COM-WATCH€¢ Rwandan Coffee Export Promotion • Over US$200 Million Coffee Revenue Projected For...

AUGUST 2012 ISSUE #15

COM-WATCH

Vietnam To Help Angola Rejuvenate Coffee Production Kenya Turns To China In A Bid To Process Her Own Coffee Tanzania Rain A Big Boost To Coffee Output Up 72% Uganda July Coffee Exports Seen 26% Lower Yr/Yr

Focus on Coffee

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CASHEW• African Cashew Industry Annual Conference• Guinea Bissau Coup Set To Halve Cashew Production

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• Making Cashews Pay

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COCOA• Cocoa And Coffee Products Opened To New Markets• Cameroon Cocoa Grinder June Purchases Fall to Zero• Cameroon Cocoa Exports Dropped 43% in June• Cameroon Cocoa Exports Down 11% On Year So Far• Rains Drive Up Cocoa Prices In Cameroon• Cameroon Average Cocoa-Export Price Rose 5.2% to July 9

04

• Ivory Coast On Track For Good Main Crop Start• Cemoi Plans to Boost Ivory Coast Cocoa Bean Purchases by 50%• Ivory Coast Sells 830,000 Tonnes Of 2012/13 Crop

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COFFEE• Vietnam To Help Angola Rejuvenate Coffee Production

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• Angola to Harvest Over 13,000 Tonnes of • Coffee This Year• Cameroon Robusta Coffee Exports Down 32% By End June• Cameroon Arabica Exports Plunge• Ethiopia's Coffee Export Nose-Dives As Government Control Backfires• Farmers Grow More Coffee In Kenya Western Region

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• Kenya Turns To China In A Bid To Process Her Own Coffee

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• Rwandan Coffee Export Promotion• Over US$200 Million Coffee Revenue Projected For Tanzania Next Season• Tanzania Rain A Big Boost To Coffee Output Up 72%• Coffee Institute Set to Implement Strategic Plan• Demand For Coffee Hybrid Increases In Moshi• Uganda's 2011/12 Coffee Exports Likely To Miss 3 Million Bag Target• Uganda July Coffee Exports Seen 26% Lower Yr/Yr

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COTTON / TEXTILES & LEATHER• World Bank Provides US$90 Million Grant To Increase Cotton Exports In Burkina Faso• Mali Wants To Double Its Cotton Production• Cotton Buying Season Picks Up Gradually• Steel Yard Scale Use Approved• China Seeks Cotton Trading Cooperation With Tanzania

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• Chinese And Tanzanian Investors Want To Invest In Mulungushi Textiles• Gatsby Offers 17 Billion For Cotton Projects• India To Assist Tanzania In Setting Up Textile Park• Cotton Farmers Riot in Zambia• Zimbabwe Sets Minimum Cotton Price of 77 Cents• Indian-African Cotton Initiative• WTO Assistance To Cotton Producers Touches Almost $400mn

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FOODSTUFFS, NUTS, PULSES, SPICES, FRUITS & VEG• Malawian Dairy Farmers Receive Major U.S. Grant

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SUGAR• Kibaki's Sh1 Billion Boost for Cane Farmers• Sugar Factory to Be Built in Nyandarua• Industry To Diversify Beyond Sugar Production• Egypt Invests US$200m To Build Sugar Factory In Tanzania• Uganda Sugar Producer Says To Double Output By 2015

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• More Sugar Farms In Tanzania Envisaged

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TEA• Burundi Tea Revenues Up 2% In June• Kenya Top Grade Tea Prices Rise For Sixth Week• Kenya H1 Tea Output Down 11%, Earnings To Remain• CTC Tea Export To Kenya May Exceed Last Year’s Level• Sacco to Build Tea Factory in Bomet• EU Dishes Out €1.5m To Boost Tea, Coffee Production

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TIMBER• Ghana Declares War Against Illegal Timber Exports• Ugandan Government Maintains Timber Ban• ITC Program Set for Timber Exports

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TOBACCO• Zimbabwe Tobacco Sales Up 6.5% As Economic Growth Slows• Zimbabwe US$465 Million Tobacco Sold

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Dominic [email protected]

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African Cashew Industry Annual ConferenceWest Africa Trade Hub 19/07/12The world’s largest annual cashew event will be held in Cotonou, Benin, Sept. 17-20, bringing the leading cashew companies together – including the biggest buyers and processors, technical experts, financial institutions and service providers across the industry.

“The future is Now!” allows participants to see the latest handling and processing equipment, and site visits to important sites in Benin.

One indication of the industry’s growth is the processing milestone that Africa will hit sometime later this year: for the first time, more than 100 MT of raw cashew nuts will be processed on the continent.

Processing capacity continues to increase improving the market stability for cashew farmers. The 7th annual conference will feature the 2nd World Cashew Expo, which connects equipment manufacturers directly to processors in Africa in order to facilitate investment.

Guinea Bissau Coup Set To Halve Cashew ProductionReuters 27/07/12Guinea Bissau's cashew production - the state's top revenue earner - will drop by half this year due to turmoil following April's military coup according to the United Nations.

U.N. special envoy for Guinea Bissau Joseph Mutaboba said that according to the president of the Guinea Bissau Farmers Association the 2012 crop was forecast to drop to about 100,000 tonnes as a result of the April 12 coup.

This is particularly disturbing as cashew production accounts for 90% of the country's income and the sector employs almost 80% of the labour force.

Guinea Bissau has been in turmoil since soldiers seized power, derailing a presidential election in the latest of a string of military interventions in the country's politics since independence from Portugal in 1974.

The military junta announced late May that if had handed power back to civilian leaders.

CASHEW BENIN

CASHEW GUINEA BISSAU

Joseph Mutaboba

COMMODITY WATCH WWW.DELMAS.COM

CASHEW NEWS

01

Making Cashews PayIRIN 13/07/12As the cashew harvesting season draws to a close, producers in the Casamance region of southern Senegal are organizing themselves to have more say in the price that will be set for their product.

Middlemen - mostly from India - who export the raw nuts, usually take the bulk of the profit, while producers struggle to get by.

Cashews are an economic mainstay in Casamance, bringing in US$65 million annually. The province produces about 100,000 MT per year, but exports only about half of that due to poor transport facilities to pick up the nuts. Another 50,000 MT of nuts is exported via Senegal from northern Guinea-Bissau.

Across West Africa, cashew production is mounting - the region produced 85% of the global harvest in 2011, with exports going mainly to India and Brazil.

Each year a price is set for the crop - though the bulk of 2012 it hovered between 400-500 CFA/kg [US0.74-0.92]. In 2011 the price varied from CFA 350-615 [US$0.65-1.14], depending on the area.

Producers complain that they have no say about the price. Cashew prices fluctuate, depending on production levels and the value of the US dollar, to which they are pegged.

As these vary wildly, so do the prices of raw nuts, in some years dropping as low as 75 CFA/kg [US0.13]. Setting a fixed price leaves producers with no leverage leaving farmers forced to sell off crops to survive.

Producers are also hampered by poor access to transport facilities - which means they cannot travel to cities to sell their nuts for higher prices - and there are very few processing facilities in the country.

It is also difficult to get loans to finance their harvests. Processing cashews involves separating the fruit and the kernel, and then drying the nuts. Raw nuts achieve much lower prices than processed nuts.

Reorganizing the industry on terms more favourable to producers is possible, but only if they organize themselves better. Those involved must restructure the industry, rather than pitting producers, processors and exporters against each other.

All players need to sign mutually beneficial contracts to negotiate a price. Once a contract has been signed, producers and processors can apply for credit to finance their harvest. This way, everyone has the same interests at stake - ideally the contract could be win-win for all.

The Chamber of Commerce in Ziguinchor is trying to work with producers to set up such arrangements. With help from the French Development Agency [AFD], they have created a platform to enable cashew producers to become better organized, and are trying to set up a fund to buy cashews for re-sale. French funding will also be used to set up the region’s first processing plant, following the example of Cote d’Ivoire, Ghana and Nigeria.

There are just a few cooperatives processing nuts by hand in Senegal, including a women’s cooperative in Thiès, 60km from Dakar, and a group in Sokone near the coast. Industrial processing will mean cashew production can expand, producers can sell their nuts for higher prices, and more jobs will be created, according to the African Cashew Alliance. Currently, some 95% of Casamance’s nuts are exported raw, but this is set to change, albeit gradually. Meanwhile, individual producers are starting to speak out.

CASHEW SENEGAL

COMMODITY WATCHCOMMODITY WATCH WWW.DELMAS.COM

CASHEW NEWS

02

Cocoa And Coffee Products Opened To New MarketsRTV 23/07/12The Ministry of Commerce and the World Cocoa Foundation have signed a protocol agreement to usher in Cameroon within the African Cocoa Initiative. During the signing ceremony, the Minister of Commerce, Luc Magloire Mbarga Atangana said the agreement offers Cameroon a fresh opportunities to review its production and marketing strategy.

