COM-WATCH - Delmas · PDF fileCOM-WATCH. This report is ... • Dangote Sugar Refinery To Acquire Savannah Sugar ... in Douala, with an annual grinding capacity of 30,000 MT. Cameroon

East Africa Sugar Capacity On The Rise

Cameroon Palm Oil Production Increases

Malawi Cotton Production Up

JUNE 2012 ISSUE #13

COM-WATCH

This report is brought to you by the Delmas Marketing Department

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01

GENERAL COMMODITIES• Zimbabwe Commodity Exchange Launch Expected Soon

BANANA• Cameroon Gets €48 Million From EU to Boost Banana Output

CASHEW• Cashew Prices May Rise On Concerns Over Africa Supply• TIB to Finance Cashew Nut Processing Plant• Tanzania Set to Boost Cashew Nut Processing• $14 Million in Investment Financing for Cashew Processors Made Available Through Partnership with BOAD

02

CASSAVA• Nigeria To Export One Million Tonnes

03

COCOA• Moroccan Firm To Build Cameroon Chocolate Factory• Cameroon Cocoa Grinder Purchases Hit 28,033 T• Cameroon Cocoa Farmgate Price Fell 5.5%• Cameroon Cocoa Exports Down 11% By End April• Cameroon Joins The International Cocoa Agreement• Ivory Coast Cocoa Premium

04

• Ivorian Prime Minister Officiates At World Cocoa Conference Launch• Ivorian Cocoa Crop To Hit 1.35 Million Tonnes• Ivory Coast Rains Brighten Cocoa Mid-Crop

05

• Ghana's Cocobod Probes 70,000 Tonne Discrepancy

06

• Africa Export-Import Bank Mulls Loan for Ghana Cocoa Factory• Ghana Starts US$10 Million Cocoa-Farm Rehabilitation Program• Ghana Cocoa Premium To Drop With Ivorian Trade Declining• FG Pledges To Boost Cocoa Production With N5.6m

07

• Cocoa Shortage One Million Tonnes By 2020

08

• El Nino Could Cut Global 2012/13 Cocoa Output• Cocoa Shortage May Be 1 Million T By 2020• Market For UTZ Certified Cocoa Doubles

• Armajaro Trading Gets US$55 Million Investment• Blommer Sustainability Projects• Daily Spot Price

09

COFFEE• Cameroon Robusta, Arabica Export Price Rise• Cameroon Robusta Coffee Exports Nosedive• Coffee Exports 50% Below Target In Ethiopia• Ethiopian Coffee Enterprise Earns 209 Million Birr• Judge Throws Out Coffee Directive• Tanzania Coffee Board Will Purchase Beans From May to March• Coffee Production Boosting Programme Bears Fruits

10

• Uganda Sees May Coffee Exports To Fall• Uganda Coffee Exports Plunge 20% In April

11

COTTON, TEXTILES & LEATHER GOODS• Ivorian Cotton Forecast Lowered Ahead Of New Season• Malawi Registers Sharp Cotton Production Growth• Mali Sees Higher Cotton Output Despite Instability• Concern As Tanzania Cotton Firms Blacklisted• Zimbabwe Government Intervenes In Cotton War• Cotton Extends Slump to 21-Month Low as Supplies Expand

12

FOODSTUFFS, NUTS, PULSES, SPICES, FRUITS & VEG• Kenya New Rules for Fruit Juice Package Labels

14

PALM OIL• Cameroon Says Cargill Eyes 50,000-Ha Oil Palm Project• Cameroon Palm Oil Production To Hit 265,000 Tons• Ivory Coast's Sifca Looks To Central Africa• Equatorial Palm Bullish On Palm Oil As Prices Rise• Feronia Posts FY Revenue Increase Of 91%, • Palm Oil Production Up 61%

15

SUGAR• Illovo Pulls Out Of Mali Sugar Project• Dangote Sugar Refinery To Acquire Savannah Sugar• Swaziland To Increase Sugar Capacity• Tanzania To Start Exporting Sugar• Firm to Set Up Busoga Sugar Factory

16

• Illovo Sees 2012/13 Output Above 400,000T• Sugar Companies - High Economic Growth Predicted

17

TEA• Kenya Tea Prices Firm, Volume Offered• Kenya’s Tea Output For Q1 Down 14.9%• Kenya Tea Exports Up 10% In First Quarter• Tanzania’s Tea Production May Increase to Record on New Factory

18

TIMBER• Ghana Risks Becoming A Net Importer Of Wood• Ghana On Track For FLEGT Licenses By March 2013

19

TOBACCO• Malawi’s Tobacco Yields Down• Tobacco Prices Remain Firm• African Countries Top Tobacco Exports

Rachel [email protected]

Dominic [email protected]

Contributors

WWW.DELMAS.COMTHE AFRICAN COMMODITY REPORT

GENERAL COMMODITIES

Zimbabwe Commodity Exchange Launch Expected SoonThe Herald 22/05/12A Zimbabwe exchange for agricultural commodities will start operating soon, a year after it was launched, according to Finance Minister Tendai Biti.

