SENIOR International Sugar Organisation economist, Lindsay Jolly has urged Africa’s sugar industry to unite and act fast in a bid to remain sustainable and competitive in the face of worldwide market shifts and growing consumer pressure.

INNOVATION and a firm grasp of international trends linked to climate change and consumer demand are key if Africa’s sugar producers are to enjoy sustained growth in the face of rising costs, unpredictable weather patterns and the global anti-sugar lobby.

Senior Economist at the London-based International Sugar Organisation Lindsay Jolly told delegates at a recent sector congress in Nairobi that while opportunities for sustained growth existed, taking advantage of the opportunities to remain competitive and sustainable required Africa’s sugar industry to reduce costs and boost productivity, improve logistics, streamline trade agreements and be innovative in cane variety breeding.

Jolly said social and human rights issues linked to sustainability and the economic backlash from lobby groups and consumers on the perceived connection between sugar-rich diets and excessive weight gain were also top priorities.


While Jolly maintained there was no scientific evidence that the consumption of sugar led to obesity, he said changes in consumer behavior towards food and drink regarded as detrimental for a healthy diet were real and impacting on the sector.

Added to this, consumers were demanding products that were socially and environmentally ethical down the supply chain.

However, he said, audits for sustainability seldom accentuated the positives of cane sugar production in developing countries, which included benefits such as free schooling, health care and housing.

“Procurement personnel are increasingly considering human rights, labour working conditions and environmental impacts of products when making decisions. In response, global retailers and leading brands are implementing codes of conduct and sourcing policies to manage risk and identify opportunities.”

But Jolly said the effectiveness of the response by the food and sugar industries in support of sustainable sugar production had failed to communicate effectively the benefits of sugar production, particularly in rural communities.

Further, the industry was slow to adapt to change in some countries.

“Despite the Brazilian model having proven that the sugarcane industry can sustain a far more diverse and multi-functional role beyond sugar production, there is sometimes a surprisingly slow rate of diversification in other countries. Why?”

Jolly said an improved and variable output was now essential for the sector’s resilience to commodity cycles and adverse weather patterns.

“Increasing productivity is the only road to long term survival in a single dimensional industry such as the sugar sector.”

Jolly identified the following key opportunities for the continent’s sugar producing sector:

  • the production of green energy and biofuels
  • developing products such as bio-chemicals and bio-plastics
  • speciality sugars and organic sugar production

The most notable threats included:

  • lack of enabling legislation for green energy and biofuel production, affordable supply and a competitive and transparent energy industry.
  • new investment in production capacity
  • inadequate response to climate change
  • increased logistics costs across the supply chain.

“The transport sector remains almost entirely reliant on oil products, with few policies in place to promote the use of alternative fuels, such as biofuels. But looking forward, total transport demand for oil is projected to more than double by 2040 to reach 2.2 million barrels a day – 55% of which is gasoline and 40% diesel,” he said.

Currently there is very little fuel ethanol production in Africa, but several countries are mandating a green energy future in the transport sector, including Kenya, Ethiopia, Sudan, Nigeria, Zimbabwe, Angola, South Africa and Mauritius.

And in the realm of co-generated electricity Mauritius was leading the way with four sugar mills supplying electricity to their respective national grid. In Ethiopia all of their mills under construction include cogeneration capacity.

Another key point, Jolly said was that South Africa had “huge” potential but government policy was not supportive enough of such an initiative.

Additional African countries where electricity was supplied by sugar mills included Angola (1), Sierra Leone (1), Sudan (2), Swaziland (1), Tanzania (1), Uganda (2), Zambia (1). South Africa has none.

While Jolly agreed the economics of cogeneration projects were complex, he said for the commercially viable supply of electricity from sugar mills, the millers’ production costs must be covered, including those for the provision of feed-in tariffs that encouraged the adoption of renewable energy.

“What the millers need are supportive governments that promote a legislative environment supportive of independent power and promoting attractive purchase agreements. The Independent Power Producer (IPP) must also be able to compete against the national power utility,” he said.


Jolly says the global bio-plastics production capacity is growing – in 2016 it was estimated at 4.15 million tons. World production capacity is expected to increase to 6.1 million tons by 2021. “Most of the growth is in bio-based non-biodegradable plastics, but the use of bio-based biodegradable plastic is growing,” he said.

In 2016, packaging was dominant in the market at 40% of the total bioplastics share while consumer goods, construction, transportation and the automotive sector had seen a rise in the use of the products.

A further opportunity for diversification, Jolly said, was the production of organic sugar which was at 370 000 tons a year currently, Fairtrade sugar production at  212 000 tons with 350 000 tons of speciality raw sugar imported into the European Union and the United States each year.

Speciality sugars are produced in Central America, Martinique and Guadeloupe, Malawi, Mauritius, Reunion and Swaziland.

Speciality sugars are subjected to additional or special processing to meet customers’ unique requirements relating to flavor, grain size and colour. The product is exported to high-premium niche markets in the European Union and the United States.


While some green fields opportunities for production expansion existed in southern Africa, Zambia, Malawi and Mozambique, Jolly said investment in such projects had reached a hiatus in the wake of the prolonged world market price fall between 2011 and 2015 and while the price had rallied in 2016 it had again retreated this year.

Another factor dampening new investment in the sector was the expectation of a significant reduction in demand from the EU following sugar policy reforms and the scrapping of production quotas in their beet sugar industry which kicked into play this month.

“In the longer term it is Africa’s strongly growing sugar consumption that will ultimately help create an attractive environment for new investment in production capacity. The severity of the impact of the policy reform will depend mainly on exposure to the EU market and the level of cost competitiveness. The region’s sugar industry has to find markets within Africa for sugar that would otherwise have gone to the EU,” he said.


Africa’s sugar industry was also not a one size fits all, with the existence of varied production systems, sizes of operations, ownership structures, differing market outlets and legislation.

“There are significant sugar trade policy and pricing disparities between the regions. There is often also heavy speculation by sugar traders as they respond to import duty arbitrage between the different trade zones. Regional and bilateral trade agreements – some countries belong to more than one trade agreement – have a key role to play in the survival of the sugar industry on the continent,” Jolly said.


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