv 04/09/13]

Cameroonian Cocoa Growers Worry Over Output In 2013/14Months of dry, cool weather in Cameroon's cocoa-producing Centre, South and East regions have sparked fears of a drop in production in the recently opened 2013/14 season. The cocoa season runs from August 1 to July 31, with the main harvest period from October to January/February and the light crop harvest from April/May to July. [Public Ledger 28/08/13]

Cameroon Offers Aid to Improve Cocoa Crop QualityCameroon's government and cocoa industry will provide XAF100 million [US$200,000] to farmers in aid during the crop's ongoing season to purchase new equipment in a bid to improve the country's cocoa quality. Of the country's cocoa output for the just-completed 2012-13 season, less than 1% was reported to be of premium grade--blamed in part on poor post-harvest handling, storage, and the mixing of superior and inferior beans by some exporters and traders. The new aid plan was reached when Trade Minister Luc Magloire Mbarga Atangana and top executives of the National Cocoa and Coffee Board [NCCB] and the Cocoa and Coffee Inter-professional Board [CCIB] met with cocoa farmers.

Atangana noted in August, during the launch of the 2013-14 cocoa season that farmers would benefit from an overhaul of dilapidated cocoa-drying ovens and new tarps. The minister wanted to make sure that the government and other stakeholders invest XAF100 million to salvage cocoa quality this season. In addition control brigades will be mounted nationwide to control and intercept cocoa of poor quality. As part of the effort, the government intends to refurbish 2,500 cocoa-drying ovens in the South West region, which accounts for at least 40% of the country's national cocoa output. [Wall Street Journal 06/09/13]

COTE D’IVOIRE

Cargill Invests 1.8 Billion CFA Francs Cargill is to invest 1.8 billion CFA francs in training for 60,000 Ivorian cocoa growers under the framework of a partnership agreement signed in 2011 with the National Agency for Rural Development [ANADER] to enable them to achieve UTZ and Rainforest Alliance certifications in sustainable agriculture.[Ecofin 14/09/13]

Cocoa Plant Disease Pushes Into Ivory Coast HeartlandSwollen shoot disease is pushing deep into Ivory Coast's primary cocoa-growing regions despite government efforts to combat it and could hurt output over the long term. In the decade since it struck the centre-west growing regions, the disease has spread to 12% of all Ivorian cocoa farms.

For now, experts say the impact on output is being masked by production from new plantations. The disease causes a drastic reduction in yields in the first season following infection and then typically kills trees within a few years. When it emerged in the centre-west region, the disease soon killed off 8,600 hectares of cocoa in Sinfra and Bouafle, leading to a 66% drop in output there. It has since also been found near Issia, in the Daloa region that accounts for a 25% of the Ivorian crop.

In 2008 the CCC started a project to map the affected zones, which is still unfinished. Its preliminary surveys show the disease has affected 12% of cocoa farms across Ivory Coast. Around 150,000 ha of Ivory Coast's 2.5 million ha of cocoa farms are either threatened or have already been destroyed.

Hoping to fend off an epidemic like the one that destroyed nearly 200 million trees in Ghana in the 1940s, Ivory Coast said last year it was seeking 46 billion CFA francs [US$92.6 million] from international agencies to help fight the disease. While researchers are working to develop new varieties of cocoa capable of resisting swollen shoot infection, for now farmers are forced to chop down infected trees. And rather than replant and risk another infection years down the line, many farmers choose to abandon cocoa entirely in favour of less vulnerable crops such as rubber.[World Bulletin 06/09/13]


COCOA

08

GHANA

Ghana Signs US$1.2 Billion Cocoa Loan For 2013/14 Crop PurchasesIndustry regulator Cocobod has signed a US$1.2 billion syndicated loan from international banks for 2013/14 cocoa crop purchases as against US$1.5 billion for 2012/13. The credit facility between Cocobod and a consortium of international and local banks, led by French lender Societe General, will enable Cocobod to raise funds to purchase 830,000 tonnes of cocoa from farmers for the season. Ghana aims to raise its production to an average of 1-million tonnes annually from 800,000 tonnes through improved farming methods and better incentives. The loan, which was oversubscribed as in previous years, is the largest soft commodity deal in sub-Saharan Africa. The new season is expected to begin early next month.

The cocoa industry is important to Ghana’s economy with key policy initiatives including payment of remunerative producer prices to farmers, improved agronomic and husbandry practices, bonus payments to farmers and rehabilitation of degraded farms. This has resulted in an increase in productivity, with cocoa production reaching an all-time high of 1,000,000 tonnes in the 2010/2011 cocoa season.

Stakeholders have also been major players in the pioneering work in the area of cocoa production, logistics and processing with government resolving to partner stakeholders to create an enabling environment for cocoa sector. Namely to explore other emerging markets as part of remedial measures to keep cocoa farmers in business in the face of the incessant fall of the international market price of the commodity. It is in this vein that the producer price has been increased by 108%from GH¢1,632 in 2008/09 to GH¢3,200 in 2010/11, then to the current GH¢3,392 per tonne in 2012/13. The Minister challenged COCOBOD and other stakeholders to address the over-reliance on the European market for the country’s output.

The National Cocoa Stakeholders’ Forum 2013 was aimed at adopting long-term solutions to the challenges confronting the cocoa sector including the production, marketing and financing of its activities. [Reuters 20/09/13 & Spy Ghana 13/09/13]

COCOBOD Tasked To Take Lead Role In Certifying Ghana CocoaThe Ghana Cocoa Board [COCOBOD] has been challenged to position itself in a lead role in the production of certified and traceable cocoa. As the industry rapidly moves towards certified and sustainable cocoa marketing, Ghanaian licensed buying companies are increasingly falling in line. However most of the certification programmes are driven by international Fairtrade organizations like UTZ and the Rainforest Alliance. Cocoa certification and traceability require that farmers’ social, environmental and economic activities are in line with legitimate and best labour practices, in exchange for a premium price on the produce. [Joy 18/09/13]

Ghana Cocoa Board To Cut Subsidized Pesticides As Revenue FallsGhana plans to halve the use of subsidized pesticides next season to cut costs after a drop in prices for the commodity. COCOBOD announced it could no longer maintain the schedule of free spraying with the dwindling prices of cocoa. The board, which buys all cocoa produced in Ghana, targets the purchase of 830,000 MT in the season starting in October, from an estimated 800,000 MT in 2012-13. That compares with record output of 1-million tons in 2010-11. The board will allocate funding for 3-applications of pesticides over cocoa farms in 2013-14 from 6 last year and it plans to eliminate the financing altogether in 5-years. [Bloomberg 01/09/13]

Cocoa Regulator Plans Ending Fertiliser SubsidyGhana plans to phase out a much-lauded fertiliser distribution programme over the next 3-5 years in its latest effort to cut costs amid weaker prices. COCOBOD currently pays for roughly half the cost of fertiliser distributed to farmers under a programme which has helped boost annual output in the world's number 2 producer from 400,000 tonnes to around 800,000 tonnes over the past decade. But cocoa prices have fallen below the US$3,000 per tonne FOB [free-on-board] price used to calculate COCOBOD's budget, forcing the body to weigh heavy cuts. COCOBOD has already slashed supply to 600,000 bags of subsidised fertiliser this year from 2-million bags the previous year. [Business Recorder 10/09/13]

Cocoa Farmers Exposed To Climate-Smart ProductionCocoa farmers in selected production districts in Ghana are accessing support in natural resource management for efficient and sustainable cocoa production. The ‘Cocoa Eco Project’ is a pilot intervention aimed at limiting the encroachment of cocoa plantations onto forest lands and conservation of biodiversity. SNV Ghana is partnering the Kuapa Kokoo Farmers Union to create environmental awareness among cocoa farmers, especially on issues of land degradation and deforestation. The 30-month project, covering 10-cocoa growing districts, is to increase income levels and improve livelihood of targeted farmers and will expose farmers to interventions in climate mitigation and adaptation to ensure sustainable cocoa production.

Ghana is the second largest producer of cocoa in the world, but productivity is among the lowest in the world – average yield is 330kg/ha, compared to Ivory Coast’s 580kg. Increasing production demands expansion of area under cultivation, with the resultant effect of converting forests to farming systems which leads to decline in carbon stocks.

Climate scientists at the Colombia-based International Centre for Tropical Agriculture [CIAT] have predicted that the expected increasing temperatures will lead to massive declines in cocoa production in Ghana and other cocoa-growing areas in West Africa by 2030. [Ghanaweb 12/09/13]

NIGERIA

Funding to Support Nigerian Cocoa IndustryThe World Cocoa Foundation [WCF] and the Nigerian Ministry of Agriculture has earmarked US$1.2 million in new funding to provide assistance to 70,000 cocoa farming households in at least 10 Nigerian states by 2015. The program will focus on business skills trainings and support for diversification of rural economies in order to increase cocoa farm household incomes. The partnership is built upon the foundation of the WCF Cocoa Livelihoods Program [CLP], funded by the Bill & Melinda Gates Foundation and WCF member companies with partners from the German Development Agency GIZ and SOCODEVI. Nigeria will adopt the value chain approach from input supply to support on-farm production to value addition, local consumption and export of produce and products. The goal is to eventually account for at least 25% of the world market, with an output of 500,000 MT by 2015. [Leadership 25/09/13]

Daily Spot Price [ICCO]These are the average of the quotations of the nearest three active futures trading months on NYSE Liffe Futures and Options and ICE Futures US at the time of London close.


COCOA

09

NIGERIA

Funding to Support Nigerian Cocoa IndustryThe World Cocoa Foundation [WCF] and the Nigerian Ministry of Agriculture has earmarked US$1.2 million in new funding to provide assistance to 70,000 cocoa farming households in at least 10 Nigerian states by 2015. The program will focus on business skills trainings and support for diversification of rural economies in order to increase cocoa farm household incomes. The partnership is built upon the foundation of the WCF Cocoa Livelihoods Program [CLP], funded by the Bill & Melinda Gates Foundation and WCF member companies with partners from the German Development Agency GIZ and SOCODEVI. Nigeria will adopt the value chain approach from input supply to support on-farm production to value addition, local consumption and export of produce and products. The goal is to eventually account for at least 25% of the world market, with an output of 500,000 MT by 2015. [Leadership 25/09/13]

Daily Spot Price [ICCO]These are the average of the quotations of the nearest three active futures trading months on NYSE Liffe Futures and Options and ICE Futures US at the time of London close.

Date ICCO daily price [SDRs per tonne]

ICCO daily price [US$ per tonne]

London futures [£sterling/tonne]

NY futures [US$ per tonne]

26/9 1723.16 2640.08 1676.67 2598.67 25/9 1707.02 2615.70 1658.67 2568.67 24/9 1728.22 2644.41 1681.67 2600.00 23/9 1728.50 2648.29 1683.00 2601.00 20/9 1730.07 2650.92 1681.67 2611.00 19/9 1740.10 2669.32 1690.00 2631.00 18/9 1745.96 2661.39 1691.67 2625.33 17/9 1739.89 2651.09 1687.67 2622.00 16/9 1754.45 2673.03 1702.00 2638.00 13/9 1735.65 2636.45 1683.33 2606.33 12/9 1727.20 2624.87 1681.00 2593.67 11/9 1719.38 2607.48 1671.33 2575.33 10/9 1717.22 2602.18 1674.00 2574.67 9/9 1712.50 2592.10 1670.67 2561.00 6/9 1725.17 2602.38 1686.00 2572.67 5/9 1719.34 2601.71 1690.00 2571.33 4/9 1675.15 2533.70 1642.33 2501.33 3/9 1624.52 2455.90 1603.33 2423.67 2/9 1626.14 2464.06 1609.33 2430.67


COCOA

10

CAMEROON / COTE D’IVOIRE

Côte d'Ivoire / Cameroon Could Double, Or Even Triple Coffee Production The Cameroon Interprofessional Council of Cocoa and Coffee [CICC] and the Ambassador of Ivory Coast in Yaoundé, Adama Dosso, revealed Cote d’Ivoire and Cameroon are preparing to introduce new improved varieties of coffee seeds in 10 months’ time. These seeds reduce the crop maturity stage from 5 to just 3 years and already used in Brazil. In addition the seeds can double or triple the production per hectare. The seeds are currently being tested at the Institute of Agronomic Research For Development [IRAD] in Yaoundé. But introduction into the sector will require significant funding which has not yet been acquired. [Ecofin 11/09/13]

ETHIOPIA

Coffee Plantation Development Enterprise Nets Over Br81 MillionThe Coffee Plantation Development Enterprise [CPDE] has secured over 81 million Birr net profit from export of coffee and other agricultural products during the concluded budget year exceeding the previous year by 64 million Birr. Figures show over 34,300 quintals coffee was exported to Belgium, Germany, USA, France, Australia, the Netherlands, Italy and South Africa during the reported period. Estimates suggest the Enterprise is working hard to export 60,000 quintals coffee during the current fiscal year thereby securing over 380 million Birr. Established 30 years ago, CPDE is the first modern coffee plantation enterprise which grows, processes and exports coffee. CPDE is growing coffee and other agricultural products at Limmu Coffee Plantation in Oromia and South Ethiopia Peoples' State. [Ethiopian YV Agency 30/08/13]

KENYA

Kenyan Coffee Prices Decline Following Three Weeks of AdvancesKenyan coffee prices fell at an auction on Sept 24 following 3-weeks of gains on reduced quality and lower demand. The average price for all coffee sold dropped 5.7% to US$168.30 for a 50-kg bag from US$178.43 the previous week.