In the meantime there have been a number of strategies put in place to boost production in Cameroon. One of such is the creation of a special trust fund to make available bank loans to cocoa and coffee producers in the country.

The Executive Secretary of the Cocoa and Coffee Inter-professional council, Omer Gatien Maledy made the announcement in Douala, while opening a meeting of the Cameroon National Association of cocoa and coffee producers.

Cameroon Cocoa Grinder June Purchases Fall to ZeroBloomberg 21/07/12Cocoa purchases by Cameroon’s major grinder fell to zero in June according to the Cocoa and Coffee Board and the Cocoa and Coffee Interprofessional Board [CCIB]. Sic-Cacao and Chococam bought no beans compared with the 1,292 MT a year earlier,. The 2-grinders have so far bought 28,466 MT since the season started on Aug. 1.

The cocoa intake for the Cameroon unit of Switzerland-based Barry Callebaut AG between August and June of the on-going 2011-12 season was 28,467 MT, little changed from the 28,200 MT it bought during the same period in the last season. Locally known as Sic Cacao S.A., the company bought no cocoa beans in June 2012, although it bought 1,191 MT of cocoa beans in June 2011.

The cocoa season in Cameroon officially runs from August through July. Sic Cacao's total

cocoa-bean intake for last season was 28,413 MT, up 37% from 20,734 MT in the prior year.

Sic Cacao is Cameroon's lone certified, industrial cocoa grinder for chocolate and other by-products, with an annual grinding capacity of 30,000 tons. The Swiss company Barry Callebaut owns 70% of Sic Cacao, while the Cameroon government has the remaining 30%. Chocolate produced from Sic Cacao is marketed mainly in Cameroon and the surrounding economic community of Central African States.

Government and industrial data indicate Cameroon produced 240,000 MT of cocoa beans in the last season, a record high from 197,939 MT produced in the 2009-10 cocoa season.

Cameroon Cocoa Exports Dropped 43% in JuneBloomberg 21/07/12Cocoa exports from Cameroon fell 43% in June, 1-month from the end of the season. Exports for the period dropped to 3,169 MT from 5,547 tons a year earlier. CAMACO was the biggest exporter with 1,154 tons, followed by OLAM CAM with 828 tons.

CAQPRO was the third-biggest exporter with 301 tons. A total of 170,441 tons of cocoa has been exported since the start of the season, compared with 193,851 tons shipped in the previous year.

Cameroon Cocoa Exports Down 11% On Year So FarReuters 21/07/12Cameroon exported 174,399 tonnes of cocoa beans to end-June since the beginning of the season last August, 11% below the 196,068 tonnes shipped during the same period a year ago.

Cocoa exports totalled 3,169 tonnes in June, down from 3,286 tonnes in May and also down from 5,547 in June last year. Both the National Cocoa and Coffee Board [NCCB] and the Cocoa and Coffee Interprofessional Board [CCIB] attributed this drop in mid-crop harvests to pests and a prolonged dry season followed by heavy rains that are slowing down the drying of harvested beans.

The data showed the number of exporters for the month was only 7, down from 14 in May and 28 in April. Cameroon Marketing Commodities [CAMACO] was the leading exporter with 1,154 tonnes, followed by Olam Cam with 828 tonnes, CAQPRO Ltd with 301 tonnes, Achanyi and Sons with 235 tonnes, and Telcar Cocoa Ltd with 201 tonnes.

Cameroon's cocoa production hit a record of 240,000 tonnes in 2010/11. The Cocoa Development Authority [SODECAO] initially forecast output of 250,000 tonnes in 2011/12.

Rains Drive Up Cocoa Prices In CameroonReuters 16/07/12The dearth of beans due to a poor mid-crop and steady rains in parts of the country have pushed up cocoa farmgate prices in Cameroon so far this month. The warning came after a senior official from the National Cocoa and Coffee Board said that output is expected to fall some 10-15% from last year's record 240,000 harvest.

There are very few beans on the local market, while the number of buyers has gone up, encouraged by fair prices on the world market. Therefore the forces of demand and supply come into play, raising the prices. On average, prices paid to farmers have risen from 800 CFA/kg [$1.49] in June to 900 CFA/kg this month in the Centre Region.

In the South region, they have jumped about 25% to 800 CFA/kg. The South-West region reported a month of steady rains, which has dogged the drying process and damaged roads used to ferry beans to market. As a result prices in have also risen 5-10%.

Cameroon Average Cocoa-Export Price Rose 5.2% to July 9Cameroon’s average cocoa-export price rose 5.2% to 1,244 CFA francs/kg in the week to July 9, according to the Cocoa and Coffee Board. The following is a table of free-on-board exports rates at the main port of Douala. The prices are in CFA/kg.

COCOA CAMEROON

July 9 1,222 July 6 1,235 July 5 1,254 July 4 1,254 July 3 1,254 July 2 1,241 June 29 1,196 June 28 1,196 June 27 1,138 June 26 1,138


COCOA NEWS

03

Ivory Coast On Track For Good Main Crop StartGood soil moisture and sufficient sunshine mean Ivory Coast remains on track for a healthy start to the forthcoming cocoa main crop despite a lack of rainfall in a number of main growing regions. The 2011/2012 cocoa season, which wraps up at the end of September is expected to fall short of the previous year's record harvest, due mainly to a 5-month dry spell that carried into March.

But a run of abundant rainfall and sunshine in recent months has raised hopes of a rebound when the 2012/2013 opens on October 1. Good weather conditions has left plantations well flowered, but more sunshine would be needed to ensure the development of small pods. Farmers said the lack of rain could help prevent fungal diseases and drier conditions in coming weeks would likely boost the development of the main crop.

Cemoi Plans to Boost Ivory Coast Cocoa Bean Purchases by 50%Bloomberg 19/07/12French chocolate maker, Cemoi, plans to boost purchases of Ivory Coast cocoa beans to 150,000 MT a season. The company currently buys 100,000 MT of beans during the harvest. About 70,000 MT are ground into cocoa butter and other products in its processing plant in Abidjan. Ivory Coast, the world’s top cocoa grower, produced 1.5 million MT of the crop in the 2010-2011 harvesting season, according to the International Cocoa Organization.

Ivory Coast Sells 830,000 Tonnes Of 2012/13 CropReuters 29/06/12Ivory Coast had forward-sold 830,000 tonnes of its 2012/2013 crop via its new auction system by June 25 and expects to forward-sell a further 80,000 tonnes in all. The total of 910,000 tonnes represents 70% of an expected total harvest of 1.3 million tonnes. This is a good indicator that the new auction system has won the confidence of market operators.

The new auctions are a vital part in the reform of the sector which had left many industry participants confused. Some exporters initially boycotted the auctions, claiming authorities had underestimated the real cost of bringing cocoa to port and that, without changes, the scale for reimbursing handling costs could saddle them with losses. Traders have said they were surprised at the level of forward selling Ivory Coast had achieved.

What will be interesting now is to monitor what the average prices of cocoa [futures] is in Q4 against the average auction sales price. If the futures market is higher than the average sales price then the Ivorian government may have a problem.

Under a complex system aimed at stabilising end-prices for farmers, those who bought contracts at less than the subsequent market price will get the difference refunded to them by Ivorian authorities. The reform was a condition for some $4 billion of IMF-backed debt relief, which Ivory Coast finally completed on at the end of June.

Daily Spot Price [ICCO]These are the average of the quotations of the nearest three active futures trading months on NYSE Liffe Futures and Options and ICE Futures US at the time of London close.

COCOA COTE D’IVOIRE

Date ICCO daily price [SDRs per tonne]

ICCO daily price [US$ per tonne]

London futures [£ sterling/tonne]

NY futures [US$ per tonne]

2/7 1562.06 2373.99 1553.33 2313.67 3/7 1584.78 2405.27 1569.00 2348.00 4/7 1571.87 2385.68 1556.67 2344.67 5/7 1578.45 2390.22 1571.33 2341.33 6/7 1544.88 2329.00 1547.00 2264.33 9/7 1590.90 2393.62 1589.67 2323.33 10/7 1586.46 2388.08 1587.67 2315.67 11/7 1578.93 2376.60 1576.67 2305.67 12/7 1510.91 2265.86 1512.67 2199.33 13/7 1530.37 2295.95 1522.33 2225.67 16/7 1517.57 2277.91 1499.33 2212.67 17/7 1512.10 2277.20 1498.00 2217.00 18/7 1517.19 2281.76 1497.67 2222.67 19/7 1535.31 2315.86 1519.00 2245.00 20/7 1540.05 2318.89 1527.00 2252.00 23/7 1547.72 2322.46 1542.00 2253.67 24/7 1535.64 2301.22 1528.33 2231.00 25/7 1543.43 2315.89 1541.00 2247.00 26/7 1585.83 2386.09 1565.67 2316.67 27/7 1597.91 2413.50 1581.33 2340.67


COCOA NEWS

04

Reuters 12/07/12Vietnam, the world's second-largest coffee producer after Brazil, will help Angola revitalise its war-ravaged coffee production by planting the commodity on 100,000 ha over the next decade.

