1

SUGAR SECTOR
Sector Profile

Background and Overview: The sugar sector is one oI the biggest agro-processing industries in Tanzania. The
sector contributes approximately 35 oI the gross output oI Iood manuIacturing industries and 8.5 total
manuIacturing value added products. It provides direct employment to 17,500 people and around 18,500 small scale
cane out-growers
1
. Considering the secondary employment, the sector generates employment Ior 86,000 people. It
also creates substantial indirect employment in the Iorm oI people engaged in the wholesale and retail trade in sugar,
providers oI transport services and people working in social services in the sugar estate townships (shops, bars,
schools etc). S is primarily used Ior local consumption where the current level oI sugar selI suIIiciency is only 75
percent. However, Ioreign exchange saving by consuming the sugar produced locally is about US$ 320/tone oI
which in the year 2009/10 a total oI US$ 84.3 million was saved. Direct Ioreign exchange earning Irom little export
oI sugar and molasses on average is US$ 9.7 million per annum. Tanzania holds only a marginal position in the
world market with its production oI 280,000 tones oI raw sugar (about 0.2 oI the world sugar production)
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.

History oI the sector datesback to the early 1930`s when Tanganyika Planting Company (TPC) Limited was
incorporated in Kilimanjaro region. TPC started the production oI granular sugar in 1931 at a small plant installed at
Arusha Chini. Production oI sugar began in 1936 with 350 Tones Crushing (TCD) capacities per day. The 1940-
1960 period saw expansion oI the TPC plant to 1500TCD, installation oI three other small plants, at Karangai in
Arusha, Bukoba (Kagera) and Turiani (Mtibwa). The Iirst large sugar project aIter independence was Kilombero I
incorporated as a sugar cane out- growers programme. A new out-grower programme was also incorporated into the
Mtibwa project. The Sugar Development Corporation (SDC) was then established under the Public Corporation Act
oI 1964 to promote sugar production activities in Tanzania. SDC was the Government arm responsible Ior
development oI the sugar industry, sugar marketing and all matters relating to the sector.

Sugar production in Tanzania increased steadily Irom an annual average oI 49000MTs in 1961-1965 to an annual
average oI 115,200MTs during the 1976-1980. Also, the sugar cane grown by out-growers increased steadily Irom
an average oI 17552MTs (1961-1965), to an average oI 157000MTs between 1981 and1985. However, between
1986 -1990(when all Iactories were nationalized) sugar production declined to a lowest annual average oI 99,000
MTs. The period also saw a drastic decline in cane production by out growers. The economic reIorms which started
in the 1980s entailed divestiture oI the sugar industry under which the sugar companies were privatized and SDC
was restructured into a Sugar Board oI Tanzania responsible Ior regulation, co-ordination and development oI the
sugar industry. Since then, the sugar sector has developed dynamically, in terms oI plant expansion interest oI
Ioreign investors. Although involvement oI the private investors in the sugar sector has contributed to increased
production Irom 135,535MTs in 2001 to 263,461MTs (in 2010), the demand Ior sugar has always been higher than
supply. The shortage oI the commodity has caused the price oI sugar to rise by over 50 , causing hardships to
people and industries that use sugar as an important ingredient. ThereIore, the Government has recently allowed
private companies to import duty Iree sugar Ior the Iiscal year ending June 2012 to cater Ior 100,000tonnes current
deIicit oI sugar.

Organization oI the sugar sector is such that the Sugar Board oI Tanzania (SBT) controls the production and
marketing oI sugar, distributes export quotas, promotes sugar cane crops and provides political consulting. The SBT
is under the Ministry oI Agriculture and Food Security.

There are Iour major sugar companies in Tanzania namely Kagera Sugar Limited, Tanganyika Planting Company,
Kilombero Sugar Company (with two sugarcane estates and two mills) and Mtibwa Sugar state, which own both
estates and the sugar processing Iactories. Sugar cane is also grown by private out-growers who around in
Kilombero and Mtibwa. All sugar cane Iarmers in Tanzania are represented by local groups under grower
associations. The out-growers are represented by Iarmer groups and Iour major Cane Grower Associations namely
Ruembe Cane Growers Association (RCGA), Kilombero Cane Growers Association (KCGA), Mtibwa Out-growers
Association (MOA) and Kagera Sugarcane Growers Association (KASGA), the national apex body is the Tanzanian
Sugar Cane Growers Association (TASGA). There are opportunities in establishment oI new sugarcane estates in