Benchmark AA grade declined 2.6% to an average US$292.61 a bag. Sales rose 4.1%to 3,465 bags worth US$714,259 from 3,330 bags valued at US$728,204 the previous week. Supplies fell 8.3% to 10,836 bags. Following are details of 24 Sept auction in dollars a bag.

Kenyan Coffee Below Its Target ProductionKenya coffee production is expected to miss its target for 2013 of 45,000 tons. The Coffee Board of Kenya noted production should rise to 44,000 tonnes compared with 49,000 tonnes last year. The Board noted that coffee plants are subject to production adjustments every 2-years which explained the decline. The coffee sector is expected to earn Kenya some US$217 million in 2013, a very low amount considering that tea and horticulture generate more than US$900 million per year each. Coffee was formerly one of the main sources of external revenue of the country. The Board wants to unlock the full potential of the commodity and hopes to implement measures to transform the sector over the next 3-months. [Algerie Soir 23/09/13]

Grade Low High Average AA 154 405 292.61 AB 138 221 178.68 C 100 180 142.90

MH 100 107 103.11 ML 80 86 85.22 PB 170 222 191.81 T 86 118 102.89

TT 113 196 164 UG1 120 121 120.26 UG2 81 86 82.87

COFFEECOMMODITY WATCH WWW.DELMAS.COM

COFFEE

11

TANZANIA

Tanzania Arabica Coffee Prices Rise At Latest SaleTanzania’s Arabica coffee prices rose at auction, in tandem with markets in New York as local supply decreased. The Tanzania Coffee Board [TCB] said 17,913. 60-kg bags were offered and 15,547 bags were purchased. At the previous sale 31,952.60-kg sachets had been offered for sale, with 23,878 bags selling.

Overall average prices at the Moshi exchange were up by US$6.37/50 kg for mild arabica, while robusta were down by US$2.50/50 kg compared to the last auction. Average prices were above the terminal market by US$10.11/50 kg for mild arabica and robusta were above the terminal market by US$18.15 /50 kg. Tanzania is Africa's 4th-largest coffee producer after Ethiopia, Uganda and Ivory Coast and produces mainly arabica and some robusta coffee. Prices of its arabica normally track the New York market while those of robusta take their cue from London. TCB said New York markets rose by us$4.35/50 kg, while London markets fell by US$0.45/50 kg.

Benchmark grade AA sold at US$131.00-144.00 per bag, compared with US$125.00-137.20 per bag previously. The average price was US$133.37 per bag, up from US$127.32 at the previous auction. Grade A fetched US$131.00-144.00 per bag, compared with US$120.00-136.40 per bag at the previous sale. The average price rose to US$133.55 from US$126.24.The TCB expects the 2013/14 [June/April] crop to fall to 45,000 tonnes from around 71,600 tonnes in the previous season, the highest output in 20 years. [Guardian 20/09/13]

Tanzanian Coffee Supply At Moshi Auction Surges The volume of coffee supplied at the Moshi auction increased almost 3-times to 25,496 bags at the end of August from the previous trading session's 8,230 bags. The auction results posted by Tanzania Coffee Board [TCB] shows that the amount of coffee procured declined slightly by 6.55% to 23,825 bags compared to 25,496 bags supplied.

The overall average price at the auction was down by US$3.41 [about 5,500/-] / 50 kg for Mild Arabica and Robusta were down by US$5.15 [8,000/-] / 50 kg7s compared to the last auction held on August 22. Average prices were above the terminal market by US$11.55 [18,480/-] / 50 kg for Mild Arabica and Robusta were above the terminal market by US$17.41 / 50 kg [27,856/-].

The New York December delivery were up by US$0.40 cents [640/-], equivalent to US$0.44 [704/-] / 50 kg bag Free on Board [FOB]. The November delivery for the London International Financial Futures and Options Exchange [LIFFE] market were down by US$78 [124,800/-] per MT equivalent to US$3.90 [6,240/-] / 50 kg FOB compared to previous week terminal market.

Prices for the locally produced coffee continue to be volatile due to competitions exerted by large scale producers in the international market leading to reduced farmers' earnings. The bumper coffee harvests in Brazil and Columbia has been posing threats to the local producers as the market will be over supplied.

Apart from farmers' earnings, country revenues have been also affected. Statistics show that coffee accounts for about 20% of Tanzania's foreign exchange earnings. Tanzania, Africa's 4th-largest coffee producer after Ethiopia, Uganda and Ivory Coast, produces mainly Arabica and some robusta coffee. [Daily News 10/09/13]

COFFEECOMMODITY WATCHCOMMODITY WATCH WWW.DELMAS.COM

COFFEE

12

UGANDA

Uganda Coffee Exports Projected at 300,000 Bags for SeptemberExporters are seen releasing stockpiles according to the state-run Uganda Coffee Development Authority [UCDA]. 318,338 bags worth US$35.9m were exported in Aug. Exports from Oct. 1 through Aug. climbed to 3.36m bags worth US$407.3m as compared to 2.55m bags valued at US$369.3m last season. [Bloomberg 19/09/13]

Uganda To Plant 300 Million Coffee Trees On Rising DemandUganda, Africa’s 2nd-biggest coffee producer after Ethiopia, may plant 300 million to benefit from rising global demand for the beans. The plan depends on securing 107.8 billion shillings [US$42.1 million] of funding for the program in the 3-years through June 2016. At least 35 billion shillings is required in the 12 months through next June, according to the Coffee Development Authority. The new plan builds on an earlier target of planting 40 million trees annually of the robusta variety. The trees start yielding in 2-3 years. Coffee accounts for 20 to 30% of Uganda’s annual export revenue. The country exports most of its beans to the European Union, the U.S., Switzerland, Morocco, Sudan, India, Singapore and Russia.

Meanwhile demand for Robusta beans, used to make instant coffee, will rise 3% in 2013-14 after jumping 6% this year and 15% in 2011-12. Uganda, where robusta accounts for 70% of coffee output, plans to raise annual production from 3.4 million to 3.5 million 60-kg bags to 4.5 million bags by 2018. Achieving the target would make Uganda Africa’s largest exporter. Brazil, Vietnam and Indonesia are the leading producers of the crop.

Uganda shipped 3.36 million bags of coffee from Oct. 1 last year through August, surpassing an earlier forecast of 3.2 million bags for the year ending Sept. 30, the authority said on Sept. 4. It earned US$392.8 million from exports of 2.73 million bags in 2011-12, compared with US$448.9 million from 3.15 million bags the previous season. [Bloomberg 19/9/13]

2012/13 Coffee Exports Seen Up At 3.66 Million BagsUganda's coffee exports for the 2012/13 [Oct/Sep] season are expected to come in at 3.66m 60-kg bags, up 34% from 2.73m a year earlier, after favourable weather conditions boosted the crop across the country. The export volume target, if achieved, would be the highest in more than 10-years, giving a potential lifeline to the nation's efforts to restore coffee output to 4.5m bags by 2016. [Public Ledger 20/09/13]

GENERAL

Aid By Trade Foundation And BCI Sign Cooperation AgreementRepresentatives from the Aid by Trade Foundation [AbTF] and Better Cotton Initiative [BCI] signed a long-term cooperation agreement in Paris. By signing this agreement, both organizations underscore their goal to continue to improve the living conditions of farmers in developing regions through sustainable cotton production. After a thorough benchmarking process between Cotton made in Africa [CmiA] and the Better Cotton Standards, CmiA cotton will continue to be sold as Better Cotton to BCI members. The resources generated through this joint effort will be invested in improving the livelihoods of African small hold farmers. The initiatives intend to work more closely together and develop common solutions for issues such as integrated pest management, and in system optimization between cotton supply and demand. [Cotton Made In Africa 28/08/13]

CAMEROON

Cameroon’s Cotton Growers Aim 260,000 Tons This SeasonThe National Confederation of Cotton Producers of Cameroon [CNPCC] has targeted growth at 260,000 tons of cotton for the harvest period of 2013-14. CNPCC will launch a national cotton campaign from 10/10/13. In 2012-2013, with the heavy rains in the North and Far North large areas of cultivation in the country were devastated due to severe floods. The projected cotton output for the previous season was 250,000 tons and the country was able to achieve around 230,000 tons of cotton. For the next harvest period [2014-2015] the focus is to achieve 300,000 tons of cotton. However, the 2013-14 harvest period in the country is also affected with severe floods especially in the Kaele and Yagoua regions in the Far North. CNPCC noted that these floods, however, are less severe than 2012, when about 30,000ha of plantations were devastated by storms. [Fibre2fashion 13/09/13]

GHANA

Ghana Begins GM Seeds Field TrialsGhana has started field trails of Genetically Modified [GM] seeds at Nnoboam, near Konongo in the Ashanti region and Savanna Agricultural Research Institute [SARI] of Council for Scientific and Industrial Research [CSIR] premises. The National Biosafety Committee [NBC] took delivery of the seeds. Bt Cotton has been planted in 7-different locations so breeders can see how it will perform - mainly near Burkina Faso. [Ghana Web 06/09/13]

TANZANIA

China To Invest In Tanzania’s Cotton SectorThe Chinese Ambassador to Tanzania, Lu Youqing, has unveiled a cotton investment plan which aims to construct cotton ginneries in the Shinyanga region. The investment plan includes construction of 7-cotton processing factories in the region that will include cotton processing factories, textile factories, and factories for packaging materials which would add value to improve farmers’ earnings and create 30,000 jobs. Chinese investors will also help increase productivity by introducing new technology as well as seeds from China. Currently farmers in the region are producing 400kg/ha, whereas Chinese farmers produce 4 tons/ha. The new technology is expected to help the farmers grow 1,200kg/ha. [Fibre2fashion 16/09/13]

Cotton Stakeholders Seek To Curb Sector WoesCotton stakeholders from 9-regions [Mwanza, Shinyanga, Simiyu, Geita, Mara, Tabora, Singida, Kagera and Kigoma] met for an emergency meeting ordered by President Kikwete following a 7-day tour of Lake Zone to resolve issues hindering the sector’s progress including opposition to contract farming which has contributed to a 40% production drop after farmers failed to embrace it.

The Tanzania Cotton Board [TCB] recently said that contract farming is the best way through which cotton farmers can reap maximum output. Cotton farming in Tanzania suffers mainly due to constraints like use of uncertified cotton seeds, lack of farming machinery as well as little or no use of fertilizers, and contract farming is the answer to all these constraints. Under the system, farmers would enter into written contracts with buyers to supply specific quantities of crops for which the latter would undertake to pay a pre-determined price and also supply farmers with appropriate farming inputs, pesticides, etc. on loan basis. Meanwhile due attention and intervention by the Government can help in developing a sustainable environment for contract farming and enhance crop output.

According to TCB, average cotton output per acre in Tanzania presently stands at around 250-300 kg, which can be raised to 1,200-1,500 kg per acre if some basic issues impeding cotton production are addressed and the Government intervenes and supports contract farming. Seeds produced by Quton [T] Limited are capable of producing up to 1,500kg/acre as opposed to only 300kg produced by traditional seeds. With over 400,000 farmers engaged in cotton farming, the country reaped around 360,000 tons of cotton during last season, 57 % more than 255,000 tons produced in 2011-12. The country made around US$ 159.3 million in cotton exports during the cotton year that ended in June 2013, above previous year’s exports of US$ 87.6 million. [Daily News 16/09/13 & Fibre2fashion 11/09/13]


COFFEE

13

UGANDA

Uganda Coffee Exports Projected at 300,000 Bags for SeptemberExporters are seen releasing stockpiles according to the state-run Uganda Coffee Development Authority [UCDA]. 318,338 bags worth US$35.9m were exported in Aug. Exports from Oct. 1 through Aug. climbed to 3.36m bags worth US$407.3m as compared to 2.55m bags valued at US$369.3m last season. [Bloomberg 19/09/13]

Uganda To Plant 300 Million Coffee Trees On Rising DemandUganda, Africa’s 2nd-biggest coffee producer after Ethiopia, may plant 300 million to benefit from rising global demand for the beans. The plan depends on securing 107.8 billion shillings [US$42.1 million] of funding for the program in the 3-years through June 2016. At least 35 billion shillings is required in the 12 months through next June, according to the Coffee Development Authority. The new plan builds on an earlier target of planting 40 million trees annually of the robusta variety. The trees start yielding in 2-3 years. Coffee accounts for 20 to 30% of Uganda’s annual export revenue. The country exports most of its beans to the European Union, the U.S., Switzerland, Morocco, Sudan, India, Singapore and Russia.

