Agri Business Working Group Seminar. World Bank, Maputo: Wednesday, 15 th April 2015 REPORT

Transcription

1 Agri Business Working Group Seminar World Bank, Maputo: Wednesday, 15 th April 2015 REPORT The Agribusiness working group meets every third Wednesday of the month and discuss relevant issues on agricultural business in Mozambique. Actors present are mainly big donors, private sector and government institutions. This month, the meeting was held at the World Bank Office. Three presentation on Future of the Sugar Sector in Mozambique and Outgrowing Experiences were the menu for the 2 hour meeting. Presenter 1: Jorge Manjate from CEPAGRI Mr. Manjate, shared CEPAGRI experiences related to sugar sector in Mozambique, which includes production numbers and main challenges taking into account the revision of Mozambique sugar policy aligned to international sugar market context. Seeing that the sugar sector in Mozambique has economic and social positive impact in rural communities development, Mr. Manjate underlined a few support measures approved by government to protect this sector, namely: Application of surcharge to sugar importation to protect domestic market and secure national sugar consumption internally; Creation of a singular system distribution in order to create economy scale on national sales and international market and to reduce transaction cost at national level to make the sugar price affordable; VAT elimination in the sugar production chain to reduce its price and increase the competitiveness of national industry. These measures resulted on the development of sugar industry since sugar production have increase by increasing out grower s production area. Mr. Manjate also stressed the importance of EU financial support and measures mainly in Maragra and Xinavane sugar 1

2 factories. It should be noted that out growers contribute in 20% of sugarcane supplied to industries. According to Mr. Manjate, this industry creates around annual jobs. A reduction of sales is noted associated with the continuous low price sugar importation. This factor directs Mozambique production to EU market with consequent loss of profits due the low price of sugar in that market. To manage all this constrains, the government is fighting at a global level by being part of the ACP Sugar producers and exporting countries, were was developed an action plan and was also established agreements to access international market. In Mozambique, institutional coordination is taking place between Agriculture Ministry, Industry and Commerce Ministry and customs services in order to adjust sugar reference prices as a way to operationalise sugar policy measures. The adoption of the strategy of diversification in sugar industry, it is a mean to guarantee the transition of the sugar industry to sugar cane industry, so that the product can be integrally used in different sector. The second presentation by Sancho Cumbi from Tongaat Hulett Mozambique was on Small Scale Growers Program. The Tongaat Hulett is an integrated agriculture and agri-processing business focusing on sugar cane production. The company have its operations in Southern Africa countries, namely South Africa, Zimbabwe and Mozambique and packing and distribution operations in Botswana and Namibia with 40,000 employees in general. Per annum, the company as a group use of around 10million tons of sugar cane in its operations and in Mozambique the group as over 30,000 ha of cane in two operations (Xinavane and Mafambisse). In Mozambique, the company is present since 1986, is the largest sugar miller in the country and considered the largest private sector employer with installed capacity of 330,000tons of sugar per annum. 2

3 According to Mr. Sancho, the small-scale growers program started in 1998 with a Southern Africa Development Bank from South Africa funding, with the main objective of establish the economy by improving life at local community level. For any other expansion, the company made a statement to not to acquire more land but go through small-scale growers. In 2006, on the basis of the Government Sugar National Strategy, The EU financed, Tongaat Hulett to support small-scale growers, provide technical assistance, skill development and social services to the communities. In 2006, the company in a partnership between government, private sector and local communities had under small-scale growers around 160 ha of sugar cane plantations. As key stakeholders the program has financial institutions, donors, private growers, national and local government, traditional leaders and NGOs. A new programme funded by the EU has started in 2014 with main objective to expanded smallholders sugar cane cultivation area as well as establishment of associations, and accomplishment of environmental requirements (e.g. environmental impact study, environmental management plan, community consultation) with involvement of local NGOs. Small-scale growers capacity building is one of the focus of the project with a two year training program, divided into practical and theoretical, the growers are trained on how to organize their association so they can become more independent from the company. According to Mr. Sancho, the majority of the growers are woman because most of the men immigrates to South Africa to work on the mines. Four associations are making food crop production ( as part of the EU funded programme) in order to ensure food security as 10% of the land developed is to produce horticulture. One of the questions asked during Mr. Sancho presentation, was about the kind of crop operations the company provides, he said from bush clearance to crop establishment. 3

4 Other question raised was if the growers supplies the cane only for the company, the answer was yes, because a kind of cane supplier agreement was established. One of the participants asked the presenter about the importance of a research system in sugar value chain, to answer the question Mr. Sancho underlined its importance to keep increasing company efficiency on how to do business and become competitive. One of the important aspect raised is the evolution and the transaction of the sugar industry to sugar cane industry, once there are no use of the industry residues (e.g. for animal feed in dry season). The last presentation was by Mr. Peter Kendrick from Massingir Agroindustrial SA. Massingir Agroindustrial SA. (MAI) is a sugar plantation and mill localized in the south part of Mozambique scheduled to begin production in The company is a consortium between TSB South Africa and SIAL of Mozambique and it will involve significant participation at all levels. The project is located in a favourable environment, with good climate and environmental conditions to sugar cane production (water, good soils and others). The company have so far established a seed cane nursery with the objective of identify variety s that is suitable for the region and start the process of bulking up the seed cane project to be able to supply the sugar cane to all the project. The project community proposal key parameter is mainly to ensure food security by doing food crop production. The company community engagement has two focus, invest in people by empowering them, develop skills and training them in agriculture and production and invest in infrastructure by livelihood improvement, provide and improve basic services as water, sanitation, schools and hospitals. The feasibility studies undertaken by MAI comply with IFC standards for social and environmental responsibility with the support of independent consultants in order to ensure an efficient community consultations. 4

5 In the consultation process, the community leaders have the opportunity to exchange experiences with other communities that had gone through the process (e.g. Swaziland) to understand they role, give them opportunity to decide what s better for the community and build a trust relationship between the whole community and the company. During the presentation, MAI was faced with few questions. The first one was related to the financing of the out grower project, area size and number of communities. According to Mr. Peter, the project will target around 40 communities and at the first stage the company is going to finance it but they are also looking for a finance company. The second question was related to the industry competitiveness taking into account the infrastructure components. For Mr. Peter, infrastructure constitutes one of the biggest challenges although MAI project takes advantages because of its location. One of the participants wanted to know if the company don t have problems with community related to land. To answer that, MAI raised the importance of the consultation process as the community definitively will look to the project as an opportunity do selfdevelopment. Tea sector was one of the suggested topic to be discussed in one of the next Agribussiness Meetings. Next meeting was scheduled for the 20 th May Attachements: Presented PowerPoint Slides List of participants Annual Calendar with suggested topics 5