Trends in Nigerian sugar market
The Nigerian sugar market has an estimated potential of 1.7 million tons, according to the United States Development of Agriculture (USDA). Data obtained from the National Sugar Development Council (NSDC) reveals that the country’s sugar consumption in 2012 was 1,108,980 tons even as domestic production was 10,843 tons.
Hence within the period under review, 1,098,137 tons were imported into Nigeria, costing the country a total of $517,222,527 million.
The average unit price was put at $471.
A 2013 report by staff of the USDA revealed that the country’s sugar production within the year was 65000 tons (raw value) as consumption rose to 1.32 million.
Nigeria has a land potential of over 500,000 hectares of suitable cane fields capable of producing over 5 million metric tons of sugarcane.
When processed, these can yield about 3 million metric tons of sugar, says NSDC.
But Nigeria’s sugar requirements are still met through imports of raw sugar that is refined locally.
In fact, much of sugar used in the country is imported from Brazil, according to research.
The country has only 2 per cent self-sufficiency, given that 98 per cent of the commodity is imported, said Akinwumi Adesina, minister of agriculture, recently.
Due to challenges faced by sugar cane farmers, which has made the commodity hugely unexploited, key players have remained in the business of product refining.
At the moment there are five major players in the industry: Dangote Sugar Refinery (DSR); BUA Sugar Refinery; Savannah Sugar and Josepdam Sugar Company and recently Flour Mills of Nigeria. Available records on installed refinery capacity show Dangote Sugar’s as 1.44 million tons and the BUA’s at 720,000 metric tons.
Dangote Refinery, which currently dominates 70 per cent of the market, has even done more as it has unveiled plans to spend $1.5 billion on sugar cane over the next five years so as to make the country less reliant on imports.
“In the next five years, we should be able to produce 1.5 million metric tonnes locally, from around 50,000 metric tonnes now,” Abdullahi Sule, managing director of DSR, recently told Reuters in Abuja.
In its efforts to prop the sector, the federal government on its part has initiated incentives to provide enabling environment for investors coming into the industry.
There is now zero per cent import duty on machinery and spare parts imported by local sugar companies as well as 10 percent import duty and 50 percent levy on imported raw sugar. There is equally 20 percent duty and 60 percent levy on imported refined sugar respectively.
The government has also begun speedy provision of credit support scheme for sugarcane growers through the Central Bank of Nigeria (CBN) and commercial banks.
Government has also provided infrastructure such as access roads, boreholes, power lines, land acquisition, and health care facilities for new sugar estates.
The country has also banned imports of refined sugar in retail-ready packets, although supermarkets still stock them.
According to industry watchers, privatization of sugar estates has brought improvements in the subsector, given that it is now better managed. This, to them, can be attributed to efforts by the federal government through the Nigerian Sugar Master Plan (NSMP) and the National Sugar Development Council.
But the challenge remains evolving strategies to meet the demands of about 168 million consumers and prevent spending hugely on imports.
Industry players say there is an urgent need to establish mills where sugarcane will be crushed. They also add that sufficient portions of land should be provided to grow this plant. Sugar cane farmers complain that they cannot find industrial buyers, consequently resulting in much post-harvest wastage. Analysts say establishment of a board that will link buyers (companies) and sellers (farmers) could be a way out.
“Such a board will help encourage already existing cane farmers and bring in new entrants. What they need is market for their products,” said Anthony Juwan, livestock farmer in Abeokuta, Ogun State.