Sugar imports continue to skyrocket

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In its highest procurement period in the last few years the Ethiopian Sugar Corporation has floated another round of sugar bidding with a huge volume. The bid is for the third time in the budget year.
The international bid that the corporation announced a week ago indicated that it is looking to buy 200,000 tons of cane sugar.
The maximum production in the history of the corporation was 4 million quintals per annum in the 2015/16 budget year. Last budget year the annual production was 4.5 million quintals. According to the survey conducted by the Sugar Corporation the current demand is from 6 to 6.5 million quintals per annum.
Due to the gap between the demand and actual local production the corporation has imported 200,000 metric tons of sugar per annum.
However this year imports have significantly increased.
Gashaw Ayecheluhem, Public Relations head at the corporation, told Capital that the El Nino and La Nina effects have affected production. “The instability followed by burning  sugarcane farms at Wonji and Arjo Dedesa and suspending the production at Fincha have significantly hindered our ability to produce a lot of sugar  this year,” he said.
He said that the delay of the expected new factories has also affected the volume.
“The instability has significantly affected the production at some of the factories, for instance Fincha suspended its production for months when it was unable to transport the sugar in produced and ended up staying at a congested warehouse during the  instability period,” he said.
“The rain also caused some other factories to not start on time,” he added.
According to Gashaw, Omo Kuraz II, which is one of the new factories constructed by the Chinese company COMPLANT, has suspended its production because of unexpected rainfall. Kuraz II commenced its trial test last budget year and suspended production due to the rainfall and is still not operating.
In December 2017 and March 2018 the corporation bought 100,000 metric tons each to alleviate the sugar shortage.
With the current purchase, Ethiopia will have imported 400,000 metric tons in a single budget year. The sugar being bought now will be transported during the coming budget year.
According to Gashaw, the 200,000 metric tons of sugar will be distributed from September to December in  the coming budget year that starts on July 8.
According to the bid document, the procurement volume will be decreased based on the production performance of the factories.
“If the factories are doing well the volume in the latest bid will be reduced,” he added.
The 100,000 metric ton sugar bid opened in March and is expected to begin transportation June through August, which is the second month of the coming budget year (2018/19).
In the end of the budget year the corporation purchased only 70,000 metric tons of sugar, which was distributed last October.
The sugar shortage is not new to the country. For the past several years the government has allocated millions of USD to import the sweet.
In the beginning of the past Growth and Transformation Plan (GTP I), which started in 2010 and ended in 2015, the government announced the commencement of ten sugar factory projects that were expected to be finalized before the end of the five year period. Hopes are that the new sugar factories will allow the country to halt sugar imports and enable it to earn more than USD 600 million from exports by the end of the first GTP.
However almost all of them have been delayed beyond the scheduled time and the country continues to allocate scarce hard currency to import the product, which is also source of input for several industries.
Currently some of the projects are on in the testing stage and the majority are under construction.
Compared with the past two years the current purchase is very huge.
In 2015 the corporation purchased 275,000 and 300,000 tons in 2016, while the July and 2017 purchase, were 170,000 tones.
The corporation planned to cut sugar imports as of the past budget year and it has unsuccessfully attempted to export sugar to Kenya.
In the previous bid that opened in March ED and F Man, Agro Corp, Sukden, Al Khaleej, Baitak Development and Antei International were selected as the final competitors to supply sugar  from June to August. ED and F Man, who won the bid, are expected to transport the sugar for  local consumption until August.
In December Al Khaleej won the bid for 100,000 metric tons of sugar purchased by the corporation, Sukden supplied the 70,000 metric tons in the beginning of the budget year.
From seven operational factories Kuraz II and Arjo Dedesa, who lost 2,100 hectare of sugar cane during the  unrest, are not active.
According to Gashaw, so far in the budget year the corporation imported 295,000 metric tons of sugar and imported another 110,000 metric tons that ED and F Man will supply for the end of the current budget year and the beginning of 2018/19 budget year.
Every month the corporation supplies 600,000 million quintals of sugar to the local market  and manufacturing industry.
Sugar factories are expected to perform maintenance during this rainy season.