Zimbabwe previously had a thriving commodity exchange, which was closed in 2001 when the Government gave the monopoly on maize and wheat trading to the Grain Marketing Board [GMB]. But GMB has been slow in paying farmers.

Economists say a commodity exchange can be a viable alternative marketing channel for agricultural produce, as it creates a transparent, open and accessible commodities market where both buyers and sellers can participate with the full knowledge of the prevailing prices.

Lack of information had also reduced transparency of the marketing process, with no protection for the large number of farmers.

CASHEW

GENERAL

Cashew Prices May Rise On Concerns Over Africa SupplyFinancial Express 03/05/12The cashew nut market is seen firming up on supply problems of raw cashew from Africa. Africa produces 45% of the world’s total raw cashews but most of the processing takes place in Vietnam and India. Political problems in Guinea Bissau delaying movement and reports of lower yield in Ivory Coast are the major reason for the price increase.

During April, kernel prices have moved up by about 10-12% and raw cashew prices have moved up by 12-15%. Most of the increase in kernel prices has been due to concerns of supply and resultant covering of shorts for nearby positions by kernel buyers.

If arrivals do not pick up in May, the fears of a big shortage in Ivory Coast will be proved right. This will lead to a further increase in raw nut prices leaving little chance for any decline in kernel prices even if the demand is slow.

TANZANIA

TIB to Finance Cashew Nut Processing PlantTanzania Daily News 22/05/12Tanzania Investment Bank [TIB] has signed a MOU with the Tandahimba Newala Cooperative Union [TANECU], seeking to enhance processing of raw cashew nuts, adding value to crops.

The deal will enhance value addition through construction of a 30-40 tonne processing plant to be built in Mtwara. The bank will finance 80% of the project, with TANECU catering for the remaining 20% of the project scheduled to start in July after completion of a feasibility study and business plan.

This year's cashew production has broken the country's production record, with

157,000 tonnes from the historic record of 142,000 tonnes.

Tanzania Set to Boost Cashew

Nut ProcessingTanzania Daily News 11/05/12The Export Trading Group [ETG] has embarked on

expansion of local processing of cashew

nut that will see the company enhance its

capacity from 2,500 to 14,000 tonnes pa. The move is

part of the company's bid to rescue the cashew nut industry by

providing a reliable domestic market and adding value to the crop.

This season over 85,000 tonnes of cashew nut worth over 100bn/- were

stranded in co-operative unions' godowns [dockside warehouses] due to price volatility in the world market.

Expansion is expected to begin in July 2012 by increasing processing capacity at ETG’s Tunduru factory from 2,500 to 4,000 tonnes.

”We have secured cutting and peeling machines from India and Vietnam, respectively to boost production at Tunduru as well as two processing plants with capacity to process 5,000 tonnes each to be installed in Newala District and Mtwara Municipality. The two plants will start production in October, this year.”

Sunil Mizar Korosho Africa Ltd – ETG Member

Apart from having packing centre for cashew nut in Mtwara, EGT has established a state-of-the-art packaging centre in Dar es Salaam with International Standard Organization [ISO] certification. EGT expect to buy 60,000 tonnes for export and for local processing this year, up from 48,000 tonnes last season.

Lack of enough processing industries has left the country exporting more than 80% of its raw cashew nut to India. Since September 2011 the Indian market slumped by 40% due to depreciation of its currency, Rupee and influx of cheaper cashew nut from Ivory Coast.

TOGO

$14 Million in Investment Financing for Cashew Processors Made Available Through Partnership with BOADAfrican Cashew Alliance 15/03/12On 11/05 African Cashew Alliance [ACA], USAID and BOAD [Banque Ouest Africaine de Developpement] signed a MoU in Lome, Togo to improve access to finance for investments in cashew processing.

The agreement will make available CFA 7 billion [US$14 million] in investment financing to cashew processors supported by the ACA in CFA zone countries.

These funds will enable an increase of processing capacities, including the acquisition of new equipment and expansion of facilities. The agreement also includes a follow-up training for bankers to be held by ACA and the USAID West Africa Trade Hub on the specifics of cashew financing.

