The sugar trade in Africa. Edward George Head of Soft Commodities Research, Ecobank 15 April 2013

Transcription

1 The sugar trade in Africa Edward George Head of Soft Commodities Research, Ecobank 15 April 2013

2 World sugar production and consumption Europe FSU North & Central America MENA Production and consumption of sugar, 2011/12 (each full bar = 20m tonnes) South America SSA South Asia East Asia & Oceania Sources: ISO, Ecobank Research. Production Consumption 2

3 South Africa & Egypt dominate sugar production Production, 000 tonnes 2,500 % share of production 2,000 4% 11% 1,500 13% 43% 1, % / / /13 South Africa Egypt Sudan Swaziland Kenya Zambia Mauritius Mozambique Zimbabwe Tanzania Southern Africa EAC Other North Africa West Africa South Africa & Egypt each produce around 2m MT of sugar per year. Southern Africa & North Africa dominate account for over 2/3 of Africa s sugar production. East Africa is becoming an increasingly important sugar production hub. Sources: ISO; Ecobank Research. 3

4 Africa s leading sugar exporters Sugar exports, US$ 000s, , ,000 Raw/refined sugar Molasses Confectionery 500, , , , ,000 - Mauritius & Egypt dominate export volumes, a large proportion comprising molasses. North, Southern and East Africa dominate Africa s Top Ten sugar exporters. Sources: Intracen; Ecobank Research. 4

5 North Africa dominates imports of sugar Sugar imports, US$ 000s, ,600,000 1,400,000 Raw/refined sugar Molasses Confectionery 1,200,000 1,000, , , , ,000 - Algeria Nigeria Egypt Morocco Sudan Tunisia South Africa Ghana Angola Ethiopia North Africa dominates imports of sugar, reflecting the region s high consumption levels. Nigeria is SSA s leading sugar importer, but the make-up of its sugar imports is changing. Sources: Intracen; Ecobank Research. 5

6 The EU and Brazil are the key sugar trade partners Export markets for African sugar, US$, 2012 Sources of sugar imports, US$, % 1% 5% 14% 2% 2% 4% 12% 9% 79% 71% EU USA Japan Russia Others Brazil EU Thailand Guatemala China Others EU dominates Africa s sugar exports, reflecting the preferential regime for African sugar. Brazil is the source of 71% of the sugar imported into Africa. Most Brazilian exports to West Africa are of raw sugar which is refined in situ. Sources: Intracen; Ecobank Research. 6

7 Sugar export partners vary from country to country Top ten African sugar exporters, US$ 000s, ,000 EU USA Africa Other 250, , , ,000 50,000 - Mauritius, Mozambique and Swaziland export nearly all of their production to the EU. But exports to other African countries make up 42% of Africa s sugar exports. Sources: Intracen; Ecobank Research. 7

8 Brazil is by far Africa s leading sugar import partner Top ten African sugar importers, US$ 000s, ,200,000 Brazil EU USA Africa Other 1,000, , , , ,000 - Algeria Egypt Nigeria Morocco Tunisia South Africa Ghana Angola Ethiopia Sudan Brazil is the source of over 70% of the sugar imported by Africa s top four sugar importers. The EU maintains an important market share in North Africa. Sources: Intracen; Ecobank Research. 8

9 Key traders of African sugar A handful of multinationals dominate Leading sugar traders in Africa Company Louis Dreyfus ED&F Man Olam Bauche Novel Cargill Sucden Czarnikow Armajaro Headquarters Netherlands UK Singapore France Switzerland USA France UK UK LDC & ED&F Man trade around half of all African sugar flows. Olam, Bauche, Novel, Cargill & Sucden are also important. There are numerous small traders, but all of them ultimately trade with the big players Dominance of the major trading houses is discouraging new entrants. Source: Ecobank Research. 9

10 There are many obstacles to trading sugar in Africa Weather / Climate change Lack of irrigation makes crop cultivation dangerously dependent on good rains Drought of had devastating impact on production in East & Southern Africa. Changing seasonal rain patterns are disrupting harvesting and planting. Unpredictable trade regimes Differing trade regimes within each region encourage import duty arbitrage. Periodic trade disputes disrupt sugar flows (e.g. Kenyan dispute with neighbours over source of sugar imports). Bans or restrictions on sugar imports are on the rise (e.g. Nigeria s total ban from 2015). Continuation of EU/USA preferential import regimes is increasingly uncertain. Competition from Asia Imports of sugar from India, Pakistan & South-East Asia are rising. Large unrecorded volumes of sugar are passing through the UAE, flooding markets in East and Central Africa. With international prices remaining weak the surge in cheap imports could make domestic production unviable. Financing constraints The global financial crisis has forced many banks to suspend or pare down their trade finance lines. Small- or medium-sized African traders are struggling to raise finance. This is choking off the emergence of new players who can challenge the major trading houses. 10

11 But there are also many opportunities Financing sugar flows Many African countries will remain largescale importers (e.g. Kenya, Angola). Ethiopia, Nigeria, Ghana and Mali are set to switch from being major sugar importers to exporters. Supporting sugar corridors from MENA into SSA (e.g. Egypt to Kenya, UAE to Tanzania, Saudi Arabia to Uganda). Develop new products Bio-ethanol for industrial use, heating & cooking and blending with petrol. Co-generation of power (using bagasse) to power sugar mills and for sale to local communities and the domestic grid. Specialist sucrose products (isoglucose & inulin syrup), fertiliser & cosmetics. Sugar trade liberalisation Despite recent disputes, integration of SADC, COMESA & EAC trade blocks continues. EAC has become model to emulate. Sugar flows between all three blocks will surge. Privatisation of sugar sector Six sugar companies in Kenya are being privatised, with government writing off debts. Tightly controlled sugar sectors are being opened to private investment (e.g. Ethiopia). Commodity exchanges Exchanges can guarantee a market for sugar producers as well as supply for /buyers traders. Secure warehousing and a WRS could unlock the financing potential of the sector, enabling farmers to purchase fertilisers and pesticides. 11

12 Questions