Sugarcane plantations in Metehara, Finchaa and Tendhao have yielded low production of sugarcane following a reduced supply of water from Koka and Awash dams. According to the Ethiopian Sugar Corporation, the country will look to increase the import of sugar from abroad if water shortages continues. However the world is also witnessing a staggering price hick on Sugar recently. Global raw sugar consumption is expected to exceed production by 4.95 million metric tonnes in 2016-17.
Water levels in the dams have reduced significantly after consecutive poor rainy seasons caused by the global El Nino effect.
The three plantations have the capacity to produce 481,000 tones of sugar, almost 90 percent of the country’s total sugar production. Wenji-Shoa sugar factory, currently produces 174,946 tons of sugar per annum, and Metehara 136,000 tones, while Tendaho Sugar Factory, yet to be completed, will be the largest of all with an annual production capacity of 619,000 tons of sugar and 63,000 cubic meters of ethanol.
Gashaw Aychelehem, Communications Head of the Corporation told Capital that a study on the impact of reduced dam levels on the sugar industry would be conducted.
“We should carry out a study to know the exact impact of the reduced water in the dams on the plantation. However, we can confidently say that the new plantation is not getting the right amount of water and we may not be able to get the expected level of production in the future.”
He added that El Nino will not have significant impact on the current fiscal year’s production of sugar. “Sugar cane is ready for production two years after being planted and the current crops to be harvested in this fiscal year have received enough water before the dams reduced in volume,” he explained.
The government had already announced that sugar – currently imported at a rate of over two million of quintals per annum – would be provided fully by domestic production once Kuraz, Belles and Wolkayit sugar factories are completed. These factories are expected to have a production capacity of 954,000 tones of sugar per annum.
Such ambitious targets, however, will have to be reviewed in light of the severe global sugar shortage expected to hit in 2016 due to droughts caused by El Nino hitting sugar producers in India, Thailand and China.
The global sugar shortage expected to hit in 2016 will be even more severe than expected because of droughts caused by El Nino.
Raw sugar prices have risen 9.6 per cent so far this year and are trading around their highest point for 18 months.
Analysts say crops are being hit by El Nino, a warm weather event in the Pacific Ocean that has a knock-on effect on agriculture the globe.
Drought had hit sugar production in India, Thailand and China for this season and next.
Below average rainfall in India, the world’s second largest producer, has hit production and limited planting for the upcoming crop.
“El Nino drought has impacted many Asian cane crops and reduced overall production,” Green Pool, a commodities analyst, said.
“The drought impact is anticipated to carry forward into 2016-17 because it has reduced planting, reduced plant health and reduced plant care.”
The gap has widened 19 per cent since January, which will push global sugar consumption into a second straight annual deficit.
That comes after five consecutive years of production exceeding demand.