1
Annual Report, Sugar Board 2008/09
2
Federal Agriculture Research Centre (2007)
2

Coast, Ruvuma, Kagera, Mara, Mbeya, Kilimanjaro and Kigoma regions and in sugarcane processing Iactories.
Other important institutions in the sugar sector are the Sugar Cane Research Institute (SRI) in Kibaha, as well as the
National Sugar Institute (NSI) in Kidatu. The SRI carries out variety trials and researches in the areas oI pest and
disease control as well as on the agronomic improvement oI sugar cane crops. The NSI concentrates on the technical
aspects and provides training Ior growers and machinery or Iactory owners with the goal oI increasing the eIIiciency
oI production The National MicroIinance Bank (NMB) as well as the Savings and Credit Cooperative Organization
(SACCOS) provide micro credits Ior out-growers. Furthermore the Private Agricultural Support Service (PASS)
provides support in the economic planning oI sugar cane production by out-growers.


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igure 1: Organization of the 1anzania Sugar Sector

Source: ederal Agriculture Research Centre (27)

Marketing and Supply Chain: Sugar cane is grown by both millers and out-growers as a raw material. It is sold to
the millers, crushed and sugar is produced together with molasses and baggase Ior co-generation as byproducts.
Sugar is packed-loaded on to trucks or wagons and transported to centres oI consumption by rail, road or sea. The
wholesalers in town and cities sale the sugar to retailers and Iinally consumers in both urban and rural areas buy it
Irom retailers. The little sugar Ior export is transported to Dar-es-salaam and Iinds its way by sea to the U Ior
reIining or direct consumption. Molasses is sold to the contracted persons and then transported to the consumption
areas (Ior dairy purpose or Ior production oI alcohol, pharmaceuticals etc.) and later is sold to consumers. Baggase is
burnt to produce power (electricity) which is used by the sugar companies and a small amount sold to the national
grid Ior consumption. Inputs such as lime are also bought Irom limestone works transported to the Iactories Ior
liming the juice and used Ior clariIication oI sugar syrup.

Challenges of the Sector Sugar production is a long-term business, due to the capital-intensive nature oI investment
and the period over which sugar is grown. Production oI sugar cane also requires provision oI reliable and large
water storage. Water storage dams are expensive and it is oIten impossible Ior private enterprise and individual
companies to erect them. It is thereIore a challenge Ior sugar companies and growers across the country to make the
appropriate arrangements to have water stored at costs reasonable enough to enable them to expand their operations.
Other costs that make investment in the sugar production expensive include land preparation costs i.e. ploughing,
harrowing and Iurrowing; seed cane and transport; planting; weeding and cane maintenance; cane cutting; transport
to Iactory; cane reception and handling costs; sugar processing and sugar sale at domestic or Ioreign market. Sugar
cane out-growers who could plan an important role in the sugar value chain Iace a number oI challenges including:
low literacy levels, lacking training/skills; poor inIrastructure which increases transport costs and losses; prevalence
oI diseases, poor lack oI reliable irrigation schemes, limited access to investment and operations Iinances, as well as
low cane prices and delayed payments to Iarmers. Currently, out-growers Iarm small rain Ied plots and yields are
comparatively low.

Other bottlenecks in sugar production include:
O Sugar cane ratoon disease (RSD) has been a major cause oI low cane production. The disease alone
causes cane yield reduction oI more than 50through stunted growth and low plant population.
Government
Sugar Board
Mtibwa sugar
estate
Kilombero
sugar
Tanganyika
Planting
Company
Kagera
Sugar
Factories
Mtibwa
Out-
growers
Association
Ruembe Out-
growers
Association
Kilombero Cane
Growers
Association

Local Groups oI Out-growers

Out-growers

Out-growers

Tanzania
Sugarcane
Growers
Association
National Sugar
Institute
Sugarcane
Research Institute