Prior to 1975 Angola ranked as the world's 4th-biggest coffee producer with annual shipments of around 4 million bags. But a civil war between 1975 and 2002 destroyed the country's coffee sector.

Thai Hoa Vietnam Group, the country's top arabica producer and trader, a Brazilian consultant firm and a coffee producer from Angola will form a venture to grow 6,000 ha of robusta over the next 3-years. If the first stage proves a success, the venture will seek US$250 million in funds for the entire robusta project through official development aid from Brazil, as well as other financial sources.

Output could be exported to meet growing demand in Brazil, where production costs have been rising. Brazil mainly produces arabica but also turns out robusta beans, locally known as conilon, mostly for domestic consumption. Angola's current production is estimated at 4,000 tonnes of coffee a year, far behind major producers in Africa such as Ethiopia with 390,000 tonnes, and Uganda with 193,000 tonnes. Africa as a whole produced 16.69 million bags of both arabica and robusta in the 2011/2012 crop, up 2.4% from the previous season and making up 12.7% of the world's total.

VietnamTo Help Angola

Rejuvenate Coffee

Production


COFFEE NEWS

05

Angola to Harvest Over 13,000 Tonnes of Coffee This YearAngola Press 09/07/12The national agriculture sector foresees to harvest 13,900 tonnes of coffee in 2012 farming campaign, against 12,000 obtained last year.

The minister of the Agriculture, Rural Development and Fisheries Afonso Pedro Canga reiterated the government determination to support the local coffee-growers in production process of the product.

Cameroon Robusta Coffee Exports Down 32% By End JuneReuters 20/07/12Cameroon's robusta coffee exports reached 16,603 tonnes by the end of June since the start of the season in December, down 31.84% on volumes at the same stage last season according to figures from the National Cocoa and Coffee Board [NCCB].

The NCCB and the Cocoa and Coffee Interprofessional Board [CCIB] blamed the decline in exports on farmers stockpiling beans because of a fall in prices on the international market.

The bodies said that a hot season that extended by a month into mid-April could also have had an impact.

Data showed that exports for the month of June totalled 4,848 tonnes, up from 4,052 tonnes in May and well up from 2,486 tonnes in the same month last year. Robusta exports last season totalled 29,559 tonnes, from 43,985 tonnes the year before.

Cameroon exported 30,194 tons of robusta in the 2010-11 season, down from 44,966 tons exported during the 2009-10 season.

Cameroon Arabica Exports PlungeMarket Watch 21/07/12Arabica coffee exported from Cameroon between December and June in the 2011-2012 season plunged to 16,603 tons, from 24,358 tons exported during the same period of the previous season.

The statistics from the Cocoa & Coffee Interprofessional Board [CCIB], showed the country exported 4,848 tons of arabica coffee in June 2012, up from 2,486 tons exported in June of the last season.

Ethiopia's Coffee Export Nose-Dives As Government Control BackfiresNazret 06/07/12Ethiopia's coffee export continues to plummet due to chaotic government controls and enforcement of bad policies. The downward export trend began to fall in 2008/09 following the government's tightening of its grip on the sector.

According to the International Coffee Organization [ICO], Ethiopia's production during the current crop year was 549,745 tons and domestic consumption is estimated at 223,747 tons. Based on available cumulative data, the current year's export is forecasted to be about 143,442 tons

- a decline by about 30% from last year's 199,871 tons.

In the 4-years since Ethiopia Commodity Exchange [ECX] began trading coffee [2008/09-2011/12], the country's net export has declined by about 9% to an average of 164,735 tons per year from the previous 4-years' average of 180,195 tons per year [2004/05-2007/08].

The average exported percentage of production during the 4- years post ECX has dropped to 37% from an average of 51% during the 4-years pre ECX.

This number is expected to hit an all-time low of about 26% in the current crop year. Assuming an estimated 41% domestic consumption, about 33% of the production is expected to be unaccounted for this year alone.

The current decline is entirely attributed to the government's new strategy of increasing exports by enhancing its control of the coffee sector. The then new ECX was tasked in December 2008 with the responsibility of managing the pricing and flow of coffee exports.

But, as the strategy failed and the control backfired, export plummeted, illicit trade has risen, the country lost its competitive advantage, and ECX has fallen prey to the government.

Farmers Grow More Coffee In Kenya Western RegionXinhua 13/07/12Kenya has started a campaign to promote growing of coffee in its western region as the part of effort to promote higher production of the commodity and help farmers diversify sources of their income.

Coffee is currently grown in the Kenyan highlands that include sections of Central Kenya extending to Machakos in eastern Kenya, parts of the Rift Valley and Kisii in Western Kenya.

The intention is to have areas like Bungoma, Mount Elgon and the larger Nyanza in Western Kenya start growing the crop that was once Kenya’s main cash crop and top foreign exchange earner. Kenya is seeking to restore and surpass coffee growing volumes that have dropped to an all-time low of 50 MT from a historic peak of 130,000 MT in 1988.

The production upscale is seen as necessary because the world market is currently not based on the country specific quota system unlike before and countries can market as much coffee as possible in the international market.

The scaling up of production is part of the government’s new plan to revive the industry through consumer education to increase local consumption of coffee, grow the regional market of coffee, make Kenya the world coffee distribution hub and increase the level of value addition of coffee.

Kenya mainly grows Arabica coffee, used across the world to blend the Robusta coffee to give it the distinctive taste. According to the plan by the government, farmers in Western region will be supported to start growing Robusta coffee that can do well in non-highland areas so that it is blended with Arabica from the highlands.

The Coffee Research Foundation has intensified coffee seed production targeted for those areas and developed disease resistant and high yielding Batiani coffee variety that will go a long way in boosting local production.

The production upscale will be financed by the Coffee Development Fund, a state corporation under the Ministry of Agriculture to provide sustainable, affordable credit facilities to coffee farmers for farm development, farm inputs, farming operations and coffee price stabilization.

COFFEE ANGOLA

COFFEE CAMEROON

COFFEE ETHIOPIA

COFFEE KENYA


COFFEE NEWS

06

Xinhua 12/07/12Kenya is seeking partnerships with Chinese investors for joint coffee processing ventures as the country seeks focus from the traditional European market to Asia and the African markets. Kenya currently sells most of its coffee to Europe where its variety of Arabica coffee regarded as of the best quality in the world, is used to blend other coffees to improve taste. But what Kenya requires is local processing and packaging capacity to improve export of processed coffee to the emerging foreign coffee markets.

Kenya currently exports nearly all its coffee in raw form, limiting revenue farmers can earn from the crop. Raw coffee is also highly vulnerable to global price fluctuation that denies farmers the true value of their produce.

“We are looking for partnerships on value addition, process, packaging and branding with Chinese investors.”Coffee Board of Kenya [CBK]

Access to appropriate machinery is one of the major challenges facing Kenya enterprises that want to venture into coffee processing and packaging, limiting most of the local business people to being export brokers of the raw produce. Increasing capacity of local coffee processing is part of the plan to make Kenya the global hub of coffee export, a spot currently held by Germany that does not produce coffee.

As part of this plan, Kenya has rolled out plans to promote growing of Robusta coffee in non-traditional coffee growing areas to boost production adequate to support a processing industry. China’s partnership will also ease Kenya’s efforts to access China’s growing coffee consumption, seen as the fastest in the world and one of the most promising because of the country’s high population.

Kenya does not have a strong history of coffee trade with China, with first major coffee exports to the country having started in 2007. But growing trade relations with China, encouragement of business-to-business partnerships between the 2- countries, the economic crisis in Europe and the big Chinese market are some of the factors that have raised interest for extension of coffee industry as one of the core areas of business relations.

The nations have been finding increasing areas of co-operation over the past years, with Kenya's imports from China increased four-fold to Sh120.6 billion last year from Sh29.7 billion in 2006, according to the Economic Survey 2011. The economic crisis in Europe and the increased interest in coffee from the Chinese market mean that there is possibility for coffee expansion to be one of the defining features in Chinese-Kenyan business relations in the coming years.

Kenya Turns To China In A Bid To Process Her Own Coffee


COFFEE NEWS

07

Rwandan Coffee Export PromotionNew Times 20/07/12The Minister of Trade and Industry, François Kanimba, has challenged owners of coffee washing stations to strengthen the coffee value chain in order to increase coffee export receipts. The stations help link exporters to producers and also intervene in supporting farmers in access to inputs such as fertilisers. The move will enable stakeholders share experiences, hence boosting farmers' confidence in exporters.

