January 09, 2015
BusinessDay
By Odinaka Anudu
To end product import and tap into the growth spurt in the fast-moving consumer goods (FMCG) market, Nigeria’s sugar investors are expanding plantations as they aggressively acquire large expanses of land, while also developing new varieties of sugar cane , BusinessDay has gathered.
Sugar makers are vigorously keying into the Federal Government’s Backward Integration Policy (BIP), which has succeeded in encouraging local production through reduction in tariff on imported machinery and partnership between sugar producers and cane farmers.
Dangote Sugar Refinery is committing $2 billion investments in six states in the country, through its recently acquired Savannah Sugar in Numan, Adamawa State, North-East Nigeria. Its target is to produce 1.5 million metric tonnes (MT) of sugar between five and ten years.
Data obtained from the National Sugar Development Council(NSDC) show that Dangote Sugar is expanding its existing 32,000 hectares (ha) of cane plantation, through Savannah Sugar, to achieve 50,000 MT in sugar production by 2015.
The company is constructing a 1.5km airstrip and five additional plantations to reach a total of 140,000 ha under cane, while also expanding the outgrower scheme from the current 281 farmers to 500 in 2015.
The firm has also acquired $35 million new farm machinery for plantation development; 50,000 ha in Bali, Taraba State; 50,000 ha in Kebbi State; 38,000 ha in Numan/Guyuk in Adamawa, as well as 50,000 ha in Kpata, Kwara State. Dangote has also signed a memorandum of understanding (MoU) with Kenana Engineering and Technical Services of Sudan for the provision of technical and manpower services at the plantations.
In Adamawa and other parts of the northern Nigeria, it is also empowering farmers with different levels of training and assistance.
“Yes, I can speak for the farmers, we are in partnership with in Adamawa,’’ said Graham Clark, group managing director, Dangote Sugar Refinery (DSR) in an interview with BusinessDay.
“We assist them with technical input, in the procurement of fertilizer, in the maintenance of equipment and most importantly, guarantee them ready market,” Clark said.
Flour Mills, through its Golden Sugar Company, is also investing $300 million in Niger State, while also preparing land for 2150 ha for sugarcane planting, the data show.
It is also on the verge of completing a cane yard and truck park, sugar grading and nagging facilities.
“Apart from the 12,500 ha Sunti BIP project which is rated the fastest growing among ongoing projects, Golden Sugar Company is also exploring new sites in Kogi and Niger for bigger sugar projects,” said Latif Busari, executive secretary, NSDC, during a media chat held recently in Abuja.
Also, Confluence Sugar, Kogi; Crystal Sugar Mills, Jigawa; and Unicane Industries, Kogi State are investing in Greenfield projects. While Crystal Sugar has almost completed factory refurbishing and plans test-running this year, both Crystal and Confluence Sugar have already established 50ha and 100ha cane nursery respectively.
HoneyGold Group is also investing $300 million on two sites in Adamawa state, with the target of producing 200,000 tonnes sugar annually.
Similarly, McNcihols, Consolidated Plc, Lucke Sugar and Dogan Sugar are investing in new cubing, Vitamin A fortification and packaging lines.
Sugar import into the country often comes from Brazil. Constant importation is driven by Nigeria’s large population, growing middle-class and product demand by the food, beverage and tobacco sub-sector.
Data obtained from NSDC in 2013 showed that total national sugar demand rose to 2 million MT at the end of 2013, from 1.5 million MT in 2012,while refining capacity utilisation spiked to 75 percent from 60 percent. Similarly, raw sugar imports dropped to 800,000 MT from 1.4 million MT, just as refined sugar imports nosedived to 0.67 percent, from 1.88 percent reported in 2012.
Similarly, the local industry is driven by the demography as well as growth of food and beverage . Analysts see urbanisation as one key factor that will continue to raise the performance of the sector.
“Nigeria’s growing urban population and rising income levels are likely to drive demand for sugar in the coming years, as urban populations tend to consume more sugar than rural ones,’’ said Julia Fioretti of Reuters, in an article.
Reference: http://businessdayonline.com/2015/01/sugar-makers-in-aggressive-plantati...