Astronomical imbalance on sugar supply-demand raises alarm

Only ten percent of the national demand for sugar has been fulfilled this year, the Ministry of Trade and Regional Integration (MoTRI), astonishingly reveals.
During the 2022/23 budget year 11 month report tabled to the Trade and Tourism Standing Committee of parliament, MoTRI disclosed that the state owned sugar supplier, Ethiopian Sugar Industry Group (ESIG), supplied only 10 percent of the actual sugar demand of the country.
Mesekerem Baheru, Domestic Trade and Consumer Protection Directorate Head at MoTRI, elaborates that the Group has met 30 percent of the target it expected to provide, “The supply however only managed to cover ten percent of the demand.”
According to the 11 month report, in the budget year, of the first 11 months, 3.3 million quintals of the sweet was expected to be distributed but the actual performance came at a shy one million quintals.
According to Mesekerem, when millers of the Group suspended their production for annual maintenance, there was a plan to import two million quintals but it was not supplied until the end of the 11th month of the budget year.
“Because of several reasons, ESIG produce very limited amount of the sweet due to that most of the regions were getting less than 25 percent of their quota which affected the performance of the sugar sector,” Mesekerem explained.
The state owned estate which is responsible for the supply of sugar from its millers and import, was hit with instability on some of the production hubs and production was under capacity for others. Similarly the import was not effective for almost two years due to challenges stemming from the procurement process.
The group stated that several external and internal challenges hampered its activities making it to not attain its maximum potential.
ESIG, which manages about eight active farms with milling facilities, is projected to fulfill the production of 2.27 million quintal of sugar.
“Owing to various reasons, production this year has been a shadow of what it was last year. Some of them, a few weeks ago have run out of production,” Reta Demeke, Public Relations Head at ESIG told Capital recently.
“Most of the factories started production late because of several challenges including lack of parts and external challenges,” Reta highlighted, adding, “Production is a chain process which primarily is supposed to be done in the preceding seasons.”
Ethiopian sugar millers have a capacity to produce over 4 million quintal per annum, while the actual demand is estimated at about six million quintal. However internal and external challenges pushed the Group to produce at least 2.27 million quintal for the budget year as per the information Capital obtained from the Group early April.
Besides local production, the Group is also importing sugar to fill the gap. For this year, the bid was opened early November in 2022 and Osirius Group was selected to supply 200,000 metric tons of sugar owing to its lowest bid offer compared to other two bidders.
The Group had made several efforts to import the product through the company, while MoTRI on its 11 months report stated that the imported item was yet to be delivered.
Experts in the sector said that the sugar market is currently widely covered by franco valuta as per government’s green light dating two years back. This has been highly eased in the past budget year with private players said to import whatever amount of the commodity they desire with their own foreign currency.
According to MoTRI, in the stated period, 8.3 million quintal of sugar was imported through franco valuta. The amount that was supplied by private players was over 800 percent higher in contrast to source by the state owned enterprise.
Those who closely follow the business told Capital that the failure that occurred at ESIG is covered by the private sector who imported the basic commodity on the franco valuta scheme.
The sector experts critiqued the failure of the Group which led to the inability to secure the sugar for the last two years, which in turn disrupted the market.
Capital’s effort to further obtain information from the Group on the matter was unfruitful.

The post Astronomical imbalance on sugar supply-demand raises alarm appeared first on Capital Newspaper.

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