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Sugar shortage : Prices soar

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Sugar shortage : Prices soar

The sugar shortage in Tanzania is causing prices to soar. Therefore, the Tanzanian government has approved the import of over 100,000 tons of sugar and is committed to increase sugar production by 2025.

The government is on the front line to limit inflation risks

A severe sugar shortage in Tanzania has caused the price of sugar to soar in recent months. The sugar shortage is being blamed on heavy rains at the end of last year. Meanwhile, there are allegations of hoarding and price-fixing by industrial cartels. With little or no evidence of the latter, speculation remains mere allegation. What is indisputable, however, is the shortage of sugar and the consequent surge in prices for the sweetener.

Tanzania has been experiencing a sugar shortage for almost a year. The problem is so severe that President Dr. Samia Suluhu Hassan was forced to issue a public statement outlining the government’s plan to solve the problem.

President acknowledges sugar shortage

The president first acknowledged the ongoing sugar shortage but warned against hoarding, and then pledged to significantly increase domestic production by 2025. However, this is not an easy solution, the country’s top official admitted, adding that it could take up to a full year for Tanzania to increase its production capacity to meet and exceed demand. « I am convinced that by next year, we will have completely ended the sugar deficit in the country… We will increase production and we will even start exporting the product », declared the President in her speech at the 17th edition of the Presidential Manufacturer of the Year Award (PMAYA).

For her part, the Katavi regional commissioner, Mrs. Mwamvua Mrindoko, issued a stern warning to traders against hoarding sugar to provoke sugar price rises: « The authorities will not hesitate to take action. The authorities will not hesitate to take legal action against traders who raise sugar prices under the pretext of shortages », she warned. The RC told traders that the government had already published indicative prices and that no trader had the right to demand prices higher than the indicative prices set. The Tanzania Sugar Board (TSB), the government agency that oversees the sugar production sub-sector, has announced that guide prices for wholesale sugar should not exceed 1.5 USD (TSH 2,800) and 1.8 USD (TSH 3,200) for retail sugar.

Tanzania forced to import sugar to make up shortfall

While traders try to make the best of the shortage, the Tanzanian government has not stopped emphasizing the target prices for sugar but has allowed imports of this product to fill the gap. The fundamental law of supply and demand is difficult to control. The first law of supply is that when the supply of a product decreases, there is a direct and opposite reaction in price, i.e. low supply equals high prices. To stabilize market prices, the Tanzanian government authorized the import of sugar with immediate effect. The first batch of sugar entered the country at the end of January.

The arrival of the sugar cargo warranted a press conference. The exact quantity on board was not specified, but it is known that this first batch is part of the 100,000 tons that the government has authorized to be imported. The government has issued sugar import licenses to all the country’s major sugar producers. These are Mtibwa Sugar, Kilombero Sugar/Illovo, Bagamoyo Sugar, TPC Limited, and Kagera Sugar.

Tanzanian sugar industry : An untapped economic powerhouse

Tanzania is East Africa’s third-largest sugar producer, but domestic production is not keeping pace with the country’s demand. As promised by President Samia, Tanzania is committed to increasing its sugar production capacity. Sugar production is one of Tanzania’s most important agro-food industries and is expected to contribute to the country’s industrialization program. By adding value, the sugar industry is calling for the creation of value-added manufacturing facilities. As there is in Rwanda’s agri-food industry which contributes greatly to the economy of this country.

In this way, the sugar industry will contribute to Tanzania’s industrialization. According to the government, production in the sector will increase by 16.6 % from 307,431 tons to 359,219 tons between 2013 and 2019. Through the Tanzania Sugar Board, the government has announced that the country’s sugar production will reach 367,000 tons by 2021. The remaining dilemma is that demand for the product appears to be growing much faster than production growth. In 2019, Tanzania’s national demand for sugar will be 470,000 metric tons, a deficit of 23 %.

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