MAPUTO, APRIL 2015

República de MoçambiqueMINISTÉRIO DA AGRICULTURA E SEGURANÇA ALIMENTAR

CENTRO DE PROMOÇÃO DA AGRICULTURA

(CEPAGRI)

SUGAR SECTOR IN MOZAMBIQUE

I. SUGAR SECTOR IN MOZAMBIQUE

II. SUGAR SECTOR_THREATS

III. STRATEGICAL PROPOSAL ACTION

OUTLINE OF THE PRESENTATION

2

The Government of Mozambique recognizing the importance of the sugar industry in the

promotion of the rural development, and job creation, approved the following measure to

support the industry:

Tariff system of variable surtax of imported sugar (1997);

- Protect the domestic market of the importations of the more cheap sugar (dumping);

- Secure the consumption of the national sugar.

System Sales through only deliverer (2002);

- Create the economy of scale for national and international market ;

- Reduce the transaction costs;

- Guarantee the same chance of access to the sugar in the country;

Discharge of the VAT in the value chain of sugar (2002).

- Reduce the price of the sugar;

- Contribute for the competitiveness of the national industry

I. SUGAR SECTOR IN MOZAMBIQUE(1/5) 2

The measures had

supported the rehabilitation,

and modernization of 4

Sugar Mills (Xinavane,

Maragra, Mafambisse and

Marromeu), resulted in the

increase of the sugar

production, 13.000 Tons in

1992, for 423.000 in 2014;

Forecast production of

454.000 tons in 2015;

I. SUGAR SECTOR IN MOZAMBIQUE(2/5) 3

423,062

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

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92

19

93

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94

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95

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96

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97

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98

19

99

20

00

20

01

20

02

20

03

20

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20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Cane Sugar

Cane and Sugar Prodution (Tons) SugarCane

I. SUGAR SECTOR IN MOZAMBIQUE (3/5) 5

The sugar industry is crucial in

the transformation of subsistence

agriculture, in commercial

agriculture;

The area of out growers ,

increased, for 80 ha in 2000, to

9,000 ha, producing 700,000 ton,

in 2014, involving about 4.000

growers;

Structure of the Production of Sugar cane

7%13 %

AssociationIndividual Growers

80 %

Mills

I. SUGAR SECTOR IN MOZAMBIQUE (4/5) 6

The sugar industry plays an important role as primary source of job in the rural areas,

guarantee in Mozambique :

35.000 annual job in the period of peak of the production;

About150,000 people depend on the incomes generated in the industry;

I. SUGAR SECTOR IN MOZAMBIQUE(5/5) 7

The Mozambique sugar has as destination, a National Market , with annual sales of

153.000 tons in 2014, the European Union Market, (EBA/ACP/LDC Initiatives ),

241.000 ton, and U.S.A. Markets with 13.000 Tons:

II. SUGAR SECTOR_THREATS(1/3)8

Currently the National Industry has face the negative effect of importation of low costs sugar

(Thailand, India and Brazil), with effect in the reduction of annual sales in the domestic market of

the national sugar;

The import of sugar had moved the Mozambique for the market of exportation (UE) with

consequent loss of market good profits due the low price sugar in UE Market;

0

5

10

15

20

25

30

35

40

World Sugar Dump Market Price:Historically Does Not Reflect Actual Cost of Producing Sugar

-- Cents per pound, raw value --

World Average Cost of Production

Sources: Price - USDA, New York Board of Trade/ICE, Contract #11, raw cane sugar, stowed Caribbean port; Monthly avg prices through June 2014.Cost of Production - "Sugar Production Costs, Global Benchmarking Report," LMC International, Oxford, England, July 2014.

31J

Over past 25 years:World average cost of producing sugar (18 cents)

has averaged 50% more than world price (12 cents)

World Price (Only 20-25% of sugar

sold at this price)

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17

USD 573/TonUSD 573/TON

USD 375/TON

II. SUGAR SECTOR_THREATS (1/3) 9

The exportations of Mozambique for the EU, has grown significantly, and with bigger exposition

of the negative effect of the CAP, where the forecasts indicate:

Reduction of prices up to 45%, for lower of EUR 584/ton in 2014, to EUR 405/Ton in

2023;

Reduction of the volume of importation of the UE of 3,8 Million ton in 2012, for about 1,5

Million ton post 2017; (ISO 2014)

Tabela : Exportação para EU no âmbito Iniciativa Tudo-Menos-Armas (ACP/EBA/LDC), Toneladas

Origem 2006 2007 2008 2009 2010 2011 2012

Moçambique 38,846 85,615 138,883 104,393 86,975 158,701 234,324

Zambia 37,469 36,371 50,313 70,471 82,184 180,112 123,864

Sudão 15,649 30,638 28,663 31,751 21,434 21,142 43,815

Cambodja 0 0 0 0 10,544 23,723 16,342

Malawi 49,082 48,935 85,035 48,206 49,28 61,5 107,438

Madagascar 17,513 4,94 10,205 28,125 9,832 8,997 29,376

* Fonte . ISO, 2014, Sugar Market Post 2017

II. SUGAR SECTOR_THREATS(3/3)

In the next times, the space for the residual sugar of Mozambique, could be moved for

“free world market and/or regional market”, determined for the laws of the market,

where the most competitive industry will be able to survive.

10

MozambiqueSugar

Regional

SADC/SACU

Domestic

WorldPreferencial

UE

III. STRATEGICAL PROPOSAL ACTION(1/2) 11

The challengers for the sector must be associates with national, regional and global context, that

include:

Global; Action plan and the agreement draw at the level of ACP sugar producers and

exporting countries, for access to the European Market;

Regional; ToSupport the application of the disposals of Annex VII, of the commercial protocol of

the SADC, in the negotiations of the Areas of Free Trade, “Continue with the special

treatment for the sugar”;

National; The internal action proposals are:

Improve the institutional coordination in the control of the sugar import;

Adjust the reference prices for the raw (USD 385/Ton) and refined sugar (USD 450/ton),

in a dynamic perspective (To application of the surtax of imported sugar _ one of the

measures of the politics of sugar)

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Sugar

Cogeneration

Bio Etanol

Bioplástics

• Castanho

• Refinado

• Especiais

Fertilizes Animal Feed

•Etanol

• Etanol celulósico

III. STRATEGICAL PROPOSAL ACTION(1/2)

Adoption of the

strategy of

diversification in the

industry of the sugar,

guaranteed the

transition of the TIME

OF THE SUGAR

INDUSTRY FOR THE

TIME OF SUGAR

CANE INDUSTRY

MUITO OBRIGADO