However some coffee farmers say that exporters do not care about the challenges farmers, face but instead are [exporters] interested in their harvest and at a cheap farm gate price. Currently, farmers are getting about Rwf300/kg as farm gate prices for coffee beans, a higher price compared to Rwf100 in 2007. The National Agricultural Export Board [NAEB] notes the change in farm gate prices is caused by global changing prices, but says that there is always control to ensure prices don't go below by 15% on the current price.

Over US$200 Million Coffee Revenue Projected For Tanzania Next SeasonThe Citizen 24/07/12Tanzania plans to increase the export value of coffee from US$142.5 million recorded last year to over US$200 million this year. The Tanzania Coffee Board [TCB] noted statistics project an increase of coffee harvest from 33,000 tonnes recorded last year to 55,000 tonnes this season due to improved extension services to farmers. The coffee harvesting season will begin by the end of July. In 2010 Tanzania earned a total of US$101.7 million from coffee exports compared to $111.2 million in 2009, according to data from the Bank of Tanzania. Coffee farmers’ co-operative associations and unions have already made preparations for the harvesting season, this follows the temporary suspension of the auctioning in March this year.

The coffee sector survey results, conducted last year in 12 coffee growing regions, re-affirmed Tanzania’s vast coffee potentials, which if properly unleashed, could contribute significantly to the national GDP. Coffee has attracted a rich banking network in the districts where it is grown, creating jobs and driving financial services closer to the population in remote areas.

“Tanzania’s worldwide recognition as a consistent supplier of some of the world’s finest coffee provides the legitimacy to tap into the available opportunities to boost output, quality and profit of the business.”The Tanzania Coffee Board

The latest TCB report shows that apart from Tanzania, Colombia and Kenya are the only other producers of unique green coffee. The report shows that Tanzania accounts for roughly 6% of the Colombian Mild group production, adding that other competitors include the other Milds’ Group dominated by Central American countries. The report further indicates that Japan and Germany represent the 2-main export destinations of Tanzanian Mild Arabica accounting for between 60-70% of the total exports while new markets, such as US, Italy and Belgium, are picking up.

Tanzania has the capacity to export mild Arabica as early as July/August, ahead of the

Central American season, a time where the world market will be in short of supply of fresh Arabica, according to TCB. There is great potential for the industry to secure higher price premiums provided that the quality of coffee processed is improved for value addition. In the wake of increased competitiveness in the world market improved quality of coffee products is highly needed to tap more opportunities.

Tanzania Rain A Big Boost To Coffee Output Up 72%Reuters 23/07/12Tanzania expects its 2012/13 [June/April] coffee output to rise 72% to 55,000 tonnes, helped by good rainfall according to regulator Tanzania Coffee Board [TCB]. Tanzania produced a little over 32,000 tonnes of coffee in the 2011/12 season, lower than a previous forecast of 45,000 tonnes due to drought. The board expects favourable weather in coffee-producing regions to boost output as the first coffee auction of the season kicked off week beginning 16/07/12.

At the first auction of the season, TCB said 14,264 60-kg bags were offered at the latest sale and 14,117 bags were sold. East African coffee is normally packed in 60-kg bags, but prices are quoted for quantities of 50 kg. There was high demand for coffee on the first auction day of the season, with almost all the coffee on offer sold. Prices are expected to rise in the coming auctions as high quality coffee beans come into the market. Robusta prices opened at the same levels as the previous auction last season, but mild arabica prices fell due to declining prices of the beans at the world market. All the robusta coffee offered at the auction was bought as follows [prices US$].

The U.S., Japan and Germany are some of the main importers of Tanzania coffee. Tanzania reaps its crop from April through August. Arabica accounts for 75% of the country’s output, while robusta accounts for the rest. Production for this marketing season in the 12 months through June next year may climb to 61,012 tons from 32,045 tons because of a high-yield crop cycle and good weather.

Coffee Institute Set to Implement Strategic PlanTanzania Daily News 21/07/12The Administrative Support Unit [ASU] of Tanzania Coffee Research Institute [TaCRI] is committed to achieve major goals spelt out in Strategic Action Plan II [2008- 2O13]. The move is meant to ensure financial sustainability and guarantee that assets and resources are secured and managed efficiently. Some 700m/- was disbursed by the central government to TaCRI to help support coffee seedlings multiplication. The European Union has also committed €2 million, which are funds to support coffee research activities for 3-years from 2010-13. Revenue realized from TaCRI's own resources; soil analysis, coffee sales and coffee seedlings will cover 40% of the projected sum. Industry

stakeholders will continue to contribute 0.75% of the auction price towards coffee research activities.

Demand For Coffee Hybrid Increases In MoshiTanzania Daily News 23/07/12Since the introduction of new hybrid coffee varieties in 2005 that combine resistance to coffee berry disease [CBD] and leaf rust [CLR], high yielding and good cup quality, the demand for those varieties have been increasing. The demand is high as farmers have realized their benefits and called upon other stakeholders, including coffee producing district councils to invest in hybrid seedlings multiplication as that will help to raise revenues collected from coffee sales. The Tanzania Coffee Research Institute [TaCRI] current capacity is to multiply and distribute 100,000 seedlings of traditional coffee varieties per year. TaCRI also supports farmers through provision of technical advice and inputs, such as watering cans, coffee seeds, poly coffee, poly bags, wheelbarrows and money-maker pumps, which are used in seedlings multiplication activities.

Uganda's 2011/12 Coffee Exports Likely To Miss 3 Million Bag TargetAgra-Net 25/07/12Uganda's coffee exports are unlikely to hit the country's target of more than 3 million 60-kg bags in 2011/12 [Oct/Sep] due to poor weather throughout the season. Ecobank Transnational pegs shipments for the current season considerably lower than the state-run Uganda Coffee Development Authority [UCDA], which projected 3.2 mln bags earlier this year.

Uganda July Coffee Exports Seen 26% Lower Yr/Yr Reuters & Bloomberg 16/07/12Uganda expects its July coffee exports to fall 26% to 280,000 60-kg bags compared with the same month in 2011 due to farmers holding off sales in expectation of better prices according to the Uganda Coffee Development Authority [UCDA]. In July 2011 it exported 375,843

bags of coffee. Farmers and exporters are still holding on to their stocks as they anticipate better prices at various levels of the value chain. The forecast is also lower due to a reduced harvest in the southern and southwestern regions.

The European Union, Sudan, U.S., India, Morocco, Ecuador, Switzerland, Japan and South Africa are some of the major importers of Uganda’s coffee. Uganda may export 3.1 million to 3.2 million bags in the 2011-12 season, which started on Oct. 1 and runs through September. This compares with the forecast of 2.8 million to 2.9 million given by National Union of Coffee Agribusinesses and Farm Enterprises on May 8. Shipments from October through June, the 9th month of the season, dropped to 2.01 million bags worth US$293.6 million, from 2.12 million bags valued at US$300.6 million. Uganda exported 3.15 million bags worth US$448.9 million in 2010-11. Uganda was Africa’s biggest coffee exporter and the world’s 9th-largest in the 12 months through last September, according to the London-based International Coffee Organization. Robusta beans, used in espressos and instant drinks, account for about 85% of Ugandan production.

COFFEE RWANDA

Grade Offer Sold High Low Average Arabica AA 1,153 1,153 211 203 208.80 Arabica A 1,617 1,617 209 160.60 187.76 Arabica AB 303 303 148.60 141.80 144.97 Arabica B 698 551 202.80 188 194.59 Arabica PB 314 314 205 192 199.82 Arabica C 104 104 160 145 152.84 Robusta Over Scrn

18 360 360 110.80 110.80 110.80

Robusta Superior 2,519 2,519 105.40 101.20 104.23 Robusta FAQ 3,958 3,958 104.60 90.60 100.47 Unwashed Arabica Arabica FAQ 3,238 3,238 143 130.20 138.20

COFFEE TANZANIA COFFEE UGANDA

Kenya Turns To China In A Bid To Process Her Own Coffee


COFFEE NEWS

08

World Bank Provides US$90 Million Grant To Increase Cotton Exports In Burkina FasoThe Financial 28/06/12The World Bank approved an International Development Association [IDA] US$90 million grant which aims to increase cotton exports to more than 400,000 tons.

Specifically, the new grant will support the Government of Burkina Faso aims to catalyse private sector growth and employment by assisting the government to develop an input fund for cotton and improved competitiveness of cotton sector and aims to improve the production of cash crops.

Mali Wants To Double Its Cotton ProductionAfrik 05/07/12Despite a political and military crisis gripping the country for the last 3-months, Mali wants to reclaim first place as the leading cotton producer in sub-Saharan Africa.

