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Illovo plays down pressure from Zim sugar
By
Ephraim Munthali - 11-03-2003 |
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The Sugar Corporation of Malawi (Sucoma) has said the ban on imports of cheap Zimbabwe sugar has eased the pressure it was putting on its sugar and has since urged government to sustain it to avoid a recurrence.
“You cannot rule out illegal imports from Zimbabwe but the sugar that comes into the country is not enough to have negative impact on our sugar,” said Illovo managing director (Malawi) Brett Stewardson, whose company owns Sucoma.
Stewardson, speaking in an interview at Dwangwa Sugar Mill in Nkhotakota on Thursday, said Illovo has the capacity to supply sugar in the country and abroad which would counter any possible flooding of the market with imported sugar.
Recent imports of Zimbabwean sugar at below market prices, due to the disparity in the official and market exchange rates in that country, have threatened the domestic industry’s viability as it makes local sugar uncompetitive.
The threat of the Zimbabwe sugar has since receded with government intervention although it is still ongoing at lower levels and with signs of a repeat.
Sugar has become one of the most import foreign exchange earners for Malawi, accounting for over nine percent of the total exports. It is on the third position from tobacco and tea but there are strong indications that sugar may take over from tea, which has been hit by low world prices resulting from farm subsidies in the developed world, among other factors.
In 2002 Sucoma—listed on the Malawi Stock Exchange (MSE)—on its own contributed over K600 million in revenues to government through the pay roll, corporate tax and surtax on sugar, making it one of the largest single contributors to government revenue.
Observers say the increased sales and profitability for Sucoma and the whole sugar industry would lead to higher revenues for government as well as providing vital capital to reduce debt and for reinvestment in the local sugar industry.
Malawi is one of the six low-cost sugar producers in the world but analysts say it may not survive if the health of the domestic market remains uncertain, especially with the structure and subsidies in the industry across the world.
Stewardson said Illovo will take advantage of trade agreements like the Common Market for East and Southern Africa (Comesa), Southern Africa Development Community (Sadc) and preferential markets within the European Union (EU) and America to increase its exports.
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