Tanzania sugar producers refute sugar hoarding allegations amid price inflation claims

Dar es Salaam. The Tanzania Sugar Producers Association (TSPA) on Monday July 1 denied allegations of both failing to import sugar and hoarding it to artificially inflate prices for their own gain.

As producers, they said, they have no intention of undermining sugar supply in the country and are committed to increasing production.

Remarks by TSPA come in the wake of a parliamentary debate where they were sharply accused of sharing the blame for the high sugar prices that Tanzania experienced in January and February of this year.

Speaking at a press briefing, TSPA chairman Ami Mpungwe stated that they had alerted authorities last year about potential production shortfalls impacting supplies from December onwards due to forecasted El Nino rains.

They subsequently urged authorities to initiate import procedures early enough.

"There were several communications reminding the authorities, and when December arrived, the situation unfolded as we had foreseen," Mpungwe said.

He explained that until December, import permits for sugar had not been issued, which prompted Kilombero Sugar Company to halt a shipment of 45,000 tonnes destined for another country and redirect it to Tanzania.

He emphasised that claims suggesting sugar producers were permitted to import and resell sugar but failed to do so were untrue, asserting they have evidence to support their position.

"Our main task is sugar production, but we engaged in imports to help alleviate shortages," Mpungwe stated.

"It is not in our interest, as Kilombero, to engage in sugar importation. We are in the business of sugar production. The idea of the government setting up an agency to import sugar, if proposed earlier, would have received our support," Mpungwe added.

He pointed out that, despite the accusations, sugar producers opted not to engage in a public dispute. Instead, they chose to present their case directly to the Parliamentary Agriculture and Industry Committee, only for the proposed meeting to be postponed to August this year.

"We were given the opportunity to meet with the Parliamentary Budget Committee last week to discuss the Finance Bill. We tried to communicate, but decisions were made without our involvement, and we have been accused and judged without being heard," Mpungwe said.

He emphasised that accusations of disregarding 60 million Tanzanians were unjust, pointing to their extensive investments over the past 60 years as evidence.

Such investments, he argued, do not reflect the behaviour of someone who neglects the people they serve.

"We have been accused of forming a cartel, which is a serious accusation in business. One cannot make significant investments and engage in such practices, and these allegations are not politically motivated," Mpungwe stated.

"If there are concerns about unethical business practices, they should be referred to the Fair Competition Commission (FCC) for professional investigation, not politicised accusations," he added.

Efforts to elicit a response from the government regarding Mr Mpungwe's statement proved futile yesterday, as the Minister for Agriculture, Mr Hussein Bashe, did not answer his phone when contacted.

When contacted, government spokesperson Thobias Makoba advised that the issue be addressed by the relevant ministry or department.

However, speaking at the same event, Director of Bagamoyo Sugar Hussein Sufian stated that the directive for sugar factories not to hoard sugar, when no factory had done so, had created a false and negative impression among sugar sector stakeholders and the public.

He noted that claims suggesting sugar factories had been protected for over 20 years were false, clarifying that protection began in 2020 under new legislation passed by Parliament.

These claims, he emphasised, have caused anxiety among investors, adversely impacting significant investments in the sugar sector, including hundreds of farmers who had taken loans from financial institutions.

Sufian further added that claims suggesting producers intend to reduce sugar production in favour of importing sugar and that they are encouraging farmers to switch to cultivating alternative crops such as rice have also undermined efforts to stabilise the sugar sector.

He emphasised that such assertions erode confidence among local and foreign investors as well as financial institutions.

Meanwhile, Sufian stated that the sugar sector continued to face various challenges, including high production costs.

"The costs of essential inputs for sugarcane farming and sugar production have skyrocketed in recent years, and unpredictable sugar market policies are also a problem," Sufian said.

He pointed out that unpredictable policies lead to constant uncertainty for investors, impacting investment decisions and undermining banks and financial institutions' confidence in loan repayment and security.

"This situation may lead to excessively high interest rates or difficulties in obtaining long-term loans for sugarcane farming and sugar production. It should also be noted that a significant portion of these loans come from domestic banks, affecting the country's economy as a whole," Sufian said.