SACCOS
National
MicroIinance
Bank
Private
Agricultural
Support
Services
(PASS)
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O Monovariety oI NCO 376 in estate and out-grower cane Iields is yet another serious problem in
cane production. The variety occupies 96 oI the estate and 100 oI out-grower cane Iields. The
variety though satisIactorily high yielding it is on the other hand highly susceptible to smut and
RSD(ratoon stunting disease)
O Low irrigation eIIiciency (less than 75) arises Irom lack oI Iunding oI purchase oI the required
number oI pipes and sprinklers to distribute water to irrigated Iields.
O High input cost oI Iertilizer and herbicides are among the causes oI low cane Iields .
O Poor cane quality due to low sugar content in cane varieties in use. No variety has yet been
identiIied better than NCO 376 in out-growers rain-Ied areas who provide about 45 oI total cane input.
O Low sugar cane production by out-growers due to use oI mono varieties susceptible to diseases.
O Poor inIrastructure in the out grower land which hinder easy transport oI harvested cane to the
Iactories and sometimes results into poor cane quality at the Iactory yard due to cane being stale
which at times get discarded .
O Lack oI irrigation Iacilities on the out-grower land Iorces them to rely on rain-Ied cane.
O High transportation costs to sugar consumption areas due to ever increasing Iuel prices and bad roads.
O Illegal importation oI cheap sugar oI low production costs. The competition with the high cost oI
locally produced sugar cause stiII competition and companies are unable to put Iunds Ior Iurther
Development. Also the importation oI illegal sugar Irom the bordering countries like Malawi and
Zambia results into poor sales at low prices oI locally produced sugar in the areas.



!rofiles and Lines of Business of Large arms: The major business lines in the sugar sector are as Iollows:

i) Large scale sugar producers (companies).These are companies incorporated under the company`s ordinance
engaging in the business oI producing and marketing sugar. They are both cane planters and millers, owning sugar
cane estates as well as sugar mills. The Iour major sugar Iactories and their brieI proIiles are as Iollows;

Kilombero Sugar Company (KSC) Limited: Kilombero Sugar Company is the biggest sugar company in Tanzania
operating two Iactories at the same location. The company produces 42.42 oI the industry sugar cane. It is
proIiled as one oI the leading Iirms in the sector in the next section.

1anganyika !lanting Company (1!C) Limited: This is the oldest and the second leading company in the sugar
sector. The company produces 25.33 oI industry sugar cane. Its proIile is also presented as one oI the leading
sugar Iactories in Tanzania.

Mtibwa Sugar Estate Ltd. (MSE) is property oI Tanzania Sugar Industries Limited (TSIL) owned by a consortium
oI Tanzanian business persons Irom Turiani. MSL`s headquarters and operations are in the Turiani Wards, the
Mvomero district in Morogoro. Sugarcane growing and the production oI sugar and related products are the main
activities oI Mtibwa Sugar states Ltd. Cane is supplied Irom the company`s own Iields and some small portion
Irom small out-growers in surrounding villages. MSL contracts smallholder Iarmers (SHFs) who are members oI a
registered non-governmental organization (NGO) which is Mtibwa Out-growers Association (MOA). The
interaction between MOA and MSL is dependent on the Sugar Industry Act (2001) that bestows the power on the
Sugar Board oI Tanzania (SBT) to regulate the sugar industry. BeIore the opening oI the harvesting season, MSL
and MOA agree upon the terms oI the contracts based on the nature oI sugarcane, which is a major raw material oI
the sugar processing Iactory. MSL uses sugarcane to produce sugar, bio-energy, animal Ieeds, Iertilisers, and
ethanol. It produces 40,000 tones oI sugar per annum. Part oI the sugar produced is exported to the U under the
Sugar Protocol while the remaining is sold locally.

Kagera Sugar Limited (KSL) was privatized by the Government oI Tanzania in December 2001. Since then, KSL
became another member in the Super Group oI Companies. It is located in the North-Western part oI Tanzania
(close to the Tanzania-Uganda border). Sugarcane growing and sugar production are KSL's main activities. KSL
takes advantage oI its geographical location along River Kagera, using it as a source oI water in their irrigation
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scheme. KSL has heavily invested on the Centre Pivot Irrigation System, use oI high-tech Reel Irrigators as well as
Overhead Sprinklers. Its current capacity is 35,193 tones oI sugar per year.