Meanwhile demand for Robusta beans, used to make instant coffee, will rise 3% in 2013-14 after jumping 6% this year and 15% in 2011-12. Uganda, where robusta accounts for 70% of coffee output, plans to raise annual production from 3.4 million to 3.5 million 60-kg bags to 4.5 million bags by 2018. Achieving the target would make Uganda Africa’s largest exporter. Brazil, Vietnam and Indonesia are the leading producers of the crop.

Uganda shipped 3.36 million bags of coffee from Oct. 1 last year through August, surpassing an earlier forecast of 3.2 million bags for the year ending Sept. 30, the authority said on Sept. 4. It earned US$392.8 million from exports of 2.73 million bags in 2011-12, compared with US$448.9 million from 3.15 million bags the previous season. [Bloomberg 19/9/13]

2012/13 Coffee Exports Seen Up At 3.66 Million BagsUganda's coffee exports for the 2012/13 [Oct/Sep] season are expected to come in at 3.66m 60-kg bags, up 34% from 2.73m a year earlier, after favourable weather conditions boosted the crop across the country. The export volume target, if achieved, would be the highest in more than 10-years, giving a potential lifeline to the nation's efforts to restore coffee output to 4.5m bags by 2016. [Public Ledger 20/09/13]

GENERAL

Aid By Trade Foundation And BCI Sign Cooperation AgreementRepresentatives from the Aid by Trade Foundation [AbTF] and Better Cotton Initiative [BCI] signed a long-term cooperation agreement in Paris. By signing this agreement, both organizations underscore their goal to continue to improve the living conditions of farmers in developing regions through sustainable cotton production. After a thorough benchmarking process between Cotton made in Africa [CmiA] and the Better Cotton Standards, CmiA cotton will continue to be sold as Better Cotton to BCI members. The resources generated through this joint effort will be invested in improving the livelihoods of African small hold farmers. The initiatives intend to work more closely together and develop common solutions for issues such as integrated pest management, and in system optimization between cotton supply and demand. [Cotton Made In Africa 28/08/13]

CAMEROON

Cameroon’s Cotton Growers Aim 260,000 Tons This SeasonThe National Confederation of Cotton Producers of Cameroon [CNPCC] has targeted growth at 260,000 tons of cotton for the harvest period of 2013-14. CNPCC will launch a national cotton campaign from 10/10/13. In 2012-2013, with the heavy rains in the North and Far North large areas of cultivation in the country were devastated due to severe floods. The projected cotton output for the previous season was 250,000 tons and the country was able to achieve around 230,000 tons of cotton. For the next harvest period [2014-2015] the focus is to achieve 300,000 tons of cotton. However, the 2013-14 harvest period in the country is also affected with severe floods especially in the Kaele and Yagoua regions in the Far North. CNPCC noted that these floods, however, are less severe than 2012, when about 30,000ha of plantations were devastated by storms. [Fibre2fashion 13/09/13]

GHANA

Ghana Begins GM Seeds Field TrialsGhana has started field trails of Genetically Modified [GM] seeds at Nnoboam, near Konongo in the Ashanti region and Savanna Agricultural Research Institute [SARI] of Council for Scientific and Industrial Research [CSIR] premises. The National Biosafety Committee [NBC] took delivery of the seeds. Bt Cotton has been planted in 7-different locations so breeders can see how it will perform - mainly near Burkina Faso. [Ghana Web 06/09/13]

TANZANIA

China To Invest In Tanzania’s Cotton SectorThe Chinese Ambassador to Tanzania, Lu Youqing, has unveiled a cotton investment plan which aims to construct cotton ginneries in the Shinyanga region. The investment plan includes construction of 7-cotton processing factories in the region that will include cotton processing factories, textile factories, and factories for packaging materials which would add value to improve farmers’ earnings and create 30,000 jobs. Chinese investors will also help increase productivity by introducing new technology as well as seeds from China. Currently farmers in the region are producing 400kg/ha, whereas Chinese farmers produce 4 tons/ha. The new technology is expected to help the farmers grow 1,200kg/ha. [Fibre2fashion 16/09/13]

Cotton Stakeholders Seek To Curb Sector WoesCotton stakeholders from 9-regions [Mwanza, Shinyanga, Simiyu, Geita, Mara, Tabora, Singida, Kagera and Kigoma] met for an emergency meeting ordered by President Kikwete following a 7-day tour of Lake Zone to resolve issues hindering the sector’s progress including opposition to contract farming which has contributed to a 40% production drop after farmers failed to embrace it.

The Tanzania Cotton Board [TCB] recently said that contract farming is the best way through which cotton farmers can reap maximum output. Cotton farming in Tanzania suffers mainly due to constraints like use of uncertified cotton seeds, lack of farming machinery as well as little or no use of fertilizers, and contract farming is the answer to all these constraints. Under the system, farmers would enter into written contracts with buyers to supply specific quantities of crops for which the latter would undertake to pay a pre-determined price and also supply farmers with appropriate farming inputs, pesticides, etc. on loan basis. Meanwhile due attention and intervention by the Government can help in developing a sustainable environment for contract farming and enhance crop output.

According to TCB, average cotton output per acre in Tanzania presently stands at around 250-300 kg, which can be raised to 1,200-1,500 kg per acre if some basic issues impeding cotton production are addressed and the Government intervenes and supports contract farming. Seeds produced by Quton [T] Limited are capable of producing up to 1,500kg/acre as opposed to only 300kg produced by traditional seeds. With over 400,000 farmers engaged in cotton farming, the country reaped around 360,000 tons of cotton during last season, 57 % more than 255,000 tons produced in 2011-12. The country made around US$ 159.3 million in cotton exports during the cotton year that ended in June 2013, above previous year’s exports of US$ 87.6 million. [Daily News 16/09/13 & Fibre2fashion 11/09/13]

COTTON / TEXTILES & LEATHER GOODS


COTTON / TEXTILES & LEATHER GOODS

14

NIGERIA

Nigeria’s Farming Reforms Still Face HurdlesNigeria is reforming its farming sector to bolster production and draw investment but companies say more needs to be done to tackle entrenched corruption, poor infrastructure and rogue government agencies. Nigeria’s recent annual economic summit focused on agriculture for the first time, in line with President Goodluck Jonathan’s commitment to fixing Nigeria’s biggest employer and stressed the success of reforms which began 2-years ago. Food imports have fallen by US$5.2 billion and food production is up by 8 million tonnes, helping to create 2.2 million new jobs.

The government wants to add 20 million tonnes of domestic food production by 2020 and rice, corn, sorghum, palm oil and cocoa have already increased. The world’s 2nd-largest importer of rice, Nigeria aims to become self-sufficient by 2015 after introducing a 100% tax on polished rice imports this year, likely to mostly affect countries like India, Thailand and Brazil. Higher cassava output has been used to make flour, reducing wheat imports mostly from the United States by almost 9%. Nigeria’s reforms are needed to reduce reliance on a struggling oil sector and cut a US$11 billion food import bill.

Bank lending to agriculture has risen to 25 billion naira this year from just 3.5 billion in 2012. Duties on agricultural equipment have been scrapped and tax breaks given to companies willing to invest in both farming and industrial processes, as well. The country’s reforms have drawn new foreign investors such food giant Cargill, seed company Syngenta and brewer SABMiller, while Dangote Sugar and others are investing more. However, many companies noted state and local governments still extort unofficial payments, while officials at ports and customs either worked around government policies or outright ignored them. Confusing laws on land, much of which is owned or claimed by government officials, also mean it is difficult to expand. That has left 60% of Nigeria’s arable land fallow.

The government says port reform is a key policy, but investors say progress is slow. Industry players were also critical of Nigeria’s dilapidated road network and troubled power supply noting it is often more profitable to ship produce to the U.K. rather than transport it from Lagos in the south to the biggest northern city, Kano. [Business Day 05/09/13]

RWANDA

Mango Prices Go UpMango prices have doubled in markets in Kigali. Mango farm gate prices also increased from Rwf1,000 to Rwf2,000/kg. A kilo of mangoes costs Rwf2,500 in Kimironko, Remera, and Nyamirambo markets from Rwf1,500 and goes for Rwf3,000 in Nyarugenge. In supermarkets, a kilogramme of mangoes costs between Rwf4,000 and Rwf4,500 up from Rwf1,500 a few weeks ago. Mango importers blamed the increase on low supply as most are imported from Uganda, Tanzania, Burundi and the DRC. [New Times 14/09/13]

TANZANIA

Exports of Cash Crops Soar, Prices DwindleExports of almost all cash crops increased for the year ending July 2013 but their prices in the world market continued to fall. The Bank of Tanzania monthly economic review for August said exports of coffee, cotton and tea had increased on account of good harvest bringing up the value of traditional exports. It said however that with the exception of tea and tobacco, all other traditional exports recorded declines in export unit prices, largely associated with price movements in the world market.

Prices for coffee and tea at the world market had temporary gained mainly because of problems in the major suppliers of the crops. According to the International Coffee Organisation [ICO], a threat of frost in Brazil had contributed to an increase in coffee prices. However, the ICO maintains that coffee prices continued to slide in August despite a brief bounce in the beginning of the month. The decline in price is attributed to increased supply of coffee from all major exporters.

In a trade statistics report for July 2013, the ICO said world coffee exports amounted to 9.05 million bags in July 2013, compared with 9.69 million in July 2012. Exports in the first 10 months of coffee in the year 2012/13 increased by 3.6% to 94.48 million bags compared to 91.20 million bags in the same period in the last coffee year. In the 12-months ending July 2013, exports of Arabica totaled 68.68 million bags compared to 65.68 million bags in 2012 last year, whereas Robusta exports amounted to 44.19 million bags compared to 41.07 million bags. [Daily News 18/09/13]

ZANZIBAR

Zanzibar Clove Exports DeclineClove exports, the main cash crop for Zanzibar, recorded significant decline following the falls in both volume and average unit prices.

The decline in clove unit export price was largely associated with increased supply of the crop from two major producing countries, namely Indonesia and Comoro following favourable weather conditions. The decline in cloves export volume was partly explained by cyclical factors in production of the crop in Zanzibar. [Daily News 18/09/13]

GENERAL

Five Handicaps Of African AgricultureThe Alliance for Green Revolution in Africa [AGRA] has published its first report on the state of agriculture in Africa drawing on data and analyses from 15 organizations including the FAO, the World Bank and the African Ministries of Agriculture. The report focuses mainly on food crops, such as cereals and tubers. The 5-handicaps noted are:

1. Fertilizer prices: American farmers pay US$226 per tonne of fertilizer while his Zambian counterpart will pay US$414.2. The land rights of women: Women, the most likely to cultivate land in Africa, were 5 times less likely than men to hold rights of land ownership depriving them of access to credit, technology and agricultural services.3. Bureaucracy: The seed certification process is about 3-years old and over-regulated which undermines the development of the seed markets.4. Week research: United States and Japan have 2640 and 4380 scientists per million inhabitants. In Africa there are barely 70.5. Underfunding: African countries where agriculture weighs up to 40% of GDP, farmers enjoy only 0.25% of bank loans.

Download the full report: http://www.agra.org/download/522dd1d18885c

The African Agriculture Fund Raised US$243 MillionThe investment African Agriculture Fund [AAF] Fund, which is managed by the South African investor capital Phatisa has closed a fundraising of US$243 million. Phatisa, who manages 2-other funds dedicated to African markets and having more than US$330 million of capital under management, said that he hopes to invest 50% of the capital of AAF by the end of the year in African companies in the agriculture and agri-food sector seeking capital to grow. Private equity investors are increasingly targeting sub-Saharan Africa, drawn by some of the fastest economic growth rates in the world and expanding consumption.

But while private equity financing has been on an upward trend, it has not yet reached its 2008 peak, when fund managers raised US$2.2 billion. Last year, investors committed US$1.4 billion to funds, according to data from the Emerging Markets Private Equity Association.

