The US Department of Agricultures (USDAs) 2013 annual review of the Nigerian sugar sector has expressed pessimism over the ambitious plans to expand domestic Nigerian sugar cane production to 1.7 million tonnes by 2018. USDA points out that with current domestic sugar cane production of only 65,000 tonnes (raw value), government objectives require a 22-fold increase in domestic cane sugar production. This, it is maintained, will require long-term massive area expansion and enormous funding in sugar cane production research as well as long-term and huge investment in public infrastructure and human/material resources, if production is to catch up with the current and fast-growing demand for sugar. Currently, Nigeria consumes an estimated 1.45 million tonnes of sugar, with demand projected to grow rapidly in the coming years.
The USDA report lists the recent trade policy proposals put forward by the Nigerian government to stimulate investment in domestic sugar production, including:
- reducing duties on equipment used in sugar cane production;
- eliminating duties on chemicals used in sugar production;
- granting a 5-year tax holiday to investors in the sugar value chain;
- increasing import duties on raw and refined sugar to 50 and 60% respectively;
- linking import licences to investments in local raw sugar production.
In addition, the government is committed to providing a range of physical infrastructure in potential sugar growing areas, establishing credit facilities for sugar cane growers and allowing 100% foreign ownership of sugar complexes.
However, USDA also notes that while various schemes have been launched to promote domestic sugar production (including privatisation of existing estates), and while there have been some improvements in the management and operation of the privatised sugar estates and some commensurate increases in sugarcane production, overall this represents little substantive progress, given what is required to meet government objectives. For example, yields at the main domestic sugar cane producer, Savannah Sugar, fell by 10% in the 2011/12 season, from the already low level of 66 tonnes/ha.
Indeed, USDA reports that Nigerian sugar farmers are being discouraged from increasing or even continuing their sugar production as they cannot find industrial buyers, resulting in massive post-harvest wastage. In addition, while Nigeria has an installed sugar refining capacity of 2.1 million tonnes (and this is currently expanding) these facilities are not sited in the major rural sugar producing areas, given poor infrastructure such as bad road networks and electrical shortages. Sugar refineries are located at ports, as refined sugar production is based almost entirely on raw sugar imports from Brazil.
USDA observes that on the basis of current arrangements, Nigeria has a thriving trade in sugar exports to neighbouring countries, with 200,000 tonnes of sugar refined in Nigeria finding its way onto markets across West and Central Africa.