1able 1: Sugar !roduction by the our Major actories in M1s (21-21)
YEAR KSCL 1!C MSE KSL 1O1AL
2001 61688 42018 31829 0 135,535
2002 72499 49681 41151 0 163,188
2003 98420 54850 36850 0 190,120
2004 12674 62519 34577 0 223,788
2005 126253 52756 35081 15400 229,863
2006 136944 60503 49170 16703 263,317
2007 103681 34887 33666 19678 192,003
2008 127432 59247 44802 33951 265,434
2009 118026 78483 42863 40482 279,851
2010 119623 68616 40029 35193 263,461
Source: Sugar Board of 1anzania (21)

ii) Sugarcane out-growers Sugar cane out-growers comprise a diverse group oI cane Iarmers ranging Irom growers
owning an acre or less oI cane to 100 acres or more. Out-growers are attached to a sugar mill-Kilombero, Mtibwa
and recently Kagera sugar.TPC does not have out-growers at present. Overall out-growers command about 24,341
hectares at Kilombero, Mtibwa and Kagera. They are an important part oI the sugar supply chain in Tanzania.
Sugarcane growing and related support services present one oI the main opportunities Ior the industry to contribute
to economic and social development in the country. These provide over 40 oI total cane supply to their respective
Iactories. The statistics Ior sugar cane out-growers in 2009/10 and 2008/09 are shown in Table 2.

1able 2: Sugar Cane !roduction by Out-Crowers
Company
Location
29/1 & 28/9 Aumber of Cane Out-Crowers
Hectares Cane (Metric 1ons)
29/1 28/9 29/1 28/9 29/1 28/9
Kilombero 13,106 11,200 413,640 473,457 8,557 12,255
Mtibwa 11,00 8,692 179,884 216,600 4,527 5,800
TPC N/A N/A N/A N/A N/A N/A
Kagera 235 113 4,082 2,712 326 326
Total 24,341 20,005 597,606 692,769 13,410 18,381
Source: Sugar Board of 1anzania (21)

iii) Small scale sugar producers: There are Iour categories oI small-scale sugar producers operating in the country
as described below;
O Owners and operators oI mini sugar plants oI capacity 100 TCD capable oI producing 1000-2000 tons oI
sugar per annum.Two plants are installed at Wami Prison and Dudumera sugar plantation in Babati district
O Owners and operators oI miniature sugar plants commonly reIerred to as village level sugar plants. The
plants have the capacity to crush 2.5 tons canes per hour to produce between 100-600 kg sugars per day.
There are a total oI 13 units in the country. One is operational at Lumuma Roman Catholic Church area.
O Household level sugar producers. These entails crushing sugar cane using manual or electrical cane crushers
(designed by SUDCO (SDC)/NSI).Liming boiling the juice under open Iire, slow cooling/crystallization
and separation oI the sugar crystals Irom molasses through gravitational drainage.
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O Producers oI jiggery- Although jiggery is not granular Iree Ilowing in so Iar as this product can complement
or substitute granular sugar and when exported is sometimes classiIied under tariIIs applicable to raw sugar,
it can also be treated a sugar. It is estimated that there are about 22 producers oI jaggery in the country
commanding an area oI about 5000 ha and producing over 20000 tons oI jaggery.

iv) High ructose Corn Syrup (HCS) and Sweeteners: At present there is no HFCS production. As Ior sweeteners
there is one company 21
st
Century, producing sweetened sugar i.e. blending normal sugar with high intensity
sweeteners to produce extra sweet sugar.


Profiles of the Major Companies
The sugar sector is dominated by Iour companies. However, two Iactories are proIiled as the major companies due
to two major reasons. First, they are leading companies in the sector in terms oI production levels, employment and
size oI the estates. Second, while one Company (Kilombero) engages sugar cane out-growers, Tanganyika Planting
Company does not have out-growers. ThereIore, the two companies represent the two models used by the sugar
Iactories in Tanzania.

