About

ETHIOPIAN SUGAR INDUSTRY PROFILE

It was at Wonji in 1951 some 110 km east of the capital Addis Ababa that modern sugar industry started in Ethiopia as a share company established by foreign private investors & Ethiopian government. By then the Netherland’s H.V.A. Company had entered into the sector as a foreign share holder. When the factory started production in 1954 its initial production was 140 tons of sugar a day. At the start, the share company had five thousand hectares of land for its sugarcane cultivation.  As its location is one of the most suitable areas of the world to the sector it opened a door to Wonji Candy Factory to come forward.

Then, followed Shoa Sugar Factory in 1962 with 170 tons of sugar production capacity a day. The two factories known by the name Wonji Shoa Sugar Factories /which later on administered as one factory/ altogether had the capacity of producing 75,000 tons of sugar per annum till 2012 i.e. prior to the completion of the new Wonji Shoa Sugar Factory. Serving for more than half a century and getting obsolete, these two Wonji and Shoa sugar factories were closed in 2012 and 2013 respectively. Replacing these pioneer factories, the new and modern factory had started production in 2013 with higher production capacity.

The second factory, Metehara Sugar Factory is established as a share company between same Netherlands Company and the then Ethiopian government in 1965 and started production in 1969 at a location known as Mertti some 200 km from Addis Ababa. Currently, the factory with a total 10,235 hectares of sugarcane cultivation land has a capacity of producing more than 130 thousand tons sugar and 12.5 million liters ethanol a year on average.

Five years after the establishment of Metehara Sugar Factory i.e. in 1974 following the dawn fall of the emperor’s regime all sugar factories were made to be administered under the ownership of the government according to notice number 58/1978 of the then Ministry of Industry and started operating under the then Ethiopian Sugar Corporation. The corporation had also been made to administer the Addis Ketema and Asmara Candy Factories together with the above mentioned three sugar factories.

Meanwhile, in relation with sugar development, Fincha valley is found to be suitable and sustainable for sugar development as per studies conducted in 1974. Based on this extensive study was underwent in 1978 by the British Bookers Agricultural International Limited, for the establishment of the country`s third sugar factory – Fincha Sugar Factory.

Construction of the factory which was delayed by finance shortage started in 1988 and cane planting in 1991. It was completed eight years later and inaugurated by the former FDRE president H.E Negaso Gidada (Dr.) and began regular production in1998.

The gap between the establishment and commencement of production of the factory is mainly occurred due to the political change the nation had undergone.

Its finance sources were African Development Bank and Development Fund, Governments of Australia and Spain as well as domestic banks of the nation.

Its initial sugar production was 50 thousand tons per annum. More modern than the former factories, the factory’s construction job including its ethanol plant was executed by American company known as F.C. Shefer and Associates and Netherland’s company called Dewetto International while many domestic construction companies had also played their part in the process.   

Later in 1992 the Corporation which had administered the three sugar factories was dissolved by stature after 14 years of service. All the above factories were reestablished as separate public enterprises. Metehara and Wonji Shoa Sugar Factories by regulation number 88/93, and Fincha Sugar Factory by regulation number 199/1994 have become independent public enterprises.

Following this the Ethiopian Sugar Industry Support Center came into existence in 1998 to provide support to the factories. The center was established as a share company of the Development Bank of Ethiopia, Ethiopian Insurance Corporation and the three sugar factories. Years later, Ethiopian Sugar Development Agency was established by proclamation number 504/2006 in its stead. The Agency had given support the factories in project development, research, training and marketing.

In 2006 Tendaho Sugar Development Project was established by Regulation Number 122/2006 as a fourth two-phased project in the country. Construction of the first phase of the factory with the capacity of crushing 13 thousand tons of sugarcane per day has started production in 2014. The first phase, using sugarcane produced on 25,000 hectares of land and reaching its maximum crushing capacity, eventually enables the factory produce three million quintals of sugar and 27  million Litters ethanol a year.

Sugar Corporation

The present Sugar Corporation with a vision of executing sugar development activities at a large scale came into existence on October, 2010 by the Council of Ministers Regulation No.192/2010. It is operating under a board of directors. Currently the Corporation is accountable to Public Enterprises’ Property and Administration Agency as dictated on proclamation number 1097/2018.

Ever since its establishment in October 2010 Sugar Corporation has benefited communities of the areas in which the development is going on. It has made irrigation, potable water, roads, schools, health posts and other social service institutions available for the local community. It is also expanding land covered with sugarcane, increases the number of sugar factories and creates job opportunities. However; it is possible to witness that it has yet to do a lot in increasing housing construction, and sugar co products supply.