BANANA

Cameroon Gets €48 Million From EU to Boost Banana OutputBloomberg 11/05/12The European Union will give Cameroon €48 million [US$62 million] to increase production of bananas in the nation. The grant is meant to help Cameroon improve the quality of the fruit and export more to the EU after the signing of an Economic Partnership Agreement [EPA] in 2009.

COMMODITY WATCH WWW.DELMAS.COM

GENERAL COMMODITIES / BANANA / CASHEW

01

Nigeria will export 1 million tonnes of cassava chips in 2012. This target is anticipated to be met through the various reforms initiated on improving the cassava value chain in the country.

Cassava is 1 of 5-crops that the present administration has identified as a prospective foreign exchange earner for Nigeria under the Agricultural Transformation Agenda [ATA] along with sorghum, cotton, rice and cocoa.

The Federal Government has concluded arrangements for the establishment of 18 cassava processing plants across the country to process 1.3 tonnes of cassava, making Nigeria the largest cassava processor globally.

CASSAVA Nigeria To ExportOne Million Tonnes

COMMODITY WATCHWWW.DELMAS.COM

CASSAVA

02

CAMEROON

Moroccan Firm To Build Cameroon Chocolate FactoryReuters 11/05/12Morocco's leading chocolate-making company, Compagnie Cherifienne de Chocolaterie, will build a 40,000T per year chocolate factory in Cameroon this year according to the Cameroon's government.

Cameroon is the world's fifth largest grower of cocoa with more than 200,000 MT of production, and its government has been seeking to boost value-added exports.

"The Compagnie Cherifienne de Chocolaterie is going to set up a major modern chocolate-producing factory here in Cameroon through its subsidiary, the Cameroon Investment Company [CIC].”

Luc Magloire Mbarga Atangana Trade Minister

Construction will start in June 2012 with first output before the end of the year at a cost between CFA30-50 billion [US$60-100 million]. Cameroon currently has just one local cocoa processing firm Sic-Cacaos, based in Douala, with an annual grinding capacity of 30,000 MT.

Cameroon Cocoa Grinder Purchases Hit 28,033 TReuters 18/05/12Cameroon's sole cocoa grinder, Sic-Cacaos, bought 28,033 tonnes of beans by the end of April since the start of the 2011/12 season in August, according to figures by the National Cocoa and Coffee Board [NCCB].

The figure compares with 26,287 tonnes bought in the first 9-months of the season last year. Purchases in April were down to 98 tonnes from 269 tonnes the previous month, and 255 tonnes during the same month last year.

Sic-Cacaos, based in Douala, is a subsidiary of Swiss chocolate firm Barry Callebaut and supplies cocoa products to the central African region. It has a grinding capacity of 30,000 tonnes per year, but last year purchased a record 33,894 tonnes, putting excess tonnage in storage.

Cameroon Cocoa Farmgate Price Fell 5.5%Bloomberg 24/05/12Cameroon’s average national farmgate cocoa price decreased 5.5% to 1,032 CFA francs [US$1.97] a kilogram from 1,092 CFA francs in the week to May 22 compared with a week earlier, according to data from the Cameroon National Association of Cocoa and Coffee Producers.

The following is a table of regional farmgate rates, with prices a kilogram in CFA francs.

SouthwestKumba 1,050Mamfe 1,020South 1,010Center 1,040Littoral 1,040Average 1,032

Cameroon Cocoa Exports Down 11% By End AprilReuters 16/05/12Cameroon's cocoa exports hit 167,944 tonnes by the end of April since the season began in August, putting them nearly 11% below the 188,163 tonnes shipped during the period a year ago, according to data from the National Cocoa and Coffee Board [NCCB].

Cocoa exports totalled 4,492 tonnes in April, roughly double the 2,282 tonnes exported during the same month last year. An increase in farmgate prices has led some growers to release stockpiles in April, accounting for the strong monthly export total.

The lag in Cameroon's cumulative exports this season comes after a stretch of dry and windy weather that has also curbed output from other cocoa growers on Africa's West coast, including Ivory Coast and Ghana.

Plantations in some parts of Cameroon have also been damaged by outbreaks of insects.

Cameroon's cocoa output struck a record last season at 240,000 tonnes amid ideal weather that also pushed production in Ivory Coast and Ghana to all-time highs.

Cameroon Joins The International Cocoa Agreement ICCOCameroon on 26/03/12 signed the International Cocoa Agreement of 2010, the United Nations Treaty Section has confirmed. With a view to strengthening the global cocoa sector, supporting its sustainable development and increasing the benefits to all stakeholders, the objectives of the International Cocoa Agreement amongst others are:

• promote international cooperation • provide an appropriate discussion framework among governments