Kilombero Sugar Company limited

Basic Details: Kilombero Sugar Company Limited (KSCL) is largely owned by ILLOVO Sugar Limited (ISL), a
South AIrican company, which owns 55 oI the shares. The Government oI Tanzania still owns 25 oI KSCL and
D&F Man Holding Limited, a company based in the United Kingdom owns 20 oI KSCL. The headquarters and
operations oI KSCL are in the Kilombero valley, which is divided into two districts namely Kilombero and Kilosa.
It is the largest sugar-processing company in Tanzania processing two types oI sugar at two Iactories. These two
Iactories are Msolwa (Kilombero 1, or K1) and Ruhembe Iactory (Kilombero 2, or K2). K1 produces brown sugar
and K2 is the only Iactory in the country which produces reIined white sugar. K1 and K2 contract members oI
Kilombero Cane Growers Association (KCGA) and Ruhembe Out-growers Association (ROA) respectively. The
total production oI sugar cane by Miller and Out-growers at KSCL is 1,089,968 MTs per annum out oI which out-
growers contribute 37.95 oI the total output. KSCL processes over 120,000MTs oI sugar per annum. An average
cane yield per acre is 78 tones and the average Iactory capacity utilization oI 76. The company has 850 permanent
employees and 1,900 seasonal agricultural workers. During the peak season it employs up to 4,500 workers.

History: KSCL was incorporated on 30
th
May, 1960 in then Tanganyika and started the out-growers associations in
1961 as Iarmers` groups. These Iarmers` groups transIormed into Ujamaa settlements during the villagelization
policies. The older Iactory, Msolwa (K1) was built in 1962 by private investors. Later in 1968 the Government
bought all shares oI the company Irom initial investors. These shares were in 1972 entrusted to a National
Agriculture and Food Corporation (NAFCO) and the sugar Development Corporation when it was Iormed in 1974.
Ruembe (K2) was built in 1976 and the ordinary share capital was increased Irom TZS
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36 million to 108 million in
1977/78. Later on the ordinary share capital was raised to 208 million out oI the amount invested in Kilombero II
project. Both Iactories started as government initiatives to involve smallholder Iarmers who collectively grew
sugarcane in the Ujamaa Iarms. The Iarms started during the establishment oI Ujamaa villages when the smallholder
Iarmers came Irom diIIerent parts oI the country and settled in the Kilombero valley in order to grow sugarcane. The
company was privatized in April 1998 leading to current shareholding. AIter privatization, ISL invested US$ 50
million Ior rehabilitation oI the K2 Iactory. This increased the demand Ior sugarcane supply in the valley. In
subsequent years another US$3.5 million was invested. In 2004, a reIinery was installed, costing US$ 5.5 million
with capacity oI 65000 tones oI reIined sugar. From 2003 to 2005 KSCL with the support oI International Finance
Cooperation (IFC) established Kilombero Community Trust (KCT). KCT supports the Iarming community to obtain
loans, Ior not only sugarcane development but also other crops. Sugar production has increased Irom 29,000 tones in
the year beIore privatization to the current level oI operation. Kilombero also provides 50 MWhr p/day to the
regional grid oI the Tanzania lectricity supply company (TANSCO) through co-generation, at a price oI around
US $ 6 cent per KwH.

change rate ..,..

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Current Activities and !roducts: KSCL engages in large scale sugarcane production and sugar processing. It owns
two large sugarcane plantations, Kilombero One (K1) and Kilombero two (K2), which the major sources oI raw
materials Ior the Iactory in Kidatu. ThereIore, planting oI sugar cane is done by the company in its own estate, by
out-growers and the Kilombero Community Trust Farm. Out-growers undertake production through their
associations and sell the sugar cane to KSCL according to the contracts given by the Iactory in advance. Most oI the
out-growers grow sugar in small Iarms with sizes ranging Irom 1 to 5 acres, with very Iew small Iarmers having
Iarms oI more than 10 acres. Cane production is dependent on both rain-Ied and irrigation agriculture. Much oI the
water originates Irom the Udzungwa Mountains as water Irom the numerous streams and rivers Ilow Irom the
mountains. The main products produced by KSCL are sugar, molasses, baggage Ior boiler and power generation.
These products have not been changing but increasing in tonnage due to increase in cane supply.

Management and organization: Management oI KSCL is under executive and non-executive directors who are
responsible to oversee and implement the group strategic intent. The Kilombero Board is composed oI members
oI Illovo company Irom South AIrica and two Tanzanians (The Director General oI SBT and a Government
oIIicial Irom Treasury) to represent the 25 share holding. The top management team made up oI most expatriate
Irom the group. The local qualiIied personal in the top position are Iew. The key Departments include General
Management OIIice, Agricultural manager, tow Iactory managers, two Iield managers, principle agronomist and
an out-grower managers. The key decisions are made by the departmental managers under the ChieI xecutive
OIIicer. The organization oI SHFs Iollows KSCL`s Iactory locations. All SHFs` Iarms are in the valley, but
organized by two Iarmers associations.