Phatisa has already invested US$84 million of the agriculture fund, which started in 2011, and intends to disburse half of the equity before yearend. It has already put money into 9-projects in 7-African countries, ranging from palm oil in Sierra Leone and the DRC, to poultry farming in Zambia and beverage bottling in Ivory Coast. Earlier this year, South Africa's Ethos Private Equity raised US$800 million for a new Africa-focused fund, while Helios bagged another US$900 million in the previous year. [Reuters 18/09/13]

CAMEROON

Rainfall Threating Maize Harvest In CameroonThe 2nd maize campaign started at the beginning of August. But the abundance of rain which may disturb the growth of plants particularly in Southwest coastal regions an important basins corn production. National maize production is 1.6 million tonnes catering for a domestic demand estimated at 2.2 million tons, leaving a deficit of production of 600,000 tonnes.[Ecofin 16/09/13]

World Bank To Rescue Rice-Growing Areas In Northern CameroonThe World Bank and the Cameroonian Minister of Economy, Emmanuel Nagnou Djoumessi, signed a loan of 54 billion francs CFA for the construction of a dyke-road on the Logone River. The area overflows during the rainy season and creates floods in the far north endangering 10,000 ha of onion and rice production. It will enable modernization and the increase of annual production to over 100,000 tonnes. Domestic demand for rice is estimated at 300,000 annual tons pa which is met by imports from China and Thailand. [Ecofin 10/09/13]

FOODSTUFFS


FOODSTUFFS

15

NIGERIA

Nigeria’s Farming Reforms Still Face HurdlesNigeria is reforming its farming sector to bolster production and draw investment but companies say more needs to be done to tackle entrenched corruption, poor infrastructure and rogue government agencies. Nigeria’s recent annual economic summit focused on agriculture for the first time, in line with President Goodluck Jonathan’s commitment to fixing Nigeria’s biggest employer and stressed the success of reforms which began 2-years ago. Food imports have fallen by US$5.2 billion and food production is up by 8 million tonnes, helping to create 2.2 million new jobs.

The government wants to add 20 million tonnes of domestic food production by 2020 and rice, corn, sorghum, palm oil and cocoa have already increased. The world’s 2nd-largest importer of rice, Nigeria aims to become self-sufficient by 2015 after introducing a 100% tax on polished rice imports this year, likely to mostly affect countries like India, Thailand and Brazil. Higher cassava output has been used to make flour, reducing wheat imports mostly from the United States by almost 9%. Nigeria’s reforms are needed to reduce reliance on a struggling oil sector and cut a US$11 billion food import bill.

Bank lending to agriculture has risen to 25 billion naira this year from just 3.5 billion in 2012. Duties on agricultural equipment have been scrapped and tax breaks given to companies willing to invest in both farming and industrial processes, as well. The country’s reforms have drawn new foreign investors such food giant Cargill, seed company Syngenta and brewer SABMiller, while Dangote Sugar and others are investing more. However, many companies noted state and local governments still extort unofficial payments, while officials at ports and customs either worked around government policies or outright ignored them. Confusing laws on land, much of which is owned or claimed by government officials, also mean it is difficult to expand. That has left 60% of Nigeria’s arable land fallow.

The government says port reform is a key policy, but investors say progress is slow. Industry players were also critical of Nigeria’s dilapidated road network and troubled power supply noting it is often more profitable to ship produce to the U.K. rather than transport it from Lagos in the south to the biggest northern city, Kano. [Business Day 05/09/13]

RWANDA

Mango Prices Go UpMango prices have doubled in markets in Kigali. Mango farm gate prices also increased from Rwf1,000 to Rwf2,000/kg. A kilo of mangoes costs Rwf2,500 in Kimironko, Remera, and Nyamirambo markets from Rwf1,500 and goes for Rwf3,000 in Nyarugenge. In supermarkets, a kilogramme of mangoes costs between Rwf4,000 and Rwf4,500 up from Rwf1,500 a few weeks ago. Mango importers blamed the increase on low supply as most are imported from Uganda, Tanzania, Burundi and the DRC. [New Times 14/09/13]

TANZANIA

Exports of Cash Crops Soar, Prices DwindleExports of almost all cash crops increased for the year ending July 2013 but their prices in the world market continued to fall. The Bank of Tanzania monthly economic review for August said exports of coffee, cotton and tea had increased on account of good harvest bringing up the value of traditional exports. It said however that with the exception of tea and tobacco, all other traditional exports recorded declines in export unit prices, largely associated with price movements in the world market.

Prices for coffee and tea at the world market had temporary gained mainly because of problems in the major suppliers of the crops. According to the International Coffee Organisation [ICO], a threat of frost in Brazil had contributed to an increase in coffee prices. However, the ICO maintains that coffee prices continued to slide in August despite a brief bounce in the beginning of the month. The decline in price is attributed to increased supply of coffee from all major exporters.

In a trade statistics report for July 2013, the ICO said world coffee exports amounted to 9.05 million bags in July 2013, compared with 9.69 million in July 2012. Exports in the first 10 months of coffee in the year 2012/13 increased by 3.6% to 94.48 million bags compared to 91.20 million bags in the same period in the last coffee year. In the 12-months ending July 2013, exports of Arabica totaled 68.68 million bags compared to 65.68 million bags in 2012 last year, whereas Robusta exports amounted to 44.19 million bags compared to 41.07 million bags. [Daily News 18/09/13]

ZANZIBAR

Zanzibar Clove Exports DeclineClove exports, the main cash crop for Zanzibar, recorded significant decline following the falls in both volume and average unit prices.

The decline in clove unit export price was largely associated with increased supply of the crop from two major producing countries, namely Indonesia and Comoro following favourable weather conditions. The decline in cloves export volume was partly explained by cyclical factors in production of the crop in Zanzibar. [Daily News 18/09/13]

Case StudyShonga Farms is still battling with the basics; visa processing times, port delays, access to credit, transport systems. Shonga, a poultry and milk farming group which supplies the Lagos branch of Kentucky Fried Chicken, noted imported chicken from Brazil cost N135/kg, while a chick in Nigeria cost N180, making government plans to emulate its South American rival unrealistic.

FOODSTUFFS


FOODSTUFFS

16

COTE D’IVOIRE

Ivory Coast Hopes To Squeeze The Profits From Palm OilThe palm oil industry originated in West Africa but is now dominated by massive plantations in South-East Asia. Ivory Coast, and other African countries, are trying to take the lucrative business back home to tap into its profits. An hour's drive to the west of Abidjan palm trees dominate the landscape mainly owned by PALMCI, a subsidiary of SIFCA Group, an Ivorian company involved in palm oil, sugar and rubber production across West Africa. But, as in Nigeria and Ghana, it is the smallholders in Ivory Coast who produce most of the country's palm oil - a multi-billion dollar industry. Demand for the lucrative oil is increasing and land in the main exporting countries of Malaysia and Indonesia is quickly running out. So companies are now looking to West Africa for supply.

Ivory Coast, home to Africa's largest oil palm refinery, is planning to double production by 2020. SIFCA Group, which owns the refinery, is spending more than US$400 million in the next 5-years on plantations and factories in Ghana, Liberia and Nigeria - currently the continent's biggest exporter. Over the last few years Malaysia's Sime Darby and Singapore's Golden Agri-Resources Ltd, the 2-leading palm oil producers in the world, have scooped up more than 500,000 ha of land in neighbouring Liberia. Across West and Central Africa, hundreds of thousands of hectares have been identified for other expansions.

But this expansion has not arrived without problems. In June, Abidjan held Africa's first palm oil congress; its main objective being to change the image of palm oil which is synonymous with words like deforestation, land grabbing and the thick smog that spread across parts of South-East Asia in June. However the biggest problem remains the price which is set in South-East Asia but the hope is that will change once production is increased across Africa and would help local farmers compete with the Malaysian and Indonesian giants. [BBC 09/09/13]

NIGERIA

Oil Palm Supply - RSPO Builds Capacity Among StakeholdersA Roundtable on Sustainable Palm Oil [RSPO] was held in Nigeria, a 2-day event hosted by Solidaridad West Africa and Proforest Initiative (UK) and supported by the RSPO-Nigeria National Interpretation Initiative. The event aimed at raising awareness and building capacity among key stakeholders in the oil palm supply chain on the best practices contained in the RSPO and to create an enabling environment for the uptake of the RSPO standard. Players in the consumption of oil palm products across the globe have set 2015 as deadline for investors in the agro-sector to have their products certified.[Vanguard 23/09/13]

NIFOR Advocates Improved Technology, Investment For Oil Palm ProductionThe Nigerian Institute for Oil Palm Research [NIFOR] noted improved technology and investment would increase oil palm production in Nigeria. Improved investment would ensure research and guarantee that results of plant modification processes are duly translated to farmers. NIFOR’s goal is to make farmers realise that crops are profitable commodities and appeal for them to invest. NIFOR is encouraging farmers to maximise the use of improved technologies and seedlings produced by the institute to enhance their plantation development for optimum return on investment. [Nigeria Tribune 01/09/13]

CAMEROON

Sosucam Sees Slump In SalesSosucam subsidiary of Vilgrain group, a food company which operates 2-sugar plants in the central region of Cameroon, has lost 10 billion Cfa francs, due to the slump in sales of sugar over the last few months. The slump is the consequence of smuggling in the northern part of Cameroon and the massive influx of sugar imported since last August after demand fell following Ramadan. Sosucam the market leader with an annual production of 130,000 tons alongside competitors such as Nosuca, Sumocam and New Food often have trouble meeting the national demand for sugar estimated at 300,000 tonnes pa. [Le Messager]

KENYA

Butali Sugar Mill Gets Sh429 Million For InfrastructureThe Butali Sugar Mills in Kakamega has received a grant of Sh429 million from the Kenya Sugar Board. The money will be used for purchase of equipment for the construction of feeder roads, acreage expansion and general improvement of infrastructure. The Government also want the cost of fertilizer for sugar cane farmers to go down from the current Sh4000 to Sh1600 as it is with the maize farmers. [Capitol FM 01/09/13]

Mumias Sugar Falls To US$26 Million Full-Year LossKenya's Mumias Sugar fell to US$25.6 million pretax loss in the year through June after a 20% fall in revenue, but was confident of returning to profit soon. The global and regional sugar supply has increased, resulting in much lower selling prices which further hit turnover when coupled with low production. Cheap sugar imports also served to depress prices.[Reuters 03/09/13]

Sh1 Million Illegal Sugar Impounded Officials impounded a consignment of sugar worth more than Sh1 million in Shimanzi, Mombasa, following a directive by the government at the Kenya-Tanzania border in Lunga Lunga, Shimoni and Taita Taveta to stamp out the cartels. The brown sugar, that was repackaged in 200 bags of 50 kg each, was illegally imported from Egypt. The government has banned importation of sugar from non-Comesa members. This is aimed at reducing over-supply sugar which destabilises market prices. [The Star 21/09/13]

Government To Blame For Woes Gripping Local Sugar IndustryThe impending expiry of the moratorium to control sugar imports from the Common Market for Eastern and Southern Africa [Comesa] in March 2014 has sparked a major discussion in the Western sugar belt. Stakeholders are concerned that the move might seriously hurt the local sugar industry causing most factories to close and deny sugarcane farmers income. Stakeholders have asked the government to renegotiate the deal to secure a 2-year extension of the safeguards to enable Kenya reorganise its sugar industry for competition. Unless this is done the industry would face imminent collapse, as it cannot compete with other sugar producing countries within the trading block. [Standard Media 05/09/13]

PALM OIL


PALM OIL

17

COTE D’IVOIRE

Ivory Coast Hopes To Squeeze The Profits From Palm OilThe palm oil industry originated in West Africa but is now dominated by massive plantations in South-East Asia. Ivory Coast, and other African countries, are trying to take the lucrative business back home to tap into its profits. An hour's drive to the west of Abidjan palm trees dominate the landscape mainly owned by PALMCI, a subsidiary of SIFCA Group, an Ivorian company involved in palm oil, sugar and rubber production across West Africa. But, as in Nigeria and Ghana, it is the smallholders in Ivory Coast who produce most of the country's palm oil - a multi-billion dollar industry. Demand for the lucrative oil is increasing and land in the main exporting countries of Malaysia and Indonesia is quickly running out. So companies are now looking to West Africa for supply.

Ivory Coast, home to Africa's largest oil palm refinery, is planning to double production by 2020. SIFCA Group, which owns the refinery, is spending more than US$400 million in the next 5-years on plantations and factories in Ghana, Liberia and Nigeria - currently the continent's biggest exporter. Over the last few years Malaysia's Sime Darby and Singapore's Golden Agri-Resources Ltd, the 2-leading palm oil producers in the world, have scooped up more than 500,000 ha of land in neighbouring Liberia. Across West and Central Africa, hundreds of thousands of hectares have been identified for other expansions.