To fulfill its major goals and tackle problems faced the Corporation is implementing change management and other series of tasks. Along with this capacity building trainings are going on locally and abroad.

Sugar Industry Sub Sector   

Sugar development sector is one among other huge projects which enables industry take a leading role in the nation’s economy. Ethiopia has huge human as well as natural resources which enable the nation to broaden this export oriented manufacturing industry sector and its productivity.

The nation has suitable climate, 1.4 Million hectares wide and proved irrigable agricultural land as well as abundant resource of water and ample labor resource. The government has given higher attention to the sector and it is working for further development of it.   

Productivity

The country is rich with resources like suitable climate, fertile land and abundant water supply which are favorable for sugarcane development. Hence, it is possible to cultivate 162 tons of sugarcane per hectare on average in 15 months. In relation to the productivity it is possible to produce 10.8 tons of sugarcane in Ethiopia per month and when compared against the global sugarcane production potential it outstrips the global production per hectare in 2.3 tons.

Cognizant of this fact, the FDRE government has started broadening the sugar development sector which had been limited to Wonji Shoa and Metehara Sugar Factories for more than half a century to Oromiya, Afar, Amhara, Tigray and Southern Nations, Nationalities and Peoples Regional States since 2010.

Based on this at Tana Beles Sugar Development Project in Amhara Region two sugar factories are under construction with crushing capacities 12 thousand tons sugarcane per day using sugarcane to be planted on 40 thousand hectares of land.

On the other hand, there are four sugar factories which use sugarcane developed on 100 thousand hectares land in South Omo, Bench Maji and Kaffa zones of Southern Nations, Nationalities and Peoples Region where Omo Kuraz Sugar Development Project is found.

The constructions of these factories are at different levels. Among these Omo Kuraz Sugar Factory Number Two and Three have started production, with each having crushing capacity of 12 thousand tons of sugarcane a day.

Whereas the other two factories with each having crushing capacity of 12 thousand and 24 thousand tons of sugarcane a day are under construction.

In the same way, construction of Welkayit Sugar Development Project in Tigray region, which will use sugarcane developed on 40 thousand hectares of land and the capacity to crush 24 thousand tons of sugarcane a day is advancing.

Commencing 10 huge sugar development projects which require high investment in the lowland areas of the country is challenging. However our motto is “we learn while working.” And, hence our sugar development projects in the areas which have no infra-structure before is becoming hopeful.

Though the successes so far are not as expected, it is possible to say they foresee the bright future of the industry. We had only three sugar factories till 2014. But now we have eight operational factories in addition to making the existing ones up to date.

Generally, from the new sugar factories Tendaho, Kessem, Arjo Diddessa, Omo Kuraz Number Two and Omo Kuraz Number Three`s construction is completed and the factories have started production.

Moreover, it has been possible to make the land covered with sugarcane to 102 thousand 741 hectares from 30 thousand 397 hectares in 2009. This is made possible by the efforts made in the past eight years. Similarly, the efforts made to increase irrigation infrastructure becomes fruitful. On the other hand, the effort made to benefit the local community from the development in the area is encouraging.   

Community    Service

Hand in hand with the sugar development, Sugar Corporation and Ministry of Water, Irrigation and Energy have built 255 social service institutions like schools, potable water supply, health institutions, mills and roads.

  • Members of the local community are given priorities to be hired at the projects after training on tractor operation, building, carpentry and the like. This continues in the future.
  • The local youth are organized in micro and small enterprises to take part in the development activities and generate income. This also continues now and in the future.  
  • Irrigated land is given for the local pastoralist community. The pastoralists now have begun producing crops like maize. In the future conditions are laid for them to be sugarcane out growers who sell the product to the sugar factory around. In order to make this possible they have got experiences from sugar cane out growers of Wonji Shoa Sugar Factory.
  • From 2010 to 2017, Sugar Corporation has spent about 1.2 billion birr for the construction of social service institutions, infra-structure, compensation, vocational training and others to benefit the local community.
  • In conclusion, ever since the development is started in 2010 more than 450 thousand citizens have got jobs on permanent, temporary and contractual basis.

Domestic Sugar Supply

Even though the sugar industry scored more than half a century, the fact that the sugar development is not as desired:

  • Growing demand of sugar of the society in relation to the fast economic development the country is registering;
  • Growing of population and
  • Due to Increasing number of industries which use sugar as an input, the sugar demand and supply has been incompatible.