The Malian Company for Textile Development / La Compagnie malienne pour le développement textile [CMDT] envisages a gradual increase in production to reach 500,000 tons of cotton produced from the crop year 2012-2013 against 445,143 tons the previous season. Back in the 2003-2004 campaign, Mali achieved a record production of cotton of 600,000 tons. To achieve such growth the CMDT will buy a kilogram of first grade cotton at 255 FCFA (about 40 cents) instead of 185 CFA francs (28 cents). The price of second and third grade cotton will also climb to 230 FCFA (35 cents) and 210 FCFA (32 cents) , respectively.

CMDT has also taken incentives to boost cotton cultivation including the timely provision of seeds, fertilizers and inputs to producers. Farmers will also have access to credit if they pay off their arrears. The state has set an example by clearing US$230 million debt. For the new boss of the CMDT, Salif Abdoulaye Macoro, all conditions are now in place to allow Mali to regain its leading position in Africa.

Cotton Buying Season Picks Up GraduallyDaily News 27/07/12The 2012/2013 cotton buying season is reportedly picking up gradually, with producers opting to supply at the previously disputed price of 660/- per kg of seed cotton.

The crop buying season opened mid-July, having been delayed for almost a month due to price disputes between buyers, growers and Tanzania Cotton Board (TCB), the industry regulator, as buyers offered 450/- and producers vowed never to supply at below 1,000/-. Prolonged negotiations led to the wrangling parties to settle for the 660/- price, with the district councils forced to reduce cotton levy from 5% to 2% of the buying price.

The crop buying is going on well, urging farmers to sell their produce now as there are little prospects of price appreciation.Many commercial banks have been reluctant to issue loans to buyers because the banks perceive the 660/- price as unrealistic with the prevailing world market prices. Although

some politicians from the cotton producing areas had earlier advised their voters against selling cotton unless they get the 1,000/- price, desperate producers were allegedly selling the cash crop to black market buyers at 300/- per kg. The delayed crop buying season subjected cotton growers to sheer desperation, with some bowing to temptations by exploitative middlemen to sell the crop at 300/-,” as most cotton growers rely on earnings from cotton sales to buy food.

Members of Parliament from the cotton growing areas, debating the 2012/2013 national budget estimates in Dodoma last month, stood firm against cotton farmers selling the cash crop cheaply, urging producers instead to keep the produce, pending price appreciation. The MPs described the cotton sector, which supports over 16 million people in the country’s 42 districts, as highly sensitive and deserving specialised attention. They proposed construction of cotton processing factories to boost local demand of the country’s white gold.

Steel Yard Scale Use ApprovedTanzania Daily News 03/07/12The Government has agreed on usage of steel yard scales in purchasing cotton in the 2012/13 season following a meeting of cotton stakeholders held on 26/06/12 due to the shortage of digital scales.

The Minister for Agriculture, Food Security and Cooperatives, Christopher Chiza said the scales would be gradually phased out with a grace period of 1-year. He also said that the steel yard scales to be used must be inspected by the Weights and Measures Agency. According to Chiza, about 8000 digital scales are required but Tanzania Cotton Association [TCA] has imported only 5,500 digital scales and only 2,460 digital scales have arrived in the country.

China Seeks Cotton Trading Cooperation With TanzaniaFibre2Fashion 26/07/12To help the Tanzanian cotton farmers who suffered heavy losses due to lack of market for their cotton, the Chinese Government has put forth a proposal for establishing a trading cooperation with Tanzania.

According to Chinese ambassador to Tanzania, Lu Youqing the Tanzania-China cooperation could prove beneficial for Tanzanian cotton markets. The National Bank of China is keen to support Tanzanian farmers in cotton planting and processing, and has already allocated funds for projects and is promoting the Kilimo Kwanza and Southern Agricultural Corridor of Tanzania. Youqing has invited a Chinese textile firm to invest in Tanzania, and added that the proposed investment by Chinese company would double Tanzania’s cotton production.

Tanzanian cotton is considered to be the world’s best cotton as it is free from chemical contamination. China aims to accomplish the China-Tanzania agricultural cooperation target, which involves an overall investment of up to USD1-billion.

China will share its long accrued technologies and experiences in cotton plantation, seed optimisation, product processing capability and value addition knowledge with Tanzania. China-Tanzania bilateral trade volumes grew from US$1.11 billion to US$ 2.15 billion during 2009-2011. If the trade volumes of US$770 million between January-May 2012 are added, the bilateral trade volume since 2009 totals US$ 5.7 billion.

COTTON MALI

COTTON BURKINA FASO

COTTON TANZANIA


COTTON / TEXTILES & LEATHER GOODS NEWS

09

Chinese And Tanzanian Investors Want To Invest In Mulungushi TextilesLusaka Times 27/07/12Two Chinese companies and a Tanzanian firm have expressed their readiness to invest in Mulungushi Textiles in order to revamp operations at the plant once contractual issues surrounding the ownership of the textile between Government and the Chinese investors who are the majority shareholders are concluded. Once the Ministry of Justice gives a go ahead, Government will not hesitate to engage any investor in order to reinstate operations at the factory.

Gatsby Offers 17 Billion For Cotton ProjectsTanzania Daily News 20/07/12Tanzania Gatsby Trust [TGT] has given about 17bn/ to Tanzania Cotton Board [TCB] to support 6 projects on cotton and textile industry development in Tanzania. The Cotton and Textile Development Programme Co-ordinator [CTDP] Mr Donald Sai, said that the projects which have been supported were on cotton research, seed multiplication, conservation agriculture, contract farming, textile investment promotion and capacity building in textile.

Specific efforts have been directed in the Lake Zone Cotton growing regions where contract farming has been introduced to address low productivity. Currently the national average of seed cotton aims to be 250 to 300 kg per acre while the world average is 800 kg.

India To Assist Tanzania In Setting Up Textile Park Fibre2fashion 27/06/12 The Government of India is committed to help Tanzania in setting up a textile park by sharing its knowhow as well as by giving financial inputs. India-Tanzania bilateral trade was worth US$1.2 billion last year, with the trade balance in India’s favour. The Indian Government intends to further strengthen the strong cordial ties with Tanzania. During last season, Tanzania reaped 224 million kg or 987,000 bales of cotton, a 37% higher than the previous season’s output of 163 million kg, according to Tanzania Cotton Board [TCB].

Cotton Farmers Riot in Zambia Wall Street Journal 02/07/12Cotton farmers rioted and set ablaze cotton in lint form, after the farm-gate prices of the commodity plunged by more than 50% after Zambia Cotton Ginners Association [ZCGA], which buys the cotton from the farmers for ginning, set the price of lint at 1,600 Zambian kwacha [US$0.31] per kg, down from 3,500 Zambian kwacha last season. Angry framers burnt more than 11,000 tonnes of cotton in Eastern Province. The ginners' body attributes the low prices to the dipping lint prices on the world market since last year. The world lint price is about 72 cents a pound, compared with around $1.50 a pound in the same period last year.

Zambian President Michael Sata urged the farmers not to burn lint, saying the government would soon find a solution for the pricing standoff. Zambia's 2012 lint output is estimated around 200,000 MT, compared with around 180,000 tons last year, according to the Zambia Cotton Ginners Association. The country exports the bulk of its cotton in lint form mainly to the Asian and European Union markets.

Meanwhile Zambia is building 2-high-voltage electricity transmission lines, worth US$280 million, to the Eastern province in a bid to boost local cotton processing. Around 20% of the country's lint output is used in the local textile sector.

Zimbabwe Sets Minimum Cotton Price of 77 CentsBloomberg 26/07/12Zimbabwe’s Agriculture Ministry said cotton farmers must be paid a minimum of US$0.77/kg for their crop. Merchants won’t be permitted to negotiate lower prices with farmers. Disgruntled farmers have been holding on to their crop for weeks citing low buying prices, urging merchants to raise the price from US$0.30/kg to anything between US$0.50 to US$0.85/kg. The cotton marketing season has also failed to kick off due to the price war, resulting in government's intervention.

Government recently gazetted a Statutory Instrument making the 2011/12 cotton crop a controlled commodity, effectively giving the State the power to fix a price. Under SI 106A of 2012, buyers will be required to buy the crop at a price fixed by the Ministry of Agriculture, Mechanisation and Irrigation Development.

Indian-African Cotton InitiativeDaily Times 05/07/12The government of India has launched its Cotton Technical Assistance Programme to help improve cotton production in Benin, Burkina Faso, Chad, Malawi, Mali, Nigeria, and Uganda. The programme was announced during the 2nd India-Africa-Forum Summit that was held Addis Ababa in Ethiopia in May last year and would see African countries benefiting from Indian assistance towards cotton production.

The objective of the programme is to implement capacity development interventions and technology transfer to enhance upstream and downstream capabilities in the cotton sector. During the 3-years of the project, both local farmers and technical staff at the ministry would trained in cotton production.