But this expansion has not arrived without problems. In June, Abidjan held Africa's first palm oil congress; its main objective being to change the image of palm oil which is synonymous with words like deforestation, land grabbing and the thick smog that spread across parts of South-East Asia in June. However the biggest problem remains the price which is set in South-East Asia but the hope is that will change once production is increased across Africa and would help local farmers compete with the Malaysian and Indonesian giants. [BBC 09/09/13]

NIGERIA

Oil Palm Supply - RSPO Builds Capacity Among StakeholdersA Roundtable on Sustainable Palm Oil [RSPO] was held in Nigeria, a 2-day event hosted by Solidaridad West Africa and Proforest Initiative (UK) and supported by the RSPO-Nigeria National Interpretation Initiative. The event aimed at raising awareness and building capacity among key stakeholders in the oil palm supply chain on the best practices contained in the RSPO and to create an enabling environment for the uptake of the RSPO standard. Players in the consumption of oil palm products across the globe have set 2015 as deadline for investors in the agro-sector to have their products certified.[Vanguard 23/09/13]

NIFOR Advocates Improved Technology, Investment For Oil Palm ProductionThe Nigerian Institute for Oil Palm Research [NIFOR] noted improved technology and investment would increase oil palm production in Nigeria. Improved investment would ensure research and guarantee that results of plant modification processes are duly translated to farmers. NIFOR’s goal is to make farmers realise that crops are profitable commodities and appeal for them to invest. NIFOR is encouraging farmers to maximise the use of improved technologies and seedlings produced by the institute to enhance their plantation development for optimum return on investment. [Nigeria Tribune 01/09/13]

CAMEROON

Sosucam Sees Slump In SalesSosucam subsidiary of Vilgrain group, a food company which operates 2-sugar plants in the central region of Cameroon, has lost 10 billion Cfa francs, due to the slump in sales of sugar over the last few months. The slump is the consequence of smuggling in the northern part of Cameroon and the massive influx of sugar imported since last August after demand fell following Ramadan. Sosucam the market leader with an annual production of 130,000 tons alongside competitors such as Nosuca, Sumocam and New Food often have trouble meeting the national demand for sugar estimated at 300,000 tonnes pa. [Le Messager]

KENYA

Butali Sugar Mill Gets Sh429 Million For InfrastructureThe Butali Sugar Mills in Kakamega has received a grant of Sh429 million from the Kenya Sugar Board. The money will be used for purchase of equipment for the construction of feeder roads, acreage expansion and general improvement of infrastructure. The Government also want the cost of fertilizer for sugar cane farmers to go down from the current Sh4000 to Sh1600 as it is with the maize farmers. [Capitol FM 01/09/13]

Mumias Sugar Falls To US$26 Million Full-Year LossKenya's Mumias Sugar fell to US$25.6 million pretax loss in the year through June after a 20% fall in revenue, but was confident of returning to profit soon. The global and regional sugar supply has increased, resulting in much lower selling prices which further hit turnover when coupled with low production. Cheap sugar imports also served to depress prices.[Reuters 03/09/13]

Sh1 Million Illegal Sugar Impounded Officials impounded a consignment of sugar worth more than Sh1 million in Shimanzi, Mombasa, following a directive by the government at the Kenya-Tanzania border in Lunga Lunga, Shimoni and Taita Taveta to stamp out the cartels. The brown sugar, that was repackaged in 200 bags of 50 kg each, was illegally imported from Egypt. The government has banned importation of sugar from non-Comesa members. This is aimed at reducing over-supply sugar which destabilises market prices. [The Star 21/09/13]

Government To Blame For Woes Gripping Local Sugar IndustryThe impending expiry of the moratorium to control sugar imports from the Common Market for Eastern and Southern Africa [Comesa] in March 2014 has sparked a major discussion in the Western sugar belt. Stakeholders are concerned that the move might seriously hurt the local sugar industry causing most factories to close and deny sugarcane farmers income. Stakeholders have asked the government to renegotiate the deal to secure a 2-year extension of the safeguards to enable Kenya reorganise its sugar industry for competition. Unless this is done the industry would face imminent collapse, as it cannot compete with other sugar producing countries within the trading block. [Standard Media 05/09/13]

SUGAR


SUGAR

18

South Africa Loses US$5.12m Monthly To Sugar ImportationSouth Africa’s Rural Development and Land Reform Minister, Gugile Nkwinti, has promised to look into the problems facing the country’s sugar industry. The sugar industry is in crisis, as more than 40,000 jobs may be shed due to the increase in sugar imports which escalated to 400,000 tonnes this year costing the country R50-million [US$5.1m] a month. Earlier this year, the industry said it was in crisis as imports displaced its product and forced it to export its surplus at a poor price.

The International Trade Administration Commission of South Africa has also applied for a revision of the dollar-based reference price [import tariff], which governs the world price of sugar. This price is implemented if the price of the imported sugar falls below a certain level. Major players in South Africa’s sugar industry believe the level is too low and should be raised so that tariff imposition is triggered sooner. [Ventures 16/09/13]

“The problem is that there is no correlation between the world price of sugar and the costs of production. The world price is distorted and below the cost of production because sugar producers globally are subsidised by their governments. We are asking for tariffs of 50%, and the World Trade Organisation allows tariffs of up to 105%, so there won’t be a problem there. All our government has to do is make it law and the imports will stop.” Executive Director Trix Trikam, South African Sugar Association

TANZANIA

Sugar Production Capacity Continues To DeteriorateProduction capacity in local sugar industries continues to deteriorate despite appeals by government leaders to use all means possible to sustain the sector. Tanzania produces 300,000 tonnes of sugar against the nation’s current consumption of 450,000 tonnes required to cater for both domestic and industrial needs. There is a growing deficit of 150,000 tonnes which could be produced locally to fill the gap.

The government is resolve to increase production in the country and see to it that, the selling price is affordable. Since allowing imports a year ago, the price has stabilised at between 1,600/- and 1,800/-. Piles of imported sugar are mounting in storage facilities. Government has called on the major sugar importers to invest more in the production of this commodity to curb shortage and has assured importers that it will deliberate with stakeholders to find a permanent solution to sugar availability. One area is the direct investment that targets sugar cane estates to get enough raw materials for sugar production in local industries. Another is to impose heavy tax on sugar imports like Mozambique which has also removed Value Added Tax [VAT] on sugar for the last 8 years. [Guardian 13/09/13]

SAGCOT Investment Initiative To Rescue Sugar Cane FarmersThe Southern Agricultural Growth Corridor of Tanzania’s [SAGCOT’s] new approach to agricultural investment may help increase sugar production and lead to higher prices. Sugar has been identified as one of the 3-key commodities scheduled to be implemented in Kilombero Valley. The initiative’s approach is based on clusters of commercial farms and agri-businesses in areas with high agricultural potential and access to backbone infrastructure. SAGCOT’s new, more efficient processing facilities and stronger partnerships with smallholders may help overcome current price disincentives.

Despite high domestic demand, sugar cane producers in the country get lower prices, of which elevated processing costs and the tariffs on imported sugar keep prices high for consumers without boosting prices for farmers. Excessive processing costs are the main reason sugar cane producers do not receive better prices which are twice as high as the average cost for Africa. Since access costs [which include processing, profit margins and transport] are higher than sugar producers’ gross profit margins, sugar factories cannot cover their overall costs in most years.

Since 2008, Tanzania has partially or totally suspended the 100% common tariff. Nonetheless, the difference between domestic prices and import prices increased suggests that waiving tariffs does not lead to lower sugar prices. Part of the problem may be a lack of coordination between the Tanzania Revenue Authority [TRA] and the Ministry of Agriculture which has led to imported sugar being stranded at the border for long periods. Domestic production appears to be stagnating, although production of both sugar cane and sugar more than doubled between 2000 and 2005, and remained constant between 2005 and 2010. Moreover, domestic production falls short of meeting domestic demand and existing policies no longer appear to have an impact on increasing production.

On the other hand, wholesale sugar prices are higher than those that would exist without current policies and with better functioning import markets. High prices are mainly related to the East African Community’s common external tariff for sugar. Although sugar import tariffs have been partially suspended or reduced since 2008, this has had little impact on reducing the domestic price of sugar. Indeed, domestic prices have remained on average 32% higher than import prices. [Guardian 02/09/13]

Sugar Firm Invests Sh78 Billion In New DistilleryKilombero Sugar Company Limited [KSCL] has started distilling extra neutral alcohol [ENA], which is used as an input to produce industrial alcohol. KSCL has invested 78bn/- in the distillery that uses ferments cane molasses to produce 40,000 litres of ENA per day. The industrial alcohol is used in the production of cosmetics, adhesives, detergents and alcoholic beverages. The sugar manufacturer had a record production last year, with estate cane production reaching 725,000 tonnes. Total cane production, covering both the company and independent out-growers reached 1.3 million tonnes during the 2012/13 crop season. Kilombero Sugar's total area under cane is around 24,000 ha of which KSCL farms nearly 10,000 ha. [Tanzania Daily News 09/09/13]

NIGERIA

Dangote Joins Sugar Cane Push In NigeriaNigeria’s biggest sugar refiner will spend US$1.5 billion [R15.4bn] over the next 5-years on farming cane, responding to a government drive to make the country less reliant on its oil industry. Dangote Sugar Refinery, which is majority owned by Africa’s richest man, Aliko Dangote, had shied away from the risks associated with growing cane and preferred to focus on refining imported raw sugar. But hikes in government duties, along with incentives for agricultural development, have persuaded it to think again. Dangote hopes in the next 5-years, it will be able to produce 1.5 million tons locally, from around 50 000 tons now. Dangote Sugar would also expand its refining capacity to 2.5 million tons a year by the end of 2014 from 1.4 million tons now at a cost of about US$100 million.

The Dangote Group has concluded plans to establish an 80,000 ha sugarcane plantations in Kebbi state sited in Suru, Bagudo, Koko/Besse and Shanga local government areas. Farmers participating in the project would be provided with improved sugarcane seedlings, fertilisers and modern production implements. The company will also establish a sugar factory in Kebbi State with construction of over 150 MW power plant alongside to ensure a steady supply of power.

President Goodluck Jonathan is trying to revive farming to reduce Nigeria’s reliance on the oil industry and to cut its food import bill of US$11bn a year. Agriculture makes up 45% of the economy, compared with oil’s 1% . But the sector is in disarray and is largely the preserve of peasant farmers. To encourage its development, the government has scrapped duties on imported machinery for sugar processing plants. Firms that invest from “sugar cane to sugar”, rather than focus on refining, have been given a 5-year tax break. Raw sugar import taxes have risen to 6%, from 5% last year, and will keep rising to about 90%. Nigeria has also banned imports of packed refined sugar. Flour Mills of Nigeria also plan a major expansion into sugar production. [Reuters 05/09/13 & This Day 17/09/13]

SOUTH AFRICA

Commission To Investigate Sugar Industry CrisisThe most protected industry in the country is applying to have the threshold at which protective measures kick in more than doubled. This would make it twice as easy for sugar producers to be protected from cheap imports that are allegedly being dumped on the local market. The Sugar Association of South Africa put through a request in March that the “dollar-reference price” for imports of sugar into the country be increased from an existing US$358 per tonne to US$764 per tonne. The world sugar price quoted by the Nymex [New York Mercantile Exchange] is currently US$339 a tonne. South Africa is a low-cost sugar producer and is consistently ranked in the top 10 of producing countries globally. It is also a highly protected market, which requires domestic surpluses to be exported to support local prices. The International Trade Administration Commission of South Africa, to which the request was made, is expected to publish its intention to investigate the local sugar industry on September 20.

When sugar that is cheaper than the reference price is brought into the country, tariff measures kick in to protect the local industry. However, when imports are higher than the reference amount, no tariffs are paid. Because of this, the reference price has had no effect since 2009. The sugar association argues that the reference price is too low, because sugar importers have enjoyed “zero” tariffs for the past 4-years. The intention of a tariff is to protect an industry from the effects of a distorted world market but if there is no duty payable because the formula deems there to be zero duties payable, this means the tariff is ineffective.

The application is the second of its kind made by the sugar association, with the first one lodged in 2008 when the association applied for an increase in the dollar-based reference price from US$330 per tonne to US$400 per tonne, premised on what it perceived to be a 60% distortion of the international sugar price. The association was of the view that the world reference price for sugar was lower on average than production costs. It complained that production costs were increasing in South Africa due to the increasing costs of major inputs such as diesel, herbicides and fertilisers. The domestic industry simultaneously came under pressure from cheap imports of sugar by markets such as Brazil and India. This meant that demand in South Africa for sugar from domestic producers was reducing and demand for imported sugar at lower prices was increasing. It followed that stockpiles of domestically produced sugar increased. The only option was to sell the stockpiled sugar to an export market that prescribed a price that was insufficient to absorb the higher production costs.

The sugar association argued that these market conditions “would result in the collapse of the domestic sugar industry.” In July 2009, the trade administration commission found that, although the world sugar prices were distorted, they remained relatively high. For that reason, the commission ruled against the blanket protection of the sugar industry of the Southern African Customs Union, but increased the dollar-based reference price from US$330 per tonne to US$358 per tonne to “mitigate against the effect of the distortions. But despite the commission only granting a marginal increase in 2009, players in the industry feel that things have deteriorated to such an extent that the request to double the reference price is a reasonable one.

Imports into South Africa have reached alarming levels, causing losses of more than R50-million per month to the industry, threatening its sustainability. Importers have begun to take advantage of the “zero tariff” reference-price weakness. The country currently imports about 400 000 tonnes of sugar which is the equivalent output of 3-sugar mills. According to the Bureau for Food and Agricultural Policy, producers are anticipating that the global sugar price would drop further - a cause for concern.

