Sugar used as model for development of commercial agriculture in Mozambique

8 July 2013

The sugar industry is serving as a model for development of commercial agriculture in Mozambique, demonstrating the country’s potential in this sector, according to the Economist Intelligence Unit (EIU).

Last year, sugar production totalled 243,538 tons, or 23 percent more than in 2011, and was the second most important exported agricultural product, after tobacco, the EIU said in its latest report on Mozambique.

After collapsing in the 1990s the sugar sector was privatised and has attracted significant foreign investment due to “low production costs, vast land availability and favourable tariff structure, both domestically and abroad (in the EU).”

Almost all the sugar produced in Mozambique is exported to the European Union (EU) as part of the “Anything but Arms” initiative and benefits from preferential access free of customs tariffs and at guaranteed prices.

Last year the European market experienced a period of weakness that also meant sugar prices were higher than those on the international market, leading the value of this Mozambican export to almost double.

The country has four sugar refineries, largely controlled by South African groups, which employ a total of 35,000 people, making the sector one of the country’s biggest employers.

A fifth refinery is planned for Mopeia, in Zambézia province, with South African investment, and may start operating in 2014.

Production, according to the EIU, may exceed 500,000 tons within the next four years, due to increased productivity and an increase in the area planted with sugar cane.

“The projection for sugar production and exports in the 2013/17 period is clearly positive,” said the British analysts.

The Mozambican government in April launched its National Plan for Investment in the Agricultural Sector 2013/17, which is intended to transform subsistence agriculture, predominant in the country, into commercial agriculture.

The programme will cover production and yield, improved market access, food safety, reforms and natural resources and involves funding of 119 billion meticals (US$3.89 billion), 20 percent of which will be provided by the State Budget.

Mozambique is this year projected to post economic growth of over 7 percent, driven by industry (10.5 percent) and services (7.7 percent), with agriculture posting modest growth of 2.5 percent, at a time when the country is still dealing with the effects of recent flooding.

However, in 2014 agriculture is expected to be the most dynamic sector in the country, with growth of 9 percent, which will be above the 7 percent growth forecast for industry and services. (macauhub)