THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Volutary - Public Date: 5/13/2016 GAIN Report Number: ET1614 Ethiopia Post: Addis Ababa Sugar Productio Grows Slowly due to Costructio Delays ad Drought Report Categories: Sugar Approved By: Michael G. Fracom, Ag Couselor Prepared By: FAS/Addis Staff Report Highlights: With icreased processig capacity ad better weather coditios expected to prevail, sugar productio is forecast to climb to 370,000 metric tos i MY16/17 (May-Apr). MY15/16 productio, while up year-over-year, was lower tha expected because of the drought ad factory costructio delays. Sugar cosumptio, which is growig at a fast clip, cotiues to outstrip sugar supplies, makig imports ecessary. Imports are projected to grow year-over year, reachig 350,000 metric tos i MY16/17.
Productio: Sugar productio is expected to climb to 370,000 metric tos i MY16/17 (May-April), a icrease of 20,000 metric tos over the ewly-revised estimate for the previous year. This aticipated icrease i productio would have bee larger, but a couple of the sugar factories uder costructio are ot expected to reach their full capacity as was origily plaed. I additio, this estimate is made uder the assumptio that dams ad other water sources, which have bee impacted by the drought, will be sufficietly recharged to provide adequate irrigatio water to sugarcae-growig areas. For MY15/16, sugar productio is revised to 350,000 metric tos, dow from the offici USDA estimate of 400,000 metric tos, but still up year-over-year by 20,000 metric tos. Productio for this period would have bee greater, but was hampered because there was less irrigatio water due to the drought ad because sever sugar factories, which are still uder costructio, did ot come olie as origily expected. See table 1 for historic productio data ad table 2 for factory-specific productio capacity. The govermet of Ethiopia has ivested sigificat sums to build the coutry s sugar productio capacity with the uderlyig go of becomig oe of the te largest glob producers by 2023. New lad has bee cleared ad plated i sugar cae. Some cotto fields have eve bee coverted to sugar. There are more tha te ew sugar factories i various stages of developmet. I additio, there are three older operatios, which curretly accout for aroud 90 percet of the coutry s sugar productio, that have recetly bee refurbished. (Refer to figure 1 for factory locatios.) However, the opeig of some of these ew sugar-processig facilities is behid schedule. At the same time, there are large areas plated i sugarcae that are goig uused because some factories are ot fully operatio. This lack of sychroizatio betwee sugar cae productio ad processig, combied with sever other factors, has kept the coutry from reachig its productio targets as cotaied i the first phase of the Growth ad Trasformatio (GTPI). I particular, at the ed of the GTPI i 2014/15, sugar productio was supposed to reach 2.25 millio metric tos. However, actu productio was closer to 330,000 metric tos, roughly 15 percet of the GTPI target. See table 3 for GTP sugar productio targets. Lookig ahead, Ethiopia is expected to resolve these sychroizatio chleges, which is expected to lead to higher levels of sugar productio i the coutry. The govermet projects that by the ed of the secod five-year phase of the GTP (GTPII) i 2019/20, productio will reach most 4.0 millio metric tos, of which three-quarters will be located for export. While productio will most certaily icrease, post does ot expect it will reach the govermet s iteded target i the desired timeframe. Table 1: Sugar Productio Marketig Year Metric Tos