But the application is unlikely to be seen as a positive proposition by all. Domestic packaging companies and major industrial users of sugar are likely to oppose the move by local sugar producers to hike up protection of their selling prices. In 2008, Tiger Brands, the Federation of Soft Drink Manufacturers and the South African Chocolate and Sweet Manufacturers Association opposed the application. They argued that they could not compete with an influx of finished goods made from cheaper sugar, unless they were able to secure their sugar at the most competitive prices, namely those of importers. [Mail & Guardian 20/09/13]


SUGAR

19

South Africa Loses US$5.12m Monthly To Sugar ImportationSouth Africa’s Rural Development and Land Reform Minister, Gugile Nkwinti, has promised to look into the problems facing the country’s sugar industry. The sugar industry is in crisis, as more than 40,000 jobs may be shed due to the increase in sugar imports which escalated to 400,000 tonnes this year costing the country R50-million [US$5.1m] a month. Earlier this year, the industry said it was in crisis as imports displaced its product and forced it to export its surplus at a poor price.

The International Trade Administration Commission of South Africa has also applied for a revision of the dollar-based reference price [import tariff], which governs the world price of sugar. This price is implemented if the price of the imported sugar falls below a certain level. Major players in South Africa’s sugar industry believe the level is too low and should be raised so that tariff imposition is triggered sooner. [Ventures 16/09/13]

“The problem is that there is no correlation between the world price of sugar and the costs of production. The world price is distorted and below the cost of production because sugar producers globally are subsidised by their governments. We are asking for tariffs of 50%, and the World Trade Organisation allows tariffs of up to 105%, so there won’t be a problem there. All our government has to do is make it law and the imports will stop.” Executive Director Trix Trikam, South African Sugar Association

TANZANIA

Sugar Production Capacity Continues To DeteriorateProduction capacity in local sugar industries continues to deteriorate despite appeals by government leaders to use all means possible to sustain the sector. Tanzania produces 300,000 tonnes of sugar against the nation’s current consumption of 450,000 tonnes required to cater for both domestic and industrial needs. There is a growing deficit of 150,000 tonnes which could be produced locally to fill the gap.

The government is resolve to increase production in the country and see to it that, the selling price is affordable. Since allowing imports a year ago, the price has stabilised at between 1,600/- and 1,800/-. Piles of imported sugar are mounting in storage facilities. Government has called on the major sugar importers to invest more in the production of this commodity to curb shortage and has assured importers that it will deliberate with stakeholders to find a permanent solution to sugar availability. One area is the direct investment that targets sugar cane estates to get enough raw materials for sugar production in local industries. Another is to impose heavy tax on sugar imports like Mozambique which has also removed Value Added Tax [VAT] on sugar for the last 8 years. [Guardian 13/09/13]

SAGCOT Investment Initiative To Rescue Sugar Cane FarmersThe Southern Agricultural Growth Corridor of Tanzania’s [SAGCOT’s] new approach to agricultural investment may help increase sugar production and lead to higher prices. Sugar has been identified as one of the 3-key commodities scheduled to be implemented in Kilombero Valley. The initiative’s approach is based on clusters of commercial farms and agri-businesses in areas with high agricultural potential and access to backbone infrastructure. SAGCOT’s new, more efficient processing facilities and stronger partnerships with smallholders may help overcome current price disincentives.

Despite high domestic demand, sugar cane producers in the country get lower prices, of which elevated processing costs and the tariffs on imported sugar keep prices high for consumers without boosting prices for farmers. Excessive processing costs are the main reason sugar cane producers do not receive better prices which are twice as high as the average cost for Africa. Since access costs [which include processing, profit margins and transport] are higher than sugar producers’ gross profit margins, sugar factories cannot cover their overall costs in most years.

Since 2008, Tanzania has partially or totally suspended the 100% common tariff. Nonetheless, the difference between domestic prices and import prices increased suggests that waiving tariffs does not lead to lower sugar prices. Part of the problem may be a lack of coordination between the Tanzania Revenue Authority [TRA] and the Ministry of Agriculture which has led to imported sugar being stranded at the border for long periods. Domestic production appears to be stagnating, although production of both sugar cane and sugar more than doubled between 2000 and 2005, and remained constant between 2005 and 2010. Moreover, domestic production falls short of meeting domestic demand and existing policies no longer appear to have an impact on increasing production.

On the other hand, wholesale sugar prices are higher than those that would exist without current policies and with better functioning import markets. High prices are mainly related to the East African Community’s common external tariff for sugar. Although sugar import tariffs have been partially suspended or reduced since 2008, this has had little impact on reducing the domestic price of sugar. Indeed, domestic prices have remained on average 32% higher than import prices. [Guardian 02/09/13]

Sugar Firm Invests Sh78 Billion In New DistilleryKilombero Sugar Company Limited [KSCL] has started distilling extra neutral alcohol [ENA], which is used as an input to produce industrial alcohol. KSCL has invested 78bn/- in the distillery that uses ferments cane molasses to produce 40,000 litres of ENA per day. The industrial alcohol is used in the production of cosmetics, adhesives, detergents and alcoholic beverages. The sugar manufacturer had a record production last year, with estate cane production reaching 725,000 tonnes. Total cane production, covering both the company and independent out-growers reached 1.3 million tonnes during the 2012/13 crop season. Kilombero Sugar's total area under cane is around 24,000 ha of which KSCL farms nearly 10,000 ha. [Tanzania Daily News 09/09/13]

NIGERIA

Dangote Joins Sugar Cane Push In NigeriaNigeria’s biggest sugar refiner will spend US$1.5 billion [R15.4bn] over the next 5-years on farming cane, responding to a government drive to make the country less reliant on its oil industry. Dangote Sugar Refinery, which is majority owned by Africa’s richest man, Aliko Dangote, had shied away from the risks associated with growing cane and preferred to focus on refining imported raw sugar. But hikes in government duties, along with incentives for agricultural development, have persuaded it to think again. Dangote hopes in the next 5-years, it will be able to produce 1.5 million tons locally, from around 50 000 tons now. Dangote Sugar would also expand its refining capacity to 2.5 million tons a year by the end of 2014 from 1.4 million tons now at a cost of about US$100 million.

The Dangote Group has concluded plans to establish an 80,000 ha sugarcane plantations in Kebbi state sited in Suru, Bagudo, Koko/Besse and Shanga local government areas. Farmers participating in the project would be provided with improved sugarcane seedlings, fertilisers and modern production implements. The company will also establish a sugar factory in Kebbi State with construction of over 150 MW power plant alongside to ensure a steady supply of power.

President Goodluck Jonathan is trying to revive farming to reduce Nigeria’s reliance on the oil industry and to cut its food import bill of US$11bn a year. Agriculture makes up 45% of the economy, compared with oil’s 1% . But the sector is in disarray and is largely the preserve of peasant farmers. To encourage its development, the government has scrapped duties on imported machinery for sugar processing plants. Firms that invest from “sugar cane to sugar”, rather than focus on refining, have been given a 5-year tax break. Raw sugar import taxes have risen to 6%, from 5% last year, and will keep rising to about 90%. Nigeria has also banned imports of packed refined sugar. Flour Mills of Nigeria also plan a major expansion into sugar production. [Reuters 05/09/13 & This Day 17/09/13]

SOUTH AFRICA

Commission To Investigate Sugar Industry CrisisThe most protected industry in the country is applying to have the threshold at which protective measures kick in more than doubled. This would make it twice as easy for sugar producers to be protected from cheap imports that are allegedly being dumped on the local market. The Sugar Association of South Africa put through a request in March that the “dollar-reference price” for imports of sugar into the country be increased from an existing US$358 per tonne to US$764 per tonne. The world sugar price quoted by the Nymex [New York Mercantile Exchange] is currently US$339 a tonne. South Africa is a low-cost sugar producer and is consistently ranked in the top 10 of producing countries globally. It is also a highly protected market, which requires domestic surpluses to be exported to support local prices. The International Trade Administration Commission of South Africa, to which the request was made, is expected to publish its intention to investigate the local sugar industry on September 20.

When sugar that is cheaper than the reference price is brought into the country, tariff measures kick in to protect the local industry. However, when imports are higher than the reference amount, no tariffs are paid. Because of this, the reference price has had no effect since 2009. The sugar association argues that the reference price is too low, because sugar importers have enjoyed “zero” tariffs for the past 4-years. The intention of a tariff is to protect an industry from the effects of a distorted world market but if there is no duty payable because the formula deems there to be zero duties payable, this means the tariff is ineffective.

The application is the second of its kind made by the sugar association, with the first one lodged in 2008 when the association applied for an increase in the dollar-based reference price from US$330 per tonne to US$400 per tonne, premised on what it perceived to be a 60% distortion of the international sugar price. The association was of the view that the world reference price for sugar was lower on average than production costs. It complained that production costs were increasing in South Africa due to the increasing costs of major inputs such as diesel, herbicides and fertilisers. The domestic industry simultaneously came under pressure from cheap imports of sugar by markets such as Brazil and India. This meant that demand in South Africa for sugar from domestic producers was reducing and demand for imported sugar at lower prices was increasing. It followed that stockpiles of domestically produced sugar increased. The only option was to sell the stockpiled sugar to an export market that prescribed a price that was insufficient to absorb the higher production costs.

The sugar association argued that these market conditions “would result in the collapse of the domestic sugar industry.” In July 2009, the trade administration commission found that, although the world sugar prices were distorted, they remained relatively high. For that reason, the commission ruled against the blanket protection of the sugar industry of the Southern African Customs Union, but increased the dollar-based reference price from US$330 per tonne to US$358 per tonne to “mitigate against the effect of the distortions. But despite the commission only granting a marginal increase in 2009, players in the industry feel that things have deteriorated to such an extent that the request to double the reference price is a reasonable one.

Imports into South Africa have reached alarming levels, causing losses of more than R50-million per month to the industry, threatening its sustainability. Importers have begun to take advantage of the “zero tariff” reference-price weakness. The country currently imports about 400 000 tonnes of sugar which is the equivalent output of 3-sugar mills. According to the Bureau for Food and Agricultural Policy, producers are anticipating that the global sugar price would drop further - a cause for concern.

But the application is unlikely to be seen as a positive proposition by all. Domestic packaging companies and major industrial users of sugar are likely to oppose the move by local sugar producers to hike up protection of their selling prices. In 2008, Tiger Brands, the Federation of Soft Drink Manufacturers and the South African Chocolate and Sweet Manufacturers Association opposed the application. They argued that they could not compete with an influx of finished goods made from cheaper sugar, unless they were able to secure their sugar at the most competitive prices, namely those of importers. [Mail & Guardian 20/09/13]


SUGAR

20

KENYA

Tea Farmers’ Bonus Drops 10%KTDA tea growers will earn Sh4.36 less in the 2012/13 financial year compared to the previous year as total average payment per kg of greenleaf tea dropped 10% despite a 25% rise in production that pushed up the previous year's revenues from Sh61 billion to Sh69 billion. According to the Kenya Tea Development Agency [KTDA], farmers will earn a total average rate of Sh45.65/kg of green leaf compared to the Sh50.01 they received in 2011/2012. Farmers delivered approximately 1.1 billion kg of green leaf to the 66 factories under its management against 907 million kg over the same period last year. The KTDA financial year runs from July to June.

The farmers bonus or second payment will be Sh5.86 less on average per kilo of greenleaf from Sh37.51 paid in 2011/2012 to Sh31.65 on the backdrop of high volumes of tea delivered to the KTDA factories that affected the price of tea in the overseas markets. The market has seen a 2% decrease in net auction price of a kilo tea to Sh272.08 from Sh278.08 in 2012. However the initial payment increased to an average price of Sh14/kg this of green leaf compared to Sh12.50 last year. In total, KTDA will pay Sh51.3 billion in 2013 from Sh45.3 billion in 2012, for the initial and the second payment. Total income increased from Sh61.4 billion in 2011/12 financial year to Sh69.2 billion in 2012/13.

Tea supply and demand in the global market has been increasing progressively in the last 10-years. The average Mombasa auction tea prices for 2012/13 were increased slightly to US$3.19 compared with US$3.18 in the previous year. Average net selling price per kg decreased to Sh272.08 from Sh278.08 in 2012, representing a 2% decrease attributable mainly to a stronger Kenya Shilling this year. The shilling is trading at Sh85 to the dollar compared to the same period in the previous year, which was Sh89 to the dollar. The market has also witnessed low prices at the auction mainly due to oversupply of tea in the market, a volatile political environment in some of the key export markets like Egypt and Syria and a depreciating currency in Pakistan.

Despite this, KTDA farmers continue to be among the best paid growers in the world. Farmers will still receive high prices as supply is expected to decrease by 10% in the coming production year. Global supply of tea has increased from 4.3 billion kg in 2011/12 to 4.7 billion kg in 2012/13 production year. During the same period consumption increased from 4.3 billion kg against 4.5 billion. Tea farmers this year will earn a total of Sh35.6 billion as bonus at an average rate of Sh31.65/kg of green leaf against Sh33.9 billion earned in the 2011/12 financial year a 5% increase. As a result, growers will be paid an average of Sh31.65/kg across most of the KTDA managed factories starting October this year.

