The Tangled Tale Behind Sugar Shortage

In recent weeks, there has been a shortage of sugar in Addis Abeba, leading many to wonder if the problem doesn't stem from the much discussed but seldom changing issue of domestic sugar production. According to industry experts there are issues on both the supply side and the distribution side. But household consumers are not the only ones being affected by the shortage. Confectionery factories that produce candies and chocolates have also not received the sugar they need for their products. The issues on all sides have affected consumers from the industrial to the household level, as DAWIT ENDESHAW, FORTUNE STAFF WRITER, reports.

Shewaye Lemma is a shopkeeper who has been working in an EtFruit shop for the past three years. The shop sells mostly food items such as oil, fruits and vegetables, and sanitation materials.

All these items are in high demand, but not as much as sugar.

“We are supposed to receive two quintals a day of sugar, but the deliveries always experience some kind of interruption,” Shewaye told Fortune. “This past Wednesday, for instance, we did not get our expected quota.”

Given the huge demand from the public, the day’s delivery is usually sold out in a half hour, Shewaye explained.

Fortune visited the shop, located beside Balcha Hospital in Liberia St, as the staff were closing for their lunch break. However, within a 15 minute visit, the shop was visited by many people looking for sugar.

The shop mostly serves people who live around the so-called Goma Quteba, and the Lideta Condominiums. But there were also some customers from further afield, such as Asko, on the western outskirts of Addis Abeba, according to Shewaye.

“It has been more than one month since we received sugar,” said another distributor on Debrezit Road.

Controversies around sugar production and supply have been always a matter of public concern, despite bold promises to improve both production and supply chains.

Currently, the Ethiopian Sugar Corporation is using sugar produced by three existing factories: Fincha, Metehara and Wonji. However, these plants were not functional for almost three months during the rainy season, a time usually used for maintenance.

During this season, the Corporation distributed around 140,000tn of imported sugar, until September 2016. The average local demand is about 700,000tn annually.

Local production this year was less than expected because of El Niño related weather phenomena. At the moment, close to 150,000tn of sugar for reserve, imported from aboard is on the way.

Sugar manufacturing in Ethiopia was started in 1950’s by a Dutch company known as Handles-Vereening at Wonji and then expanded to Methara in the early 1960’s.

“We believe we have an efficient supply,” Gashaw Aychiluhm, communication head of the corporation told Fortune.

The new improvements and upgrades to existing factories are expected to enable local production to eventually meet 100pc of local demand.

At the moment Methera and Wonji have production capacities of 5,000qt and 5,700qt of sugar a day respectively, while Fincha has a capacity of 9,000qt.

In addition seven factories are still under construction, although some of them are in the very early stages.

These factories were supposed to be functional during the first edition of the Growth and Transformation Plan.

However, after the disappointing revelations of the corporation’s status report to Parliament last year, those aspirations have fallen short.

In spite of the projects having consumed a billion Birr from the public coffers, they were all at the infant stages of their development, Parliament was told. Additional finance requests were made to the Development Bank of Ethiopia and the Commercial Bank of Ethiopia.

Status reports as of December 2016 indicate that the Kuraz I sugar factory project has progressed to about 91pc completion.

Kuraz II and III are at 83pc and 50pc completion, respectively, and Beles I has reached 70pc completion.

Kuraz V is still at the moblization stage and the severely delayed Welkayt sugar project is almost at 25pc completion.

All of these projects are expected to be completed by 2020. By then, the country plans to produce over four million tons of sugar, out of which 2.9 million tons are earmarked for export, to secure foreign exchange.

As for the current shortage across the capital, some in the industry attribute it to other, more serious shortages in regional cities and towns.

“Such shortages may affect the supply to the Addis market,” one industry expert said.

The sugar supply for the Addis market is brought in and distributed directly by the corporation, while regional states get their supply through the Ethiopian Industrial Inputs Development Enterprise (EIIDE).

“The problem is that delays in regional states affect our city’s stock,” said Solomon Bekele, a head of department at the Addis Abeba Trade Bureau.

Addis gets 112, 000qt of sugar per month, according to the quota set by Ministry of Trade. This figure was adjusted in July, 2016 from 90,000qt.

However, it’s not just consumers who are being affected by the sugar shortage.

The corporation has stopped distributing sugar to factories involved production of candies, gums and chocolates.

“Of course, it’s affecting a number of companies,” said Kassahun Gebregiorgis, representative of the association. The association has 35 permanent members and 100 temporary members.

“We are in December and still most of us did not get any,” said Kassahun.

The EIIDE, which was established two years ago after it absorbed the old Merchandise Wholesale Import & Trade Enterprise (MWITE), is mandated to distribute sugar to regions.

“After the factories began production after months of interruption, we were instructed by the Ministry to start loading and distributing sugar from the three factories on November 15,” said a manager at the Enterprise. “Then we had to hire transport companies in an open bidding process, which took close to two weeks.”

The officials of the enterprises argue that they dispatched the transporters on time, but the corporation argues otherwise.

“They were late to pick up the sugar, which caused congestion at the factories,” said Gashaw.

Fincha has the capacity to load around eight trucks on a daily basis, each with a capacity of 440qt, but there is a serious backlog.

“I’ve been waiting six days to pick up my load and it will probably take another three more,” Belachew Babel, a driver from Gonder told Fortune. He is among the hundreds of vehicles waiting for loading at Fincha Factory.

“We can’t even distribute sugar to towns near the factory, like Shambu, which is only 62km away,” said Daniel Tadesse, distribution coordinator at Fincha.

The enterprise has to distribute to 22 branches across the Oromia, Amhara, Gambella and Benishangul Gumuz regional states.

Last week, out of the total 113,830 qt of sugar that was supposed to be distributed to the enterprise’s 22 locations from the Fincha factory, only 32,800qt was loaded from the factory.

The two other factories have put up better performances.

At Metehara around 82,000qt from a total 139,000qt was loaded. At Wonji, 54,000qt was loaded.

Metehara and Wonji serve close to 48 branches across the country.

There is a huge disparity in the distribution of sugar, explained Daniel.

“I am receiving calls from branch offices such as Jimma, Gonder, Mizzan Teferi and Finote Selam complaining about the shortage,” he said.

“Now the issue is not an imbalance between demand and supply,” says Gashaw, from the sugar Corporation. “It is an issue of distribution.”

And that can only be solved through discussions with stakeholders, like the Ministry of Trade, he explained.


Published on Dec 20,2016 [ Vol 17 ,No 868]



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