2012/13 232,357 2013/14 280,000 2014/15 330,000 2015/16 a/ 350,000 2016/17 a/ 370,000 Source: ESC a/ Post estimate Table 2: Sugar Factories Estimated Productio Capacity Factories Uder Costructio Estimated Capacity (MT) Arjo-Dedesa 212,000 Kuraz (5 factories) 1,946,000 Tedaho (phases I & II) 443,000 Wkaiyt 484,000 Belles (3 factories) 726,000 Kessem 260,000 Sub Tot 4,071,000 Refurbished Older Factories Woji 220,700 Metahara 136,692 Ficha 270,000 Sub Tot 627,392 Grad Tot 4,698,392 Source: ESC website Note: The estimated capacity figures are based o best case scearios ad will likely be revised dowward i the future give the variability of coditios o the groud. Table 3: Sugar Productio Targets Uder GTP I (Millio MT) 2010/11 2011/12 2012/13 2013/14 2014/15 Producti 0.7 0.27 0.4 0.23 0.4 0.28 1.59 0.28 2.2 o 4 9 9 5 Exports - - - - - - 0.65 0 1.2 8 5 0.33 0
Figure1: Locatio of sugar factories i Ethiopia (Source: ESC) Cosumptio: Sugar cosumptio is forecast at 710,000 metric tos i MY16/17, up by 20,000 metric tos from the previous year s ewly revised estimate because of icreased demad. Almost hf of cosumptio is made up of imported sugar. I the future, cosumptio is expected to keep growig as cosumer demad rises for soft driks, beverages, cofectioary products, ad other sugar-cotaiig processed products. I fact, the room for growth is sigificat whe cosiderig that Ethiopia s per capita sugar cosumptio of just 6 kilograms is oe of the lowest i the world. The Miistry of Trade ad the Ethiopia Sugar Corporatio (ESC) set sugar locatios for ed users, maage distributio, fix domestic prices, ad maages most sugar imports. The tot locatio for MY15/16 is estimated at 555,000 metric tos, of which 350,000 metric tos is locly-produced sugar ad 205,000 metric tos is govermet-imported sugar. Approximately 75 percet of the tot locatio, or roughly 410,000 metric tos, goes for home-use. The remaiig 145,000 metric tos is for idustri use, such as soft drik ad beverage maufacturig. I additio, for this period, there is a estimated 135,000 metric tos of sugar imported outside of govermet chaels, which supplemets both home ad idustri use. While the govermet recetly raised the price of sugar from $0.75/kg to $.090/kg, this icrease is ot expected to oticeably depress cosumptio because cosumer demad remais so strog. I fact,
cosumers ofte caot get eough sugar because there are frequet shortages i the loc market. Trade: Sugar imports are forecast at 350,000 metric tos i MY16/17, up 10,000 metric tos from the previous year because of the expected declie i productio ad strog demad. Of this forecasted amout, 210,000 metric tos will likely be purchased by the govermet. The remaiig sugar is imported outside govermet chaels, especily og the Somia border where Ethiopia traders are barterig cattle for sugar. More tha hf of the sugar imported ito the coutry comes from Idia. Post is raisig its MY15/16 import estimates to 340,000 metric tos, up from the offici USDA estimate of 205,000 metric tos. Our estimate is icreasig because we are ot oly icludig govermetpurchased sugar, but are ow addig other form sugar imports that are reflected i Ethiopia s offici trade statistics. I the future, the govermet hopes to discotiue imports ad begi exportig sugar as loc productio icreases. As previously metioed, by the ed of GTPII i 2019/20, the coutry s itetio is to produce approximately 4.0 millio metric tos of sugar, with roughly 3.0 millio metric tos goig for export. From post s perspective, this export target is too high give the growig cosumer demad comig from iside the coutry. Stocks: Edig stocks for MY16/17 are estimated at 20,000 metric tos, up slightly from the previous year s levels.
Productio, Supply ad Demad for Sugar, Cetrifug (1000 MT) Sugar, Cetrifug 2014/2015 2015/2016 2016/2017 Market Begi Year May 2014 May 2015 May 2016 Ethiopia USDA New USDA New USDA New Offici Post Offici Post Offici Post Begiig Stocks 15 15 10 10 0 10 Beet Sugar Productio 0 0 0 0 0 0 Cae Sugar Productio 330 330 400 350 0 370 Tot Sugar Productio 330 330 400 350 0 370 Raw Imports 0 0 0 0 0 0 Refied Imp.(Raw V) 215 215 205 340 0 350 Tot Imports 215 215 205 340 0 350 Tot Supply 560 560 615 700 0 730 Raw Exports 0 0 0 0 0 0 Refied Exp.(Raw V) 0 0 0 0 0 0 Tot Exports 0 0 0 0 0 0 Huma Dom. 550 550 595 690 0 710 Cosumptio Other Disappearace 0 0 0 0 0 0 Tot Use 550 550 595 690 0 710 Edig Stocks 10 10 20 10 0 20 Tot Distributio 560 560 615 700 0 730 (1000 MT)