Sugar Industry News : February 2015
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WORLD PRICE
The world sugar price remained in the doldrums throughout last month. The March #11 opened the new year at 14.17 and was at 14.22 a month later. All that despite forecasts that the current year will more or less be in balance. The problem is the world oil price which is depressing ethanol prices and pushing production out of ethanol into crystal sugar.
HELLENIC SUGAR DESTITUTE
Hellenic Sugar, the only sugar company in Greece, seems to be destitute. It owes something like €18 million to its beet farmers in Greece and it couldn’t pay its staff in January. The company is essentially owned by the Agricultural Bank of Greece which itself is in great difficulty, its ‘good’ assets being transferred to another bank and it becoming, by default, a ‘bad’ bank.
FARMERS ANTICIPATE KENYAN PRIVATISATION
The latest ‘privatisation’ proposals for Kenya’s five public factories call for the government to retain 40%, the relevant local counties to take 30% and the farmers to buy the rest. Setting aside the debate as to whether that can be called privatisation, the farmers are reported to be contributing $100 each into a fund so that they accumulate $10 million by the time all 100 000 of them have paid in. That would value the five factories at $33 million in total.
MUMIAS GETS FRESH SUPPORT
Mumias, the only privatised factory in Kenya [the other privately owned factories were all started as private ventures] has received a fresh cash injection from the Kenyan government. One report suggests that it has received US$10 million from the government over the last 18 months. The government still owns 20% of the company but otherwise it is publically quoted on the Nairobi stock exchange.
MADHVANI’S NORTHERN FACTORY TO GO AHEAD
The long proposed Madhvani factory near Gulu in the far north of Uganda looks to be finally going ahead since the local community withdrew its objection to the land allocation last month. The location is strategic : Gulu is only 200 km from Juba in South Sudan compared to 300 km from Kampala.
NAKAMBALA CLAIMS PRODUCTION RECORD
Zambia Sugar has reported that its factory at Nakambala produced just over 424 000 tons of sugar in 2014, 20 000 tons more than its previous record. It is claiming that this is ‘the highest-ever tonnage produced by a single sugar factory on the African continent in any given season’. What will Kenana say to that?
SOUTH AFRICAN DROUGHT
Illovo announced last month that it would again not operate its Umzimkulu factory in Port Shepstone on Kwa Zulu Natal’s south coast in 2015 due to a shortage of cane. The same thing happened in 2011, the cane being trucked to Sezela, 45 km north up the coast. The company says that it expects only 80% of a normal crop. Umzimkulu is the most southerly of the South African industries and the crop was frosted last winter but Gledhow, 180 km north of Umzimkulu and without any frost risk is also expecting 80% of a normal crop just because of the drought. Tongaat Hulett is forecasting a crop of between 83 and 95% of normal, depending on which factory is being considered.
AB SUGAR CLOSES TWO MORE CHINESE BEET FACTORIES
AB Sugar, the owner of British Sugar and Illovo has taken the decision to pull out of China’s northern Heilongjiang province, presumably shutting its office in Harbin, the provincial capital. It closed one of the three factories there [Wangkui] about two years ago and now it is closing Yi'an and Beifang. That will leave Botian, its beet sugar company in China, with only three factories, all of them much further south and within 200 km of Beijing.
NEW CEO FOR GRUPO SAENZ
When Aaron Saenz retired in November it was unclear what would happen at Grupo Saenz, a well-respected company which owns three factories in Mexico producing perhaps 7% of the country’s total production. ED&F Man bought 49% of the company from Tate and Lyle 2007 but it was always dominated by the Saenz family so it was a surprise when Max Bonzo, the Global Assets Director of Man was appointed the new CEO in January. We understand that he is already based in Mexico.
BELIZE CROP FINALLY STARTS
It might have been two month late but the Belize crop finally started at the end of January. The problem really started when the local cane farmers’ association decided that the farmers should be paid for their bagasse, several years after the company had invested in a new export power station. The dispute delayed the start of the previous crop but not to the extent of this crop.
Matters came to a head at the start of January when a government brokered agreement was rejected by a numeric majority of farmers despite farmers owning more than half of the crop wanting to sign. Splinter groups of farmers quickly formed and the government rushed through a law which cancelled the previous obligation to belong to the association. It seems that the association was the cause of its own demise.
CUBAN CROP OPTIMISM
Cuba’s first forecast for the current crop is positive at 24 000 tons above budget at this stage. The objective is to produce 15 to 20% more than last crop. Part of the action plan has been to re-plant more land and the claim is that this crop has 25 000 ha more land planted than the average of the last three years.
BARBADOS SUGAR UNCERTAINTY
The Bajan government has announced that it has secured a $30 million loan from a bank in Trinidad to be disbursed to farmers to increase production in readiness for the new $250 million factory at Andrews. The problems are that the factory project has not started [is it funded?] and the farmers are still owed money from last crop.
LATE START IN JAMAICA
The crop in Jamaica, like Belize, is starting late but on this occasion that is the result of late rains and, in the case of Frome, late running refurbishment. It seems that all of the factories had started by the end of January.
It is interesting to note that whilst the Chinese owner is investing a lot of money in Frome, the local people are still rebelling. During January some 30,000 tons of cane were reported destroyed by deliberately started cane fires. It cannot even be that farmers were wanting there cane processed with the factory not yet ready.
WICSCBS AT RISK
The West Indies breeding station in Barbados, the second oldest in the world and the origin of some notable varieties, seems to be at risk with the slow demise of the Caribbean industry. The Sugar Association of the Caribbean is opening talks with the Florida industry to see what support might be obtained.
GUYSUCO COST OF PRODUCTION
It is always difficult to extract the truth from the generally emotional reports about Guysuco, the Guyanese public sector industry but the unions are claiming that the cost of production in Guyana is now 40¢ per lb. The unions are also claiming that the company had to harvest immature cane to even come close to last year’s budget of 220 000 tons of sugar so that this year’s crop will be even worse.