Marketing and supply Chain: The major raw material Ior KSCL is sugarcane which is grown in nucleus estate and
sugarcane by out-growers surrounding the mills. KSCL oIIers the contracts to out-growers which are annually
renewable, prior to the commencement oI the harvesting season. All SHFs` Iarms are in the valley, but organized by
two Iarmers associations. The Iarms oI the SHFs supplying sugarcane to K1 belong to the Kilombero Cane Growers
Association (KCGA) oI the Kilombero district. Those who supply sugarcane to K2 grow sugarcane in the Iarms
located in the Kilosa district and their organization is the Ruhembe Out-growers Association (ROA). Other inputs
include lime locally produced Irom TANGA limestone works Ior processing purposes. For kilombero, out-growers
have been incorporated into the programme to provide 40-50 oI the total cane input. The Iarms oI the SHFs who
supply sugarcane to K1 belong to the Kilombero Cane Growers Association (KCGA) oI the Kilombero district.
Those who supply sugarcane to K2 grow sugarcane in the Iarms located in the Kilosa district and their organization
is the Ruhembe Out-growers Association (ROA). Kilombero sugar company`s sales are mainly Ior local
consumption and sometimes regional as well as international. Locally, Kilombero serves the southern regions oI
Tanzania particularly Mtwara, Lindi region (by the sea route), Mbeya, Ruvuma and Rukwa regions (by road). It also
serves Morogoro, Dar-es-salaam and Coast regions. In the past years, KSCL used to export sugar to Seachelles,
Ruanda and Burundi and to the U under the Lome ACP-U sugar protocol. Presently, the export is very limited to
urope due to sugar crisis in the country. Molasses sales are contracted to local traders and some in exported to
urope.

irm Capabilities: KSCL whose management stems Irom Illovo sugar company in South AIrica is managed by
highly experienced and capable team in sugar and cane production. KSCL values modern technology and it
has a strong networking system especially between the companies under the Illovo umbrella. During
rehabilitation KSCL received Iunds Irom Illovo group oI companies Irom south AIricana Iurther loan was extended
to the company Ior the reIinery. In 2002-2005 the company received support Irom IFC to support Out-growers
Association in terms oI increase to Iinance, capacity building oI growers, inIrastructure development etc. In
2010/11, KSCL has received a loan Irom South AIrican Banks through ILLOVO to modernize the KI Iactory so as
to improve its eIIiciencies. KSCL sugar is known to be the best out oI all the Tanzania produced sugar. Its
packaging is good and handy. It is easy to distinguish Kilombero sugar Irom others by the emblem on its
products. KSCL also produces satchels Ior use in hotels. These unique products have given KSCL and advantage in
the market.

Social Responsibility: KSCL has been extending the support to its own employees and into nearby communities. In
addition to providing accommodation, health care, educational assistance and basic services to employees, the
company also provides medical care to communities where no other Iacilities exist, assists in education delivery and
participates in community outreach programmes. Since privatisation, KSCL has invested over US $3.5 million into
8

social development through schools and hospitals on the estate and in assistance to out-growers. KSCL currently
provides housing Ior employees, teachers and police personnel. It provides health clinic and hospital Ior over 10 000
patients per year. The company embarks on building and maintenance inIrastructure Ior schools and primary courts.
It also embarks on reIorestation program plants indigenous species on company land, as well as provides thousands
oI Iree seedlings to community. It has established a Nursery on Vidunda slopes responds to village requests Ior
speciIic species and to Vidunda village distribution.

Recent Development: KSCL has not recently established other lines oI businesses other than production oI sugar
and cane. However, the company produces addition oI molasses and power (electricity) Irom burning oI bagasse
which is sold to TANSCO central grid which is another source oI income Ior the company. The company has
recently invested in Mobile Health Clinics and Comprehensive InIrastructure Development oI Cane Haulage.

