Zambia Daily Mail
‘COMESA should settle tariff issues on sugar’
25 April 2014
By Esther Mseteka
Zambia Sugar Plc has expressed concern at the non-application of tariffs on sugar imported outside the Common Market for Eastern and Southern Africa (COMESA) as it is displacing regional producers.
Zambia Sugar Plc managing director Aubrey Chibumba said the company has not enjoyed its preferential access to COMESA markets because some countries in the region are not applying tariffs on the commodity imported outside the bloc.
Dr Chibumba said if COMESA member countries applied the sugar tariffs, the company will become competitive within the region.
“By exempting the sugar tariffs on world sugar, Zambian Sugar has been effectively displaced. Clearly this was not the purpose for which COMESA was established and at some point the COMESA sugar-producing countries will have to address this anomaly which, if not addressed, will result in subsidised world sugar displacing COMESA sugar within the COMESA region.
“At the time of the expansion in 2008 we needed to have off-take contracts for the additional sugar produced so that we could secure financing for the expansion project. Refineries in Europe were short of raw sugar and we contracted them to supply our sugar. This contract expires in 2016 and at that point or before we will have to find alternative markets,” Dr Chibumba said in response to a press query in Lusaka yesterday.
He said the call will be particularly important from 2017 onwards when legislative changes within the European Union (EU) will remove the current preferential access to COMESA sugar.
He said when this comes into effect, it will result in significant price declines in Europe and given the logistic disadvantage of Zambia’s physical location, it will become unprofitable for the company to export into Europe.
Dr Chibumba said at that point the regional markets will become essential to the sustainability of Zambian Sugar Plc.
He, however, said to address the challenges, Zambia sugar is looking at diversification through value addition to its sugar products as a parallel strategy to ensure its continued sustainability.
This season the company produced 392,000 metric tonnes of sugar of which 129,000 metric tonnes was raw sugar while 5,900 metric tonnes of specialty sugar was sold into Europe in the first quarter.