The industry continued to experience challenges which are hurting farmers’ payment, for example, high cost of energy, fluctuating foreign exchange rates and global tea prices. Other factors are climate change and rising costs of production due to VAT on farm inputs, the railway levy and increasing fuel prices. He said the agency has set up strategies to mitigate these challenges through business and market diversification. However crop production increased by 24% to 1.1 billion kg, the highest ever, from 906 million kg, while made tea increased from 211 million kg to 258 million kg recorded in the previous year. High production was due to increased acreage and favorable weather conditions during the period.[Business Standard 18/09/13 / Capital FM 18/09/13]

TEA


TEA

21

KENYA

Tea Farmers’ Bonus Drops 10%KTDA tea growers will earn Sh4.36 less in the 2012/13 financial year compared to the previous year as total average payment per kg of greenleaf tea dropped 10% despite a 25% rise in production that pushed up the previous year's revenues from Sh61 billion to Sh69 billion. According to the Kenya Tea Development Agency [KTDA], farmers will earn a total average rate of Sh45.65/kg of green leaf compared to the Sh50.01 they received in 2011/2012. Farmers delivered approximately 1.1 billion kg of green leaf to the 66 factories under its management against 907 million kg over the same period last year. The KTDA financial year runs from July to June.

The farmers bonus or second payment will be Sh5.86 less on average per kilo of greenleaf from Sh37.51 paid in 2011/2012 to Sh31.65 on the backdrop of high volumes of tea delivered to the KTDA factories that affected the price of tea in the overseas markets. The market has seen a 2% decrease in net auction price of a kilo tea to Sh272.08 from Sh278.08 in 2012. However the initial payment increased to an average price of Sh14/kg this of green leaf compared to Sh12.50 last year. In total, KTDA will pay Sh51.3 billion in 2013 from Sh45.3 billion in 2012, for the initial and the second payment. Total income increased from Sh61.4 billion in 2011/12 financial year to Sh69.2 billion in 2012/13.

Tea supply and demand in the global market has been increasing progressively in the last 10-years. The average Mombasa auction tea prices for 2012/13 were increased slightly to US$3.19 compared with US$3.18 in the previous year. Average net selling price per kg decreased to Sh272.08 from Sh278.08 in 2012, representing a 2% decrease attributable mainly to a stronger Kenya Shilling this year. The shilling is trading at Sh85 to the dollar compared to the same period in the previous year, which was Sh89 to the dollar. The market has also witnessed low prices at the auction mainly due to oversupply of tea in the market, a volatile political environment in some of the key export markets like Egypt and Syria and a depreciating currency in Pakistan.

Despite this, KTDA farmers continue to be among the best paid growers in the world. Farmers will still receive high prices as supply is expected to decrease by 10% in the coming production year. Global supply of tea has increased from 4.3 billion kg in 2011/12 to 4.7 billion kg in 2012/13 production year. During the same period consumption increased from 4.3 billion kg against 4.5 billion. Tea farmers this year will earn a total of Sh35.6 billion as bonus at an average rate of Sh31.65/kg of green leaf against Sh33.9 billion earned in the 2011/12 financial year a 5% increase. As a result, growers will be paid an average of Sh31.65/kg across most of the KTDA managed factories starting October this year.

The industry continued to experience challenges which are hurting farmers’ payment, for example, high cost of energy, fluctuating foreign exchange rates and global tea prices. Other factors are climate change and rising costs of production due to VAT on farm inputs, the railway levy and increasing fuel prices. He said the agency has set up strategies to mitigate these challenges through business and market diversification. However crop production increased by 24% to 1.1 billion kg, the highest ever, from 906 million kg, while made tea increased from 211 million kg to 258 million kg recorded in the previous year. High production was due to increased acreage and favorable weather conditions during the period.[Business Standard 18/09/13 / Capital FM 18/09/13]

Kenyan Tea Prices Rise At AuctionThe average price of Kenya's top grade Broken Pekoe Ones tea climbed to US$3.91/kg at the 17/09 auction from US$3.82. Kenya is the world's top black tea exporter and tea is a leading foreign exchange earner in east Africa's largest economy. Africa Tea Brokers [ATB] said Best Broke Pekoe Ones sold at US$3.40-$4.41/kg, from US$3.54-4.10/kg. Brighter Pekoe Fanning Ones [PF1s] fetched US$2.27-2.82/kg, compared with US$2.74-2.10/kg. ATB said there was improved demand for 119,356 packages offered for sale, but did not say how many were left unsold. [Business Recorder 17/09/13]

Prices Of Kenyan Tea Fall To 2-Year Low On Egypt/Syria UnrestThe prices of Kenyan tea have sharply decreased in the wake of continuing unrest in Egypt and Syria by Rs 100-150/kg on the local market, falling to 2-year low. The political turmoil in Egypt since ouster of President Muhammad Morsi and unrest in Syria have pulled down tea import, resulting in a sharp fall of the commodity prices on global markets. Egypt imports 6 million kg from Kenya per month which constitutes 23% of its total tea imports. The prices of high-grown tea [BP-I] declined by Rs 100. Previously, the wholesale price of 'Danedar' [BP-1] tea variety was Rs 570/kg, which is now being sold at Rs 460/kg. Similarly, the price of Leaf [PF-1] tea variety was Rs 425/kg in wholesale markets against its previous price of Rs 525/kg. The prices of D-I also declined by Rs 55/kg.

Importers and blenders said that imports from India also declined sharply due to low prices of Kenyan tea. Sources said that the price of Melenia [BP-1] brand of Indonesian black tea also witnessed a slump. It decreased by Rs 140/kg. Its previous wholesale price was Rs 380, and it was now being sold at Rs 240/kg. Pakistan imported Rs 8.2 million kgs from Kenya in the month of August, 2013. PTA said that increase in sales tax would encourage the undocumented sector to saturate the local markets incurring the losses to national exchequer. The government's recent move to impose standard rate of 16% sales tax on tea imports have given significance rise to the smuggling of black tea through Afghan Transit Trade [ATT] in country, restraining the traders to import high quality tea in Pakistan from legal channels. The devaluation of Pak rupee against dollar had also impacted on a significant rise to the profit margin on illegally traded black tea in the country's local markets. The traders largely opt for purchasing the smuggled tea instead of going for the imported commodity for getting a sizeable profit on its sales. [Business Recorder 06/09/13]

Nandi County Bans Tea Plucking MachinesNandi county wants the government to impose a ban on the use of tea plucking machines as multi-national tea companies have declared 20,000 workers redundant in the last 3-years. The local assembly has appointed a 12 man committee for a fact finding mission to the tea estates. [The Star 09/09/13]

Multinational Processors Threaten Kenya Tea Development Agency Kenya’s tea trade faces uncertainty as multinationals intensify their efforts to source the commodity directly from factories, reducing reliance on the auction system. The paradigm shift coupled with rising cases of tea hawking is threatening the otherwise stable tea trade movement under the Kenya Tea Development Agency [KTDA]. Multinational tea processors have intensified their competition against KTDA for the green leaf and are reported to have started entering into contracts with farmers in parts of Rift Valley. Tea factories that operate under the KTDA have over the years relied on the Mombasa-based tea auction. And though the auction still presents the best avenue for marketing the commodity, farmers have in the past raised concerns over its inefficiency and costs, forcing them to seek alternative ways to sell their produce. It is feared that while new markets foster competition through improved efficiency, it would adversely affect the leading foreign exchange earner. Tea trade experts now warn that the new marketing chains would affect tea pricing at the Mombasa auction. Hawkers buy a kilogramme of tea at an average of Sh22 while KTDA pays Sh14. [Standard Media 09/09/13]

ZIMBABWE

Zimbabwe: Tea Production Under ThreatTea production in Honde Valley is under threat as many farmers are switching to highly lucrative banana production. The crop is fetching low prices on the market. A kg of green tea is selling at US$0.11 while others countries are offering between US0.25-0.35/kg. Zimbabwe Farmers Union noted most farmers in the area were now uprooting the tea trees and establishing banana plantations. There is no competition on the market as there is only one buyer, the Honde Valley Smallholder Development Company which dictates prices. There are more than 1,250 farmers growing the crop on 750 ha in Honde valley. [The Herald 02/09/13]

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22

GENERAL

Producers Finding It Difficult To Respond To Even Modest Increases In DemandSome positive log and sawnwood price movements have been reported since the end of August as demand continues firm in most markets. Demand for logs has improved and the demand pull has given producers the opportunity to negotiate for better prices especially as log availability remains tight. The problem is that, because of problems in sourcing logs, producers are finding it tough to respond to the improved demand, especially as this is focused on only the more popular species.[ITTO 01-15/09/13]

Buying Still Focused On Popular Species Despite Supply ProblemsProducers in West Africa say demand from European importers has improved slightly but remains stuck on selected species such as azobe, padouk and sapele. In response to supply problems with sapele some buyers are considering sipo as a substitute. Buyers for France are reported as more active while UK business continues to be very slow and unlikely to improve in the short term say analysts. Sawnwood exports from Gabon appear to be declining fast and analysts say this has much to do with the tighter government control of forest operations. The log shortage has resulted in some sawmills remaining closing temporarily or cutting back on production rates. [ITTO 01-15/09/13]

Exporters Confident Of Their Position In Middle East Markets In Face Of Competition From SE Asian TimbersProducers report business in the Middle East markets is brisk especially for sawnwood. The Middle East market is firm and stable and producers are confident that these markets will hold firm through to the end of the year. Competition in the Middle East markets has stepped up with Malaysian mixed light hardwoods and meranti chasing the same markets as timbers from West Africa but African exporters are confident of their established position in these markets. In spite of the generally firm demand in most markets, exporters say that buyers are not responding to requests for significant price increases beyond minor adjustments for individual orders. Analysts say that the current balanced supply and demand is unlikely to change until the economies in the major markets begin to expand; only then will producers have the opportunity to seek improved prices.[ITTO 01-15/09/13]

West & Central Africa See Purchase LullProducers are saying there has been a 5-6 month’s lull in purchases by importers in the EU as many had bought heavily before the EUTR came into force. Now that importer’s stock levels have fallen and the northern hemisphere summer vacation period is over, producers expect more enquiries from importers, especially those in the EU, as they seek to restock. However, analysts report that current purchases are still focused on a very small range of species. Despite the renewed interest from buyers, exporters say there are no opportunities to raise prices. Demand for Asian markets continues to be very active and prices are stable and largely unchanged. [ITTO 16-31/08/13]

Opportunity To Raise Prices Recedes Over the past weeks only one price change has been noted and that is for padouk sawn wood. Padouk prices have become more volatile because of the fluctuating demand especially in India and to a lesser extent in the EU. Logs remain unchanged and stable. Producers are not confident that they can secure any substantial price increases during the second half of the year and do not anticipate any improvement in log availability. The overall outlook for demand appears to be firm but stable. [ITTO 16-31/08/13]

Reduced Output And Declining Availability Hollowing Out Manufacturing On the supply side there are continuing reports of poor log availability both for domestic milling and for export. The shortage of logs has resulted in lower output from those mills that can secure some logs and, in the worst case particularly in Gabon, mill closures. Forestry authorities throughout West Africa are now more rigorous in their monitoring of forest operations and exports. Gabon, in particular, has very stringent inspections both at the mills when containers are being loaded and again at the port where containers are rechecked thoroughly. Although any positive or negative effects of the EUTR have yet to be quantified most importers and traders believe that tropical timber imports will decline. That said, there is currently some improvement in buying for France and other continental EU member states. [ITTO 16-31/08/13]

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23

German Importer Responds To Questions On Legality Of Wenge Logs A delivery of wenge logs is being investigated by German authorities as they have been alerted that some of the timber may have been illegally sourced. Report note an export shipment of wenge logs was tracked from the Democratic Republic of Congo [DRC] by Greenpeace after another NGO claimed in a report that wenge was being illegally harvested and exported. The importers have submitted documents as required under the EUTR and the exporter is cooperating to demonstrate these logs are legal. The BLE is seeking clarification from Congolese authorities on the authenticity of the documentation submitted by the importer and exporter. The BLE considers the DRC a high risk country in terms illegal logging. [ITTO 16-31/08/13]

Poor Availability Drives Sapele Prices HigherOverall demand for African sawn hardwood across Europe is slow. However the strong focus of the EU market on sapele, and local shortfalls in supply after a long period of limited buying, is now translating into rising prices for this species. UK inventories of kiln dried sapele are particularly low relative to demand and distributors have been restocking. FOB prices for sapele sawn timber have risen 15-20% since the start of the year. Air-dried 52mm sapele sawn timber is currently being soldfor around €650/m3 FOB.

So far, European importers have only been able to pass on part of the price increase to their customers. However higher prices are now filtering throughout the supply chain as European landed stocks have gradually declined. European importers report availability of Sapele lumber in Africa is now very restricted and lead times between orders and delivery are getting longer and more uncertain. Many mills are now unwilling to commit to delivery of new orders before the end of the year. This is generating more interest in sipo sawn timber, prices of which are now comparable to sapele.