Development Agenda: KSC management and ILLOVO in general have shown interest to invest in a new plant at
Ruipa in the Kilombero valley but are yet to get land title deed which they are awaiting. The Iounders are in the
process oI expanding their existing mills to enable Iactories to crush all the available cane now being produced by
out-growers. The acquisition oI land at Ruipa (green Iield) is their interest together with power production co-
generation; they intend to put up an alcohol plant, production oI paper and clipboards Irom bagasse. The Iuture plan
oI the company is to maximize cane and sugar production, to continue with three-way initiative to improve own
cane supply through new varieties, irrigation expansion, and drainage rehabilitation as well as Iurther assist out-
growers in cane supply initiatives. The company plans to undertake marginal modiIications to increase power to
250MWHrs/day and installation oI new 40MW Power Island.

1anganyika !lanting Company (1!C)

Basic Details: Tanganyika Planting Company (TPC) Limited is the second largest Sugar Factory in Tanzania
cultivating sugar cane with the current capacity to produce over 650,000 metric tones oI cane. The company owns
16,000 hectares oI land out oI which 6,100 is under cultivation. About 1,200 hectares are cultivated annually. The
company employs over 2,667 permanent employees, 591 temporary workers and 636 seasonal workers. The estate is
situated 15 miles Irom Moshi, a town in Kilimanjaro in the Northern Region oI Tanzania. The perIormance oI TPC
in cane production and sugar production Irom 2000/01 to 2008/09 is as shown In Table 3.

1able 3: Sugarcane and Sugar !roduction in M1s at 1!C 2/1-29/1
Years Sugarcane !roduction Sugar !roduction
2000/01 447759 42018
2001/02 451887 49681
2002/03 552302 54850
2003/04 621001 62519
2004/05 521944 52756
2005/06 594778 60503
2006/07 417894 34887
2007/08 699241 59247
2008/09 787766 78483

History: TPC was established in the early 1930`s by a company which was registered in Demark in the name oI A/S
Tanganyika Planting Company Limited. The Founder oI Company was A.P Mollar who was a ship owner oI
Denmark. While he was shipping Irom Demark to the ast AIrican Coast in 1931, he rested in the land oI Arusha
Chini on the slopes oI Mt. Kilimanjaro and discovered an opportunity to invest in sugar estate. Due to the conducive
environment and good climate along the plain, Mollar decided to acquire the land Iirstly Ior recreation oI his ship
crew while touring the Northern Zone awaiting Ior ships to return. The high demand Ior sugar in Denmark and
Iertile soil in Arusha Chini stimulated the establishment oI a small sugar plant.
Financed Irom own sources, the company started to produced sugar in 1936 with the capacity oI 350TCD. The
estate operated as a Branch oI A/S.Tanganyika Panting Company Limited oI Copenhagen Denmark until when it
was nationalized in the late nineteen sixties and became a subsidiary oI Sugar Development Corporation (SUDCO)
and subsequently privatized in 2000. In March 2000, Sukari Investment Company Limited purchased 75 shares oI
9

TPC and became the majority shareholder oI the company. The Tanzanian Government retained 25 oI the
company`s shareholding. Sukari Investment Company Limited registered in Mauritius is owned by Mauritian and
French Companies namely Deep River Beau Champ Limited and Sucriere de la Reunion respectively.

Current Activities and !roducts As other sugar Companies, TPC deals with large scale sugar cane planting and
sugar production. The company produces cane in its own estate using Iull time, part-time and seasonal workers
instead oI engaging out-growers. The main products oIIered are sugar, by products oI molasses and co-generation.
Due to poor rainIall, sugar cane is largely produced on the irrigated land. Sugar cane production at TPC is entirely
under irrigation where 50 oI cane is grown under sprinkles while the remaining is under Iurrow irrigation. The
company has recently increased it capacity to generate power Irom 3 to 20MW. This amount oI power enables the
company to be selI-suIIicient and have surplus power oI 10MW that can be sold to the national grid. lectricity is
generated at the Iactory premises by using steam turbines to burn bagasse, a Iorm oI biomass which is a waste
resulting Irom pressing sugarcane during sugar production.

