Malawi produces refined as well as speciality sugars targeting the local, regional and international markets.
Sugar contributes about 10% of Malawi’s GDP, and about 35% of the country’s agricultural sector. Sugar contributed 9% of export earnings in 2013. The industry directly employs 11,552 people (including seasonal and non-permanent workers) and supports an estimated 3,434 people throughout-growers. The livelihoods of between 82,722 and 128,220 people, including dependents, through direct, indirect and induced employment (based on national average household sizes) are supported by the industry.
The types of sugar that are produced in the country are
Sugar in Malawi is produced by Illovo. The company has two mills. They are based in Nchalo in the south of Malawi and Dwangwa in the mid-central region. The mills are located in these two places because that is where the company operates its estates: 13,300 ha at Dwangwa and 20,925 ha at Nchalo, in the south.
Production Level
Sugar Consumption
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DOMESTIC CONSUMPTION OF SUGAR
The consumption of sugar in Malawi has been flactuating over the last five years with a major decline in 2011 (about 37000 from 166 000 in 2007)
The consumption of sugar worldwide has increased from 160 million tonnes in 2007 to 180 million tonnes in 2012
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MAJOR CHALLENGS AND CONSTRAINTS
§ Unseasoned rainfall during affects cane quality negatively and results in numerous interruptions in cane supply which in turn, contributes to poor factory performance for a milling season
§ Land unavailability affects estate expansion hence restricts increase in production of sugar due to inability to increase imports
Key Producers
KEY PRODUCERS
§ The Key producer of sugar in Malawi is Illovo sugar company
Illovo Sugar (Malawi) Limited,
registered office Illovo House, Churchill Road,
Limbe, Malawi
Private Bag 580, Limbe, Malawi
Phone : +265 (0)1 843 988
Fax : +265 (0)1 840 761
E-mail address : [email protected]
û Fixed duty is set at 419 euros per ton for white sugar
û 339 euros per ton for raw sugar.
Multilateral Agreements
Regional and Bilateral Commitments
COMESA) Free Trade Area.
SADC- SADC Free Trade Area
Bilatel Commitments
South Africa
Zimbabwe
Botswana.
Mozambique
KEY COMPETITIVENESS FACTORS
- Production related
- Malawi’s production prices at factory gate are lower than those of 90 per cent of the other African exporters
- Productivity related
- Malawi ecological conditions allows it to harvest cane once a year as opposed to other African (South Africa) that harvests once every two years
- Reduction in the cost of transportation to African markets and to sea ports represent an opportunity to enhance Malawi’s price competitiveness and to bridge the current gap between its favourable production costs and its less favourable end-market prices.
- Markets related
- Quality
- Proximity to regional markets and strong relations with the EU market
- Both agricultural and factory operations retained accreditation under the ISO quality management system, with the implementation of the Hazards Analysis and Critical Control Points (HACCP) programme at both factories maintained. The Nchalo factory retained its Foundation for Food Safety Certification (FFSC) accreditation, under the FSSC 22000 standard. Dwangwa was certified under the Supplier Guiding Principles to provide Coca-Cola with specification sugar
- Business environment
- Documentation requirements and red tape
- Customs bill of entry (Form 12) - MRA
- CD 1 Form – controlled by Reserve Bank of Malawi
- Commercial invoice – By exporter
- SADC Certificate of Origin - MCCCI
- Consignment note /airway bill – Transporter
- Phyto-sanitary Certificate – Ministry of Agriculture
- Export quality certificate – Malawi Bureau of standards
- CHALLENGES
- Quotas for sugar imports into the EU and guaranteed prices for ACP nations and LDCs are being phased out meaning small producers in these countries are up against massive producing nations such as Brazil and India
- Transportation costs are likely to remain a weakness for Malawi in the short to medium term, while preventing access to certain markets such as South Africa in the medium to long term because of the latter’s sea access to Brazil.
- Product Modification. When exporting, companies may need to modify their products to meet foreign country safety and security codes, and other import restrictions
- Lack of milling capacity is a weakness. In Malawi, transport costs are such that sugar cane cultivation is only feasible within 55 kilometres of a mill
- SOLUTIONS
- Increase plantation area to compensate for price reduction
- Improve the transport infrastructure to reduce transportation cost
- Increase number of mills to allow for more processing
National Export Strategy has been developed focusing on upgrading the sector and increasing exports.
account for roughly twenty per cent of imports in the medium to long-term;