However, stocks of this species are also quite limited and would soon disappear if there is a significant rise in demand. Low availability of African sawn timber is due to several factors. Larger volumes are now being diverted to the Chinese market. The US market has also improved this year. Overall production capacity declined in African countries during the financial crises and has yet to recover. Short term political and transport problems have also restricted the harvesting and movement of logs and sawnwood in central Africa during the first half of 2013. [ITTO 16-31/08/13]

DRC

Democratic Republic Of Congo Gets US$21.5 Million Green Light To Transform ForestsThe DRC has won a US$21.5 million grant from the Climate Investment Funds [CIF] to jump-start sustainable management of its critically important forest sector to reduce greenhouse gas [GHG] emissions and strengthen forest governance. The Integrated REDD+ Project in the Mbuji-Mayi/Kananga and Kisangani Basins [PIREDD/MBKISS] will carry out a series of pilot initiatives to help reduce forest GHG emissions.

To be completed in 5-years, the US$26.6 million project has been approved to receive a US$21.50 million grant from the CIF’s Forest Investment Program [FIP], a DRC Government contribution of US$4.4 million, and contributions of US$.70 million by project beneficiaries. The project will be implemented with support from the African Development Bank [AfDB], one of the CIF’s multilateral development bank partners and a mainstay for climate and development in Africa.

PIREDD/MBKISS is projected to save about 4 million tonnes of CO2 over 25 years. The FIP grant is the first ever awarded by CIF to an African nation for forest action. The DRC Government has developed a REDD National Strategy Framework to transform its forest sector by ramping up national and local coordination of REDD+, bolstering its institutional capacity for sustainable forest governance, increasing stakeholder involvement, and boosting the private sector’s willingness to invest. DRC is one of 3-African countries – along with Burkina Faso and Ghana – which have been selected to serve as FIP pilot countries in Africa supported by the AfDB. [AfDB 01/09/13]

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24

GHANA

Woodworkers Association Fears VPA Means Job LossesMembers of the Takoradi Wood Workers Association are concerned that there may be job losses when the VPA is implemented in 2014 even though its supporters claim it will provide new market opportunities. The Ghana Forestry Commission is now working to allay the fears of association members saying they appear to have misconstrued the concept of the VPA.

At a stakeholders meeting in Takoradi, the Trade and Industry Manager at the Timber Industry Development Division, Mr. Peter Zormelo, explained the VPA is to improve transparency and accountability by ensuring that timber products exported to the EU from Ghana have been legally acquired, harvested, transported and shipped in compliance with local laws. He advised association members to ensure they register their operations in order to acquire vendor licences to do legitimise their businesses.

To protect members from possible loses that might be associated with the VPA implementation the National Secretary of the Domestic Lumber Trade Association of Ghana [DOLTA], Mr. Afreh Boakye, suggested there is a need for the GFC to ensure a regular supply of legal timber to the local market from established sawmills and artisan millers. [Lesprom 20/09/13]

Wood Work Industry Cry For Raw MaterialSupply of raw materials in Ghana continues to be a major challenge confronting wood workers and stakeholders in the local wood industry. Statistics indicate that there is more than 430,000 MT supply gap of timber raw materials. This results in the downsizing of local commercial wood working firms and with it, employment in the sector with the loss of over 9,000 jobs between January and October 2011 as indicated by the Wood Workers Association of Ghana [WWAG]. The situation has led to the use of illegal raw materials. It is estimated that 50% or 1.5 million cubic tonnes of annual harvested timber is from illegal sources compared to the prescribed annual allowable cut of 2 million m3. The high volume of illegal timber extracted from the forests poses a major challenge to the sustainability of Ghana’s forest resources exploitation.

In view of the huge revenue obtained from the export of timber, domestic raw material needs of wood workers and wood processing companies are neglected in favour of higher value export markets. This situation is in direct contradiction of the 1994 Forest and Wildlife policy which stipulates that 20% of wood products from sawn mills should be sold on the domestic market. Furthermore, the policy framework for procurement and quality control of timber products on the domestic market is fragile and has not been effective.

Although the Public Procurement Act, 2003 requires that only certified sawn lumber from recognized sawmills are allowed for use in the projects of Ministries, Departments and Agencies [MDAs] in the country, there is no mechanism to ensure that this is actually the case. There is also ample evidence to the effect that state institutions are importing wood products such as furniture from abroad, which could easily have been supplied by local wood industry if only they had adequate access to raw materials. What is missing are processes to ensure that this directive is followed.

According to the Wood Workers Association of Ghana, chainsaw operators supply about 84% of lumber available to the domestic market. So perhaps the greatest impact of a VPA regime will be the volume of timber that can possibly be available to lumber traders to trade on the domestic market. This is because, legal standards require that timber extraction be within official annual allowable cut limits and that no illegal logging or milling be permitted beyond the stipulated limits. This means that chainsaw operations traded on the domestic market will be cracked down and that the maximum allowable cut may be as low as 780,000 m3 and as high as 2 million m3. When this happens, the local wood work industry in Ghana will be confronted with a myriad of problems that will include the following:

• Loss of employment and livelihood,• Shortage of some species of lumber on the domestic market • Delays in receiving supplies [thus, locking up the capital of traders].• High start-up capital [since sawmills mostly require full payment before consignments are delivered]• High prices of sawmill lumber• Perpetration of chainsaw activities• Extortion of moneys from lumber traders by law enforcement agencies

[SpyGhana 20/09/13]

New Team Of Specialised Prosecutors For Forest OffendersThe GFC and the Attorney General‟s Department has provided specialist training on forest and wildlife laws to more than 25 public prosecutors so quick and tough legal action can be taken on those breaking the country’s forest and wildlife laws.[ITTO 01-15/09/13]

Journalists Briefed On Merits Of VPA A workshop organised by the Working Group on Forest Certification, established to support the Voluntary Partnership Agreement [VPA] process, has been held in Accra. The workshop was to educate journalist on the VPA as it is expected to advance the interest of the timber industry in the country. The first workshop was one of a series planned to create awareness of the requirements of the EUTR for the implementation of the VPA which Ghana plans to finalise in 2014. The primary objective of Ghana’s involvement in the VPA is the strengthening of in-country regulatory systems and to move the country closer to achieving its national forest policy. [ITTO 16-31/08/13]

Forest Management Course Held In Kumasi A course on bio-economy and sustainable forest management to promote efficiency in the control and utilisation of the country’s forest resources has been held bringing together forest managers, researchers, academics and students. The workshop was arranged by the University of Eastern Finland [UEF] and the Forestry Research Institute of Ghana [FORIG] graduate school. Topics discussed included ecosystems management, forest landscape restoration, watershed management, multiple use of forest resources, strategy-based sustainable management and forest pathology. [ITTO 16-31/08/13]

GAMBIA

Gambia to Establish Effective Tax System On TobaccoThe Gambia together with the World Health Organisation [WHO] are working towards establishing an effective and efficient taxation system to control tobacco usage. [FOROYAA 19/09/13]

Malawi Tobacco Earnings Double To US$361 MillionMalawi has earnt US$361 million from tobacco sales this year, more than double its revenues in 2012, helping ease the southern African nation's normally tight foreign exchange situation. Tobacco accounts for more than 70% of Malawi's exports and 15% of GDP but the crop made just US$177 million last year amid recurring sales suspensions by Western buyers after protests by growers demanding better prices. Higher and better prices this year have encouraged higher tobacco output, which also went up from 79.8 million kgs to 168 million kgs. [Reuters 10/09/13]


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25

GHANA

Woodworkers Association Fears VPA Means Job LossesMembers of the Takoradi Wood Workers Association are concerned that there may be job losses when the VPA is implemented in 2014 even though its supporters claim it will provide new market opportunities. The Ghana Forestry Commission is now working to allay the fears of association members saying they appear to have misconstrued the concept of the VPA.

At a stakeholders meeting in Takoradi, the Trade and Industry Manager at the Timber Industry Development Division, Mr. Peter Zormelo, explained the VPA is to improve transparency and accountability by ensuring that timber products exported to the EU from Ghana have been legally acquired, harvested, transported and shipped in compliance with local laws. He advised association members to ensure they register their operations in order to acquire vendor licences to do legitimise their businesses.

To protect members from possible loses that might be associated with the VPA implementation the National Secretary of the Domestic Lumber Trade Association of Ghana [DOLTA], Mr. Afreh Boakye, suggested there is a need for the GFC to ensure a regular supply of legal timber to the local market from established sawmills and artisan millers. [Lesprom 20/09/13]

Wood Work Industry Cry For Raw MaterialSupply of raw materials in Ghana continues to be a major challenge confronting wood workers and stakeholders in the local wood industry. Statistics indicate that there is more than 430,000 MT supply gap of timber raw materials. This results in the downsizing of local commercial wood working firms and with it, employment in the sector with the loss of over 9,000 jobs between January and October 2011 as indicated by the Wood Workers Association of Ghana [WWAG]. The situation has led to the use of illegal raw materials. It is estimated that 50% or 1.5 million cubic tonnes of annual harvested timber is from illegal sources compared to the prescribed annual allowable cut of 2 million m3. The high volume of illegal timber extracted from the forests poses a major challenge to the sustainability of Ghana’s forest resources exploitation.

In view of the huge revenue obtained from the export of timber, domestic raw material needs of wood workers and wood processing companies are neglected in favour of higher value export markets. This situation is in direct contradiction of the 1994 Forest and Wildlife policy which stipulates that 20% of wood products from sawn mills should be sold on the domestic market. Furthermore, the policy framework for procurement and quality control of timber products on the domestic market is fragile and has not been effective.

Although the Public Procurement Act, 2003 requires that only certified sawn lumber from recognized sawmills are allowed for use in the projects of Ministries, Departments and Agencies [MDAs] in the country, there is no mechanism to ensure that this is actually the case. There is also ample evidence to the effect that state institutions are importing wood products such as furniture from abroad, which could easily have been supplied by local wood industry if only they had adequate access to raw materials. What is missing are processes to ensure that this directive is followed.

According to the Wood Workers Association of Ghana, chainsaw operators supply about 84% of lumber available to the domestic market. So perhaps the greatest impact of a VPA regime will be the volume of timber that can possibly be available to lumber traders to trade on the domestic market. This is because, legal standards require that timber extraction be within official annual allowable cut limits and that no illegal logging or milling be permitted beyond the stipulated limits. This means that chainsaw operations traded on the domestic market will be cracked down and that the maximum allowable cut may be as low as 780,000 m3 and as high as 2 million m3. When this happens, the local wood work industry in Ghana will be confronted with a myriad of problems that will include the following:

• Loss of employment and livelihood,• Shortage of some species of lumber on the domestic market • Delays in receiving supplies [thus, locking up the capital of traders].• High start-up capital [since sawmills mostly require full payment before consignments are delivered]• High prices of sawmill lumber• Perpetration of chainsaw activities• Extortion of moneys from lumber traders by law enforcement agencies

[SpyGhana 20/09/13]

New Team Of Specialised Prosecutors For Forest OffendersThe GFC and the Attorney General‟s Department has provided specialist training on forest and wildlife laws to more than 25 public prosecutors so quick and tough legal action can be taken on those breaking the country’s forest and wildlife laws.[ITTO 01-15/09/13]

Journalists Briefed On Merits Of VPA A workshop organised by the Working Group on Forest Certification, established to support the Voluntary Partnership Agreement [VPA] process, has been held in Accra. The workshop was to educate journalist on the VPA as it is expected to advance the interest of the timber industry in the country. The first workshop was one of a series planned to create awareness of the requirements of the EUTR for the implementation of the VPA which Ghana plans to finalise in 2014. The primary objective of Ghana’s involvement in the VPA is the strengthening of in-country regulatory systems and to move the country closer to achieving its national forest policy. [ITTO 16-31/08/13]

Forest Management Course Held In Kumasi A course on bio-economy and sustainable forest management to promote efficiency in the control and utilisation of the country’s forest resources has been held bringing together forest managers, researchers, academics and students. The workshop was arranged by the University of Eastern Finland [UEF] and the Forestry Research Institute of Ghana [FORIG] graduate school. Topics discussed included ecosystems management, forest landscape restoration, watershed management, multiple use of forest resources, strategy-based sustainable management and forest pathology. [ITTO 16-31/08/13]

GAMBIA

Gambia to Establish Effective Tax System On TobaccoThe Gambia together with the World Health Organisation [WHO] are working towards establishing an effective and efficient taxation system to control tobacco usage. [FOROYAA 19/09/13]

Malawi Tobacco Earnings Double To US$361 MillionMalawi has earnt US$361 million from tobacco sales this year, more than double its revenues in 2012, helping ease the southern African nation's normally tight foreign exchange situation. Tobacco accounts for more than 70% of Malawi's exports and 15% of GDP but the crop made just US$177 million last year amid recurring sales suspensions by Western buyers after protests by growers demanding better prices. Higher and better prices this year have encouraged higher tobacco output, which also went up from 79.8 million kgs to 168 million kgs. [Reuters 10/09/13]

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