Sugar Exports to EU Sweeter this Year Addis Fortune
16 September, 2008
Ethiopia will export 24,000tn of raw sugar in the current fiscal year to European markets duty-free under the Everything But Arms (EBA) initiative, a special arrangement EU has granted to least developed countries. The Sugar Development Agency (SDA) received a letter from EU, via the Ethiopian Embassy in Brussels, stating that Ethiopia is allowed to export the stated amount, which is up by 3,300tn from last year.
The sugar destined for the EU - to be obtained from Wonji-Shoa Sugar Factory, one of the three sugar factories in Ethiopia - will be exported to Portugal as of January this year.
"Ethiopia would benefit from the export and the quota increase," Mussa Zeinu, deputy director of SDA, told Fortune.
In February 2001, the EU's Council adopted Regulation (EC) 416/2001, termed Everything But Arms (EBA) granting duty-free access to imports of all products from least developed countries, except arms and ammunitions, without any quantitative restrictions. Banana, sugar and rice, however, were exceptions from the list.
Accordingly, Ethiopia has been exporting sugar since 2001 and its quota has increased over the years. For instance, in 2001 the amount exported was 14,000tn. The amount increased to 21,700tn by the 2007/2008 budget year.
The quota is assigned in accordance with the total sugar production of the specific countries and it is said to generate attractive revenue. As it stands now, a tonne of sugar sales for 496.80 Euros, a price tag that has shown an increase since the arrangement was started.
"We have been selling at a fixed price so far. But, we expect price increases in the current fiscal year, for example, for we can negotiate on the price from now on," Musa said.
The annual production capacity of Wonji-Shoa Sugar Factory is 80,000tn. Production from Metehara and Fincha sugar factories added to Ethiopia's total annual sugar production capacity estimated at 280,000tn. From this, the EU quota is exported to Europe, putting the country's annual demand for sugar at 460,000tn.
The government has been importing sugar in order to fill the gap between demand and supply and in the last fiscal year alone, the total import for local consumption was 102,072tn. This amount is equivalent to the total import over the previous five years. For the current fiscal year, the plan is to import the same amount.
"The Minister of Trade and Industry, Girma Birru, has been requested to approve the plan," a source from the agency told Fortune.
"We continue to export less than we import, because the export duty waiver advantages and the produce sells for a lot more money," explained the source.
There is a possibility that Ethiopia could be allowed to export a larger quantity because if, some among the 18 countries in Africa do not utilize the opportunity, there will be rearranging of the quota.
The common market value of a quintal of sugar is currently about 50 dollars, yet it sells for 78 dollars in the privileged market.