Management and Organization: AIter nationalization in 1980 the Tanzanian government appointed M/S Carl Bro
International A/S to operate TPC limited under a two year technical service agreement which expired in 1988. The
overall management oI the company was good however, the company could not recruit suIIicient members oI
qualiIied and experienced Tanzanian nationals to replace the expatriates. By end oI 1989, the positions oI
Agriculture Manager and Factory Manager were localized and an intensive training programme was undertaken to
enable localization oI the remaining positions held by expatriates beIore Dec. 1990. The Tractor Workshop Manager
and Factory ngineer were Tanzanian nationals until 2000 when TPC was privatized. Since then the company is run
by the Mauritius Company to date in which there are Iive departments namely: Administrative and Manpower
Development headed by a Tanzanian; Tractor Workshop; Factory; Agriculture and Agronomy; and Finance. The
General Manager and the ChieI xecutive OIIicer with their team make day to day decisions oI the company. Above
the CO, it is the Board oI Directors Irom investors and two Irom Tanzania Government (the Director General oI
SBT and a Government OIIicial Irom Treasury). The Board oI Directors is the Iinal decision maker oI the company
and is responsible Ior implementing the company strategic plan.

Marketing and Jalue Chain: TPC largely sells sugar to nearby regions including Kilimanjaro, Arusha, Tanga and
Manyara Region. Others are Singida, Mara and Musoma regions. AIter nationalization TPC used to export to the
U under the ACP U Sugar Protocol because Tanzania was among the 20 signatory`s under Lome agreement oI
1975. Since 2001/02 export to urope were stable at around 22,000 tones per year. The total sales increased aIter
privatization over the period with export revenue increased by 17 oI total revenue. AIter the agricultural reIorm,
export to the U started to decline and by 2007/08 TPC export to U was minimal. Due to increase in Ireight
charges, decrease in sugar price, and ongoing sugar crisis in the country export to urope has almost stopped. The
main raw material which is sugarcane is grown around the Iactory at TPC, Nucleus state. There are no out-growers
and the land Ior Iurther expansion is limited.

TPC Iaces a number challenges in its supply chain that aIIect the operational capacity oI the company. The major
challenges are as Iollows;
O Only Iour cane varieties are dominating in commercial cane production at TPC. Other varieties oI proven
high yield potential have already been introduced into the estate are still under multiplication hence their
potential is not yet exploited.
O Low cane productivity at TPC is also attributed to high inIestation oI the cane root Ieeding insect pests oI
the white grub complex (cochliotis melolonthoides) and hereronynchus ssp. These pests do not only
damage the cane but also increase costs oI cane production due to Irequent Iields replanting that is
necessary at reduced crop cycles Ior the devastated Iields.
O Salinity and sodium toxicity levels in soils oI TPC and in the Kikutetwe River water used Ior irrigation are
also a course oI low cane productivity.
O Due to poor weather condition, about 60 oI water supplied Ior irrigation to TPC is Irom borehole while
40 is Irom kikutetwe and Weruweru Rivers. Water Irom boreholes is pumped by both diesel engine and
electric powered pumps which make production at the Iactory expensive.
O Importation oI cheap sugar Irom outside the country and the tax exception given by the Government Ior
imported sugar has caused a lot oI competitive pressure to TPC.
10

irm Capabilities: The Iirm has very experienced managers oI long experience in the sugar production, marketing
and know how, oI high caliber in sugar technology Irom Mauritius which is a very eIIicient country in sugar
production research and technology. It has very good network too. TPC sugar is easily distinguished Ior its quality
and a long-term established reputation. The Company has Iairly good sugar cane production inIrastructure as well as
sound relations between management and workers to enable it to achieve its goals.

Recent Development: The initial development plan aIter privatization Ior TPC embarked on rehabilitation oI the
Iactory, the irrigation system, Iield equipment, transport and the expansion oI the cane Iields with the investment oI
over US$32 million. The company received loans Irom the owners to replace the old boilers and turbo
alternators which were problematic. AIter 2005 TPC embarked on expansion oI its limited land acquired during
privatization (KAH) oI about 1500hectares. This was put under irrigation and there was minimum modernization
oI Iactory to cope with increase cane supply. The irrigation equipment has been replaced using
development Iunds raised Irom the company business.

Development Agenda: TPC plans to make minor expansion and improve eIIiciencies in the Iactory to enable the
Iactory produce 84,000 MTs/yr which is the maximum potential Ior TPC. The modernization oI various sections oI
the Iactory through budget Iunds and improvement in cane husbandry practices and use oI higher yielding disease
resistant cane varieties are expected to drive TPC to its maximum potential oI producing 84000mt by year 2016-
2020. The company has been allowed by the Government to generate and supply 10MW oI power to the national
grid which presents a great opportunity Ior the Iuture oI TPC.