WTO Assistance To Cotton Producers Touches Almost $400mnWorld Trade Organisation 03/07/12Recent industrial consultations have taken place under a programme called “Framework Mechanism on Cotton”. These meetings are separate from the negotiations on reforming cotton trade under the Doha Round agriculture negotiations, but both are mandated under the 1 August 2004 General Council decision in the Doha Round — and the 2005 Hong Kong Ministerial conference.

The consultations’ main purpose is to exchange information on aid for cotton, but members are also briefed on the latest developments in the negotiations and the latest market conditions, and they comment on those and on related developments. In this meeting, members heard that the total amounts spent on completed assistance for cotton since 2005 is US$278m.

Another US$92m has been spent on on-going programmes worth a total of US$310m in promised assistance. A further US$1.4bn has been spent on completed or

continuing projects for agriculture and infrastructure in these cotton producing countries, with a total of US$5bn committed. The meeting heard reports from donors, and from South-South development partners Brazil, India and China. Some described how the assistance is used to improve cotton production in Africa and elsewhere.

The countries receiving the aid welcomed it and described its value to them. But they also noted the gap between the assistance that has been committed and the aid actually delivered and called for more coordination and further improvements in sharing information. The Secretariat proposed to address the request for further changes in the information it compiles in order to allow the quality of projects to be assessed as well as the quantity.

Meanwhile, the negotiations on cotton have seen little progress since the April 2011 “Easter Package” of latest drafts was compiled and circulated. Consultations have been held on how to proceed with the talks.

There was nothing new to report as many members were unready to move on cotton until the overall agricultural negotiations progress further. African and other countries pushing for reform said they were disappointed at the lack of progress in the talks. These included the Cotton-4 proponents of cotton trade reform [Benin, Burkina Faso, Chad and Mali], the African Group and the G-20 alliance of developing countries in the agriculture negotiations.

The Cotton-4 reported on their visit to Washington, to meet members of the US Congress and administration, and expressed their concerns about proposed cotton subsidies in the US Farm Bill, which passed the Senate on 21/06/12 and is now being discussed by House of Representatives. Some others shared the concern, particularly as cotton prices are falling, raising the prospect of subsidies rising again.

One was Brazil, which referred to its continuing consultations with the US within their “Framework Agreement” for an agreed solution to the legal dispute on cotton subsidies (case DS267), which concluded that the US had violated WTO agreements and its commitments by subsidizing cotton. The consultations are part of a package that includes US development assistance to Brazil, part of which Brazil uses to provide assistance to African producing countries.

Background

• Cotton has been a key issue in the agriculture negotiations and in development issues related to the WTO since 10/06/03 when it was raised by Burkina Faso President Blaise Compaoré on behalf of the Cotton-4 [Benin, Burkina Faso, Chad and Mali] in a meeting of the Trade Negotiations Committee, which oversees the Doha Round negotiations.

• The dual tracks of development aid and trade negotiations are mandated under the 01/08/04 General Council decision in the Doha Round and the 2005 Hong Kong Ministerial conference.

• The first meeting on development assistance for cotton was in October 2004.

• Meanwhile, successive chairs of the agriculture negotiations have said repeatedly that there will be no deal in agriculture if there is no deal in cotton.

• The Cotton-4 [C-4] are supported by other African producers and the G-20 alliance of developing countries in the agriculture negotiations.

COTTON ZAMBIA

COTTON ZIMBABWE

COTTON GENERAL


COTTON / TEXTILES & LEATHER GOODS NEWS

10

US Department of State 19/06/12The U.S. African Development Foundation [USADF] June 15 announced a US$1 million investment grant to Malawi's dairy sector at the 11th U.S.-Sub-Saharan African Africa Trade and Economic Cooperation Forum [AGOA Forum]. The investment, spread across 7-dairy-sector projects in Malawi, will work to improve production and develop domestic and export markets.

Malawian Dairy Farmers Receive Major U.S. Grant


FOODSTUFFS NEWS

11

SUGAR KENYA

Kibaki's Sh1 Billion Boost for Cane FarmersThe Star 21/07/12The government has allocated Sh1 billion from the Sugar Development Fund for small-scale farmers. President Kibaki said the amount, to be released through the Agricultural Finance Corporation, will help farmers increase production in their farms.

Already Sh 780 million has been loaned to farmers at a rate of 5%. Credit access in Nyanza region has improved with the Agricultural Finance Corporation opening 2-branches in Oyugis and Bondo Districts. This supplements the Kisumu, Kisii and Migori branches.

Sugar Factory to Be Built in NyandaruaThe Star 03/07/12The government has asked a Chinese company to help it construct a beetroot sugar factory in Nyandarua county. The sugar will be grown and packed locally before being sold to the East African Community and other parts of the world.

SUGAR SOUTH AFRICA

Industry To Diversify Beyond Sugar ProductionEngineering News 06/07/12Sugar cane crop production in the 2011/12 season recovered somewhat from the effects of the drought experienced in the 2010/11 season according to the South African Cane Growers’ Association [CANEGROWERS]. The 2011/12 cane crop production increased by 4.89% and about 16.8-million tons of cane was crushed. Despite the increase, total saleable sugar production amounted to about 1.82-million tons, a decrease of 86,748 t of sugar, compared with the 2010/11 season.

Sugar producer Illovo stated in its results presentation for the year ended March 31 that the drought resulted in a 24% year-on-year drop in sugar production from its South African operations.

The lower cane volumes on the KwaZulu-Natal South Coast resulted in the producer’s Umzimkhulu factory remaining closed for the season, with cane diverted to the Sezela mill to improve available factory capacity. Further, cane growers point out that the global sugar market also suffered losses as a result of the 2010/11 drought, which severely impacted on the quantity of sugar available for export.

The Sugar Milling Research Institute reports that the South African sugar industry is one of the world’s most cost- competitive producers of high-quality sugar, producing an average of 2.3-million tons of sugar a year, of which about 40% is exported. The impact of the drought, combined with increased local demand, resulted in only 66,215t of sugar being exported in the 2011/12 season, an 82% drop, compared with the previous season.

This also resulted in lower export revenue, as the total export-market proceeds for 2011/12 were R599-million, a decrease of 43.4%, compared with the previous season. Nevertheless, the net industry proceeds for 2011/12 totalled R9.24-billion, an increase from the R8.29-billion earned the year before. Despite the slight increase in cane production in 2011/12, South African sugar mills believe

the survival of the sugar industry depends on diversifying beyond sugar production alone.

The South African Sugar Association [Sasa] says the industry needs to diversify into power generation and ethanol production. It points out that the sugar industry produces about 20-million tons of cane each year, the biomass of which is equivalent to 1.75-million tons of coal, with a power-generation potential of 1.6 GWh.

Sugar producer Tongaat Hulett also reported in its financial results for the year ended March 31 that it expected to benefit significantly from electricity and ethanol developments going forward. Sasa points out that cogeneration in the sugar industry will result in billions of rands of investment and the creation of more jobs. Global growth consultancy Frost & Sullivan says investment in projects aimed at producing ethanol from sugar cane for fuel consumption would most likely increase in Africa in the medium to long term. Several similar projects are under way in Sierra Leone and Angola.

In Angola, State oil company Sonangol, privately owned company Damer and Brazilian firm Odebrecht have formed a sugar and bioethanol joint venture to eventually produce 30-million litres of ethanol, 250t of sugar and about 160,000 MWh of electricity. The project will cost about $250-million to establish. Funding will be sourced from Angola Forment Bank and Bank Espirito Santo, as well as the Brazilian State development bank.

Energy company Addax & Oryx Group has initiated a similar project, the Makeni ethanol and power project, in Sierra Leone.The investment value of the project is $340-million and it is expected to come on stream by the end of 2013. The project will be funded by entities such as the Industrial Development Corporation, the African Development Bank, Swedfund International and the Emerging Africa Infrastructure Fund.

The bulk of the bioethanol produced through these projects is earmarked for the European Union [EU] market. EU countries have passed a law that will come into effect by 2020, which compels companies that produce and market fuel to mix refined crude oil with at least 10% bioethanol. The main objective of this law is to mitigate the effects of greenhouse-gas emissions on the environment.

As an initiative to help sugar cane growers sustain themselves and find ways to maintain the production of their crops, CANEGROWERS has initiated a seed-cane scheme, which will look beyond providing financial support for small-scale growers. During the past 5-years, the association has financed 17 seed-cane scheme projects to the value of about R15.57-million. The focus of the 2011/12 season was to look at the monitoring and evaluation and sustainability of these projects.

The seed-cane scheme has been initiated to enable participating small-scale growers to buy healthy seed cane at a more competitive price, while they learn about the best management practices that encourage responsible and sustainable land use.

