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| Business |
| Illovo gears for EU sugar reforms |
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by
Frank Phiri, 03 May 2006
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06:35:58
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Illovo Sugar Malawi Limited says it is well positioned to benefit from unlimited market access to Europe in line with reforms in the sugar market regime agreed by the European Union (EU) last year.
Illovo Public Relations Officer Irene Phalula said on Tuesday the company has injected adequate capital to boost its capacity in readiness for the unlimited access deal effective in 2009.
“We’ve invested to improve our capacity as we expect export volumes to Europe to increase,” she said.
Illovo’s financial results for the year ended March 31, 2006 indicate that the company has increased its capital investment to K415 million from K320 million last year.
In September, EU agriculture ministers agreed to reduce subsidies to their sugar farmers and cut their prices by 39 percent in a reforms deal that has shaken the region’s sugar industry.
The move is aimed at correcting EU’s sugar rules and bring them in line with global trade rules as demanded by the World Trade Organisation (WTO).
The reforms—which become effective in July this year and run until 2015—would make it difficult for sugar producers based in Europe to turn a profit from raw sugar amid an anticipated over-supply from poor countries.
In turn, European sugar firms gearing to secure raw materials supply would like to take positions in Africa and the Illovo Group—Africa’s largest sugar producer—is subject of a proposed cash offer for 51 percent of its shares from Associated British Foods.
In a related development, the EU’s official journal reported on Friday that the European Commission (EC)—the executive decision making body for EU—has agreed a special preferential quota of 1.31 million tonnes of white sugar imports for the 2006/07 marketing year.
It indicates that Malawi’s quota of the zero-duty raw white sugar remains unchanged at 20,824.40 tonnes, while Mauritius with a quota of 491,030.50 tonnes retains the lion’s share.
The special quota, awarded each year to India and African, Caribbean and Pacific (ACP) group of countries, ensures cane supplies to Europe’s four main refineries in Britain, Finland, mainland Portugal and metropolitan France.
Phalula said under the same quota, Illovo exported 21,400 tonnes of sugar last year, but would not say how it exceeded the given quota.
She said the company exported a total of 48,686 tonnes of sugar to Europe alone under the ACP quota, the Everything But Arms agreement (EBA) and Special Preferential Sugar (SPS) agreement in 2005.
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