The current sugar supply is about 650 thousand to 700 thousand tons of sugar per annum. Of this 325 thousand to 400 thousand tons of sugar is produced in the country.  To fill in this gap between demand and supply about 200 thousand to 300 thousand tons sugar is imported annually by the government spending high amount of foreign currency. Though only 7 kilo grams is supplied, the current sugar consumption per individual in Ethiopia is more than 10 kilo grams a year.

As stated earlier the government spends higher foreign exchange and distribute sugar to balance the demand and supply. But importing sugar is not a long lasting solution, the sugar industry sub sector is given due attention ever since the inception of the first growth and transformation plan along with other manufacturing industry sectors.

Ethiopia is extensively expanding sugar development projects in low land areas promoting Sugar Revolution so as to:

  • Narrow the gap between demand and supply of sugar;
  • Improve life style of citizens by creating vast job opportunities;
  • Ensure the benefits of the development areas and
  • Earn foreign currency by exporting the product.

Main accomplishments of the first & second

Growth and Transformation Plan

  • Fincha and Wonji Shoa sugar factories are expanded and have increased their production capacity by the scheme of expansion
  • Though extent of sugar production planned annually is partially not successful, it is possible to make the annual sugar production to 400 thousand tons from 290 thousand 374 tons in 2010.
  • It was possible to make the new sugar factories of Kessem, Tendaho, Arjo Diddessa, Omo Kuraz Number Two and Omo Kuraz Number Three sugar factories operational.
  • The land covered with sugarcane reached 102,741 hectares from which it was 30 thousand 397 hectare in 2010.
  • Ethanol production booms to 19 million 804 litres from what it was only 7 million 117 thousand litres in Of these large amount of ethanol is mixed yearly with benzene and giving service.
  • Several research works which increase sugarcane productivity have been done.
  • Several big dams, vast irrigation infra structures, roads, housing, and huge factory constructions works as well as land preparation is widely done.
  • Due to lack of infra-structure, limitations of implementation capacity, finance, foreign exchange, spare part as well as machinery supply and many others, the sector is not as fruitful as it is thought. However, because of the chains of activities carried out and other endeavors made, the sector is becoming hopeful now. The country has targeted to become one of the top ten sugar exporting countries by the platform made.

Generally, when the five sugar factories under construction are completed Ethiopia would have 13 sugar factories and the annual sugar production of it would become 2 million 250 thousand tons.

 

Comparative Description of Developments in the Sugar Industry Sector

No.

Title of the Development

1991

2019

1

Number of sugar factories

Two (Wonji Shoa and Metahara Sugar factories)

Eight producing  factories (Wonji Shoa, Metahara, Finchaa, Kessem, Tendaho, Arjo-Diddessa, Omo Kuraz 2 and Omo Kuraz 3)

 

2.

Under construction

Fincha

Omo Kuraz 1, Omo Kuraz 5, Tana Beles 1 ,Tana Beles 2 and Welkayit

 

3.

Annual sugar production

149 thousand 658 tons

 

Planned to produce 520 thousand tons of sugar in 2019

In the past years 325 thousand tons to 400 thousand tons has been produced annually

4.

Annual ethanol production

None

22 million 355 thousand liters is expected to be produced in 2019

 

In 2014/15 19 million 804 liters is produced ( Out of these large amount of ethanol is mixed with benzene)

5.

Sugarcane crushed per day

6 thousand 213 tons

Currently eight factories have a crushing capacity of 62 thousand 500 tons

 

6.

Land covered with sugarcane

15 thousand 501 hectares   

102,741 hectares  

 

7.

Labor

11 thousand 452 on permanent, contractual and temporary basis  

More than 40 thousand workers on permanent, contractual and temporary basis

8.

Housing

7 thousand 483 residential houses

21 thousand 147 residential houses  and 311 different service providing blocks

9.

Number of social service institutions and infra-structures built for the local community around sugar factories and sugar development projects 

31 institutions 

 

 

 

255 institutions (schools, health institutions, mills, potable water supply centers, roads, animal health posts,  water ponds for animals, farmer/pastoralist training centers, association shops, religious institutions, etc.)

10.

Total number of sugarcane outgrowing and providing associations 

1 thousand 200 members organized in seven associations at Wonji only

 

15 thousand 316 members organized in 70 associations

Of these 9 thousand 319 members organized in 31 associations at Wonji

Some associations in Wonji share 50,000 to 240,000 birr for each individual member every 18 months

 

11.

Total land covered with sugarcane out growers in the sugar industry 

 

1 thousand 2o hectares at Wonji only

 

17 thousand 246.82 hectares

(Of these, 7 thousand hectares found at Wonji)