CANEGROWERS also initiated the Phakamisa project in 2011, which was aimed at improving productivity, competitiveness and the sustainability of small-scale sugar cane cooperatives. The project is ongoing and has managed to change the mindset of small-scale farmers about the importance of productivity and enterprise.

Productivity South Africa, whose goal is to improve the level of productivity in South Africa, partnered with CANEGROWERS in 2011 to implement the Productivity South Africa Workplace Challenge among small-scale farmers. The National Development Agency contributed 90% of the R2.8-billion raised to improve the competitiveness of small-scale sugar cane farmers. The balance was provided by Sasa. The project focused on the importance and value of cooperation to capitalise on economies of scale.

SUGAR TANZANIA

Egypt Invests US$200m To Build Sugar Factory In TanzaniaEgypt Daily News 05/07/12The Egyptian African Investment Company has agreed to build a large sugar factory at Dar el-Salam with investments amounting to US$200m.

The factory is expected to start operations in October 2014, noting that production will meet the needs of the Tanzanian market and that any surplus will be exported to Egypt. The project comes as part of a cooperative programme proposed in the Egyptian Development Initiative for Nile Basin.

SUGAR UGANDA

Uganda Sugar Producer Says To Double Output By 2015Reuters 27/06/12Uganda's third largest sugar producer, Sugar Corporation of Uganda Ltd. [SCOUL], aims to double its output by 2015 after securing a US$23 million loan from a French financing firm. Uganda forecasts its production of raw sugar will soar by 26% this year to 327,075 tonnes from 2011's 259,413 tonnes, lifted by favourable weather and higher cane supplies.

SCOUL noted the loan from Proparco would finance a programme that will expand the firm's sugarcane estate and contract farmers' acreage doubling its sugar production from the current 50,000 tonnes to 100,000 tonnes by 2015.

Uganda consumes about 350,000 tonnes of sugar, which could jump to 700,000 tonnes by 2030, according to industry body Uganda Sugarcane Technologists Association [USCTA].


SUGAR NEWS

12

More Sugar Farms In Tanzania Envisaged

Tanzania Daily News 18/07/12The government has pledged to increase sugar production in Tanzania by identifying other suitable areas for both large and small scale sugarcane farming. The earmarked areas for small scale farming include Kilosa and Mwaya in Morogoro, Kiru [Manyara], Lumuma [Dodoma], Peramiho [Songea] Liuli [Mbinga], Amani [Tanga] and Kintiku [Singida]. Expansion of sugar plantation in the country also goes hand in hand with increasing sugar factories. The Government has identified Mahurunga [Mtwara], Pangani [Tanga] and Babati [Manyara] as new factory sites. The government, through the Tanzania Sugar Board [TSB] is working on a 5-Year Strategic Plan [2011-2012 - 2015/16], which is tailored to improve the sector which focuses on ensuring sugar availability to meet the growing demand.

Tanzania Sugar Facts• The country has a deficit of sugar. The current estimated demand is far above the sugar supplied by the factories.• The annual demand is about 480,000 MT against production of about 300,000 MT produced [2009/10 season]. • Achievable production is even below the installed capacity of 320,000 tonnes. • To satisfy the sugar demand the sugar sector has to double efforts. Of importance is the implementation of a strategic plan 2012 – 2016 recently created by the Sugar Board of Tanzania [SBL].• The plan aims at increasing sugar production 420,000 tonnes of sugar by 2016. • Enhanced existing factories production by: Rehabilitating milling facilities, expanding the mills, improving efficiency in production, increasing yields per hectare of cane harvested by estates and establishing new sugar projects. • Establishing Indian type small sugar plants (called Khandasari plants), improving the availability of better cane varieties and planting materials, controlling sugar cane disease, promoting and implementing irrigation farming in the fields. • Improving access road networks, reducing post-harvest losses and strengthening the capacity to deliver on regulation research training and extension services.

Sugar ProjectsTwo potential projects are significant and can enable Tanzania almost double sugar production capacity. These are the Ruipa and Ikongo projects.

Ruipa: The project is in the Kilombero valley in the Morogoro region along the Tazara railway. The maximum potential of the project is to produce about 224,000 tonnes of sugar. Irrigation water is available from either the Kilombero River or the Ruipa River.

Ikongo: The project has a sugar production potential of 82,000 tonnes. It is located in in Mara region close to the Kenya border. Irrigation water is available at the Mara River.

But other projects include Mahurunga in Mtwara, Usangu Plains in Mbeya region, Luiche in the Malagarasi river basin, and the Wami coastal plain in the Coastal region. Others include Kilosa and Ukutu Kisaki in Morogoro and Babati in Arusha region.


SUGAR NEWS

13

TEA BURUNDI

Burundi Tea Revenues Up 2% In JuneReuters 17/07/12Burundi's tea export revenues rose 2% in June compared with the same period last year, helped by a stronger regional market. The state-run Office du Thé du Burundi [OTB] collected US$2.65 million in June from the export of 860,523kg, up from the previous year's US$2.60 million on sales of 934,477kg.

"There were low supplies of tea following a fall in overall production of the Kenyan tea, and this drove up prices of Burundi's tea." Joseph Marc Ndahigeze Office du Thé du Burundi [OTB]

Kenya is the top producer in the east African region, and landlocked Burundi exports 80% of its tea through a regional weekly auction held in the Kenyan port city of Mombasa. The average export price per kilogram climbed to US$3.09 in June, from US$2.79 the previous year. Tea generated US$22.2 million in revenues for Burundi in 2011, up from US$18.2 million in 2010.

TEA KENYA

Kenya Top Grade Tea Prices Rise For Sixth WeekReuters 24/07/12The average price of Kenyan top grade tea rose for the 6th straight week to US$4.07/kg at auction this week from US$3.92/kg last week. The nation is the world's biggest exporter of black tea and the crop is one of its largest foreign exchange earners, raking in US$1.27 billion last year.

Regulator Tea Board of Kenya has forecast production to pick up starting this quarter, after a 14% year-on-year fall in output for the first 3-months of the year, due to heavy rains in the country. The Mombasa-based Africa Tea Brokers [ATB] noted Kazakhstan, Sudan, Yemen and other Middle Eastern countries showed strong demand, as did Pakistan Packers.

Kenya H1 Tea Output Down 11%, Earnings To RemainReuters 25/07/12Kenya's tea output fell 11.4% in the first half of the year due to extreme weather conditions with full-year production projected to decline 5% compared to 2011. The tea board said 2012 output was expected to fall to 360 million kg, down from 377 million kg recorded in 2011, mainly due to lower production in the first half of the year. But with average tea prices increasing to around US$3 per kg at auctions, up from US$2.97 in the first half of 2011, the loss of earnings is expected to be minimal.

Tea exports fell to 207.77 million kg from 211.7 million kg in the six months to the end of June. Overall tea output fell to 158.17 million kg for the first half of the year, down from 178.4 million kg recorded during the same period in 2011. Kenya experienced drought at the beginning of the year and now the nation has seen some harsh conditions in terms of cold and very low temperatures in the tea growing areas.

Brazil, Togo and Cameroon started importing Kenyan tea this year, the tea board said, while exports to emerging market countries like United Arab Emirates, Kazakhstan, Djibouti and Indonesia also increased. Egypt remains the biggest buyer for Kenyan tea, accounting for 21% of the country's tea exports in the first half of 2012.

CTC Tea Export To Kenya May Exceed Last Year’s LevelThe Hindu 22/07/12India’s export of CTC tea to Kenya, itself a major producer and exporter of CTC tea, may exceed last year’s level if the present trend is any indication. In 2011, Kenya imported from India a little more than 3 million kg valued at Rs 20.72 crore. In first 6-months of the current year [January-June 2012], the Kenyan import was 1.32 million kg valued at Rs 11.38 crore as compared with 1.05 million kg valued at Rs 6. 74 crore in the same period of the last year.

This year Kenya has been hit by crop loss due to unfavourable weather and the shortfall in production in the first half [January to June] is estimated to be lower by 22 million kg at 127.8 million kg [149.20 million kg]. The import from India it is felt might be re-exported to help Kenyan exporters keep their overseas commitments.

In the past, Kenya imported from India larger quantities – more than 5 million kg valued at Rs 32.76 crore in 2010, for example. Over the years, Kenyan production has been a showing downward trend – from 398 million kg in 2010 to 377 million kg in 2011.The trend so far suggests that the drop this year might be sharper. However, exports exceed domestic production – 441 million kg in 2010 and 421 million kg in 2011.

The commitments to overseas buyers were kept presumably with larger imports. India’s tea export in the first half is estimated at 43.84 million kg as compared with 45.76 million kg in the same period of previous year despite bullish global market largely due to the demand-supply gap with major tea producing countries reporting shortfall in production. The Indian tea exporters would attribute their inability to cash in on booming export market to the drop in production. However, the drop so far has been estimated at 27 million kg, roughly 2.7% of the total production of about 1,000 million kg.

Sacco to Build Tea Factory in BometThe Star 06/07/12The Savings and Credit Co-operative [Sacco] has unveiled plans to put up a tea factory in Bomet district. The factory is expected to give Kenya Tea Development Agency [KTDA] run factories in the district a run for their money. Sacco said the move has been prompted by heavy losses experienced by tea farmers in the region due to delays in the collection of tea. The society will partner with ABC bank in the construction of the private tea factory. With more than 10,000 members the society hopes to solicit some Sh20,000 in form of shareholding for an agreed contribution before the partner releases the funds for the start of the constructions work at allocation yet to be identified.

TEA TANZANIA

EU Dishes Out €1.5m To Boost Tea, Coffee ProductionIPP Media 28/06/12The Government has signed for €1.5m worth of grant money from the European Union to support the Tea Research Institute of Tanzania [TRIT] boost small tea and coffee farmers improve productivity and quality of their produce for better market access. The EU is very much aware of the challenges the sector is facing particularly the low profit margins for smallholder tea and coffee farmers. Link the floor level income to old inefficient agricultural practices that has affected a decline in productivity of the existing varieties now compounded with limited access to markets the sector is crashing.

Tea is a major commercial commodity in Tanzania and is 5th most exported crop. Small scale farmers seem to be optimistic with the crop’s potential the sector has in recent years, experienced more than 30,000 increase in number of small scale farmers. The EU intends to assume an integrated approach all along the ‘tea value chain’ in order to increase productivity and as a result support the small farmers’ effort to dig themselves out of poverty.

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TEA NEWS

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TIMBER GHANA

Ghana Declares War Against Illegal Timber ExportsCAJ News Agency 13/07/12Ghana has constituted an inter-agency taskforce to clamp down on the export of illegal timber particularly rosewood from the nation’s ports which is causing the nation to lose millions of cedis in tax revenue. The taskforce is expected among others, to vet felling and export permits, shipment certificates and all other relevant documents of selected timber companies to enable the taskforce issue the necessary recommendations for the Minister to authorize shipment of timber from such companies.

It is envisaged that the Taskforce’s intervention will also help to highlight challenges in implementing the ban on the issuance of license to harvest rosewood and bring-up proposals to assist the Ministry to arrest the unsustainable exploitation of the nation’s forest resources. Agencies represented on the Taskforce are the Ministries of Lands and Natural Resources, Finance and Economic Planning, Trade and Industry as well as the Timber Industry Development Division and Forest Services Division, both of the Forestry Commission. Others are National Security Council, Ghana Ports and Harbour Authority, Customs, Excise and Preventive Service, Ghana Revenue Authority, and Environmental Monitoring Foundation, a local environmental non-governmental organization.

TIMBER UGANDA

Ugandan Government Maintains Timber BanNew Vision 13/07/12The Ugandan government has maintained the ban on harvesting timber and announced a raft of stringent measures, among them the issuance of new fraud proof licenses that will guide future dealing in the commodity. Announcing the measures on 12/07/12, which include among others the establishment of a regulatory unit, display of licenses, registration and verification of licensees, reinstatement of timber tracking system, stock taking, recording of all private forest owners and registration of firewood and charcoal dealers, water and environment minister Maria Mutagamba said the ban will expire with the issuance of the new licenses on August 1.

The measures and several others, was aimed at streamlining harvesting and trade in timber in addition to improving governance and curbing illegal timber trade in the country and the resultant annual loss of 92,000 ha of forest cover.

All current valid licenses will be replaced with the new forge proof permits for the same period, scrapping the yearly licenses. Licenses shall be specific for identified harvestable volumes. The licensee will have to demonstrate the capability to replace the trees to be felled by "exhibiting a vibrant nursery or planted or to be planted areas before a license can be issued.

"These licenses shall be based on available stocks and the licensees or permit holders shall be closely monitored and supervised based on the guidelines issued by Forestry Sector Support Department [FSSP].”Maria MutagambaWater and Environment Minister

Charcoal and timber dealers have not been spared either. They will be registered at district level and organize themselves into user groups or associations to allow for easy monitoring and coordination. By the end of September as they apply for permits, proof of plans to plant will be a condition and any such applicant should be able to plant at the start of the first year of registration. In the second year priority will be given to those already planting, she said, and extended the verification exercise of licenses and registration of saw millers and pit sawyers to August 31.

Mutagamba indefinitely banned the harvesting of timber in the 9-districts of Kibaale, Kyegegwa, Kyenjojo, Masindi, Mpigi, Hoima, Buliisa, Mukono and Buikwe, citing the gravity of deforestation there. "These are with immediate effect no go areas and no harvesting is to go on until further notice."

Government in March slapped a nation-wide 3-month ban on harvesting of all types of timber as part new sweeping measures aimed at halting runaway deforestation in the country.

TIMBER ZAMBIA

ITC Program Set for Timber ExportsTimes of Zambia 02/07/12The Zambian International Trade Center [ITC] will embark on a 4-year construction programme focusing on production and export of timber. ITC advisor, Yaya Ouattara said the Finnish government approved the construction project which would cost about US$8 million. Mr Ouattara said the programme was expected to commence in August this year and would focus on helping SMEs who were dealing in timber which would enable them export the products to neighbouring countries.


TIMBER NEWS

15

TOBACCO ZIMBABWE

Zimbabwe Tobacco Sales Up 6.5% As Economic Growth SlowsZimbabwe Independent 28/06/12Zimbabwe tobacco sales volumes for the current season have reached 126.2 million kg, 6.5% ahead of the 18.4 million kg recorded in the same period last season. Earnings for this season so far total US$465 million, up by 45% from US$313 million recorded last year. Prices for the golden leaf averaged US$3.7 per kg, up by 36% from the US$2.7 achieved last year. Contract sales have this season realised US$294 million sold at a firm price of US$3.8 per kg. Contract sales volumes currently total 77 million kg while sales from auctions are at 49 million valued at US$175 million.

Tobacco output for the 2012 marketing season has been revised downwards to 130 million kg, declining from the projected 180 million kg. Rejected bales this season dropped by 13% to 70,842 compared to the 104,969 recorded in the previous season.

The Ministry of Economic Planning and Investment, presenting a report on the implementation of the Medium Term Plan [MTP] noting the 130 million kg revised tobacco output was 28% lower than the MTP target - a disturbing development. MTP this year was targeting 180 million kg in terms of tobacco output. The drop was attributed to a decline in tobacco hectarage, which went down to 76,000 ha or 2.5% compared to last year's season. This coupled with reduced support to farmers attributed to the persistent liquidity crunch in the country and resulted in scaling down of contract arrangements also due to side marketing by beneficiaries. The situation was also worsened by erratic rains and power cuts during the curing of the harvested leaf.

Zimbabwe US$465 Million Tobacco SoldFinancial Gazette 28/06/12Flue-cured tobacco worth US$465 million had been auctioned across the country's 3-auction floors by the end of June. The Tobacco Industry and Marketing Board [TIMB] noted US$321 million worth of the golden leaf were sold during the same period last year. The TIMB said 125 million kg of tobacco had gone under the hammer during the review period. The sales volumes translated into a 6.32% change from the same period last season when a total of 118 million kg were sold.

The current marketing season started on 15/02/12. The seasonal average price increased from US$2.73 per kg last year to US$3,72 per kg this year. TIMB statistics indicated that the daily average price was US$3.52 compared to US$3.13 per kg last year. A total of 16.3 million kg of tobacco worth US$59.2 million at an average price of US$3.64 per kg had passed through the Tobacco Auction Floors during the review period.

• Boka Tobacco Auction Floors auctioned 14.5 million kg worth US$ 51.2 million at an average price of US$3.53/kg. • Millennium Tobacco Floors auctioned 8.5 million kg valued at US$30.5 million at an average price of US$3.61/kg. • Premier Tobacco Floors sold 9 million kg worth US$32.7 million at an average price of US$3.63/kg.

Contract sales amounted to 76.6 million kg worth US$290.6 million at an average price of US$3.79 per kg. Burley sales show that a total of 41 368 kg worth US$ 93, 4 million had been sold compared to 426,407 kg worth US$522 140 last year. Dark aired tobacco sales had declined to 145,456 kg by 07/06/12 worth US$223,698 from 293,873 kg worth US$195,961 sold during the same period last year.

The report said seasonal exports of tobacco as of June 22 were 31.3 million kg with a value of US$127.4 million. The average price for exports was US$4.07/kg. China dominated the country's export destinations followed by the United Kingdom, South Africa, Indonesia, UAE, Mauritius, Russia, Belgium, Hong Kong and Sudan.


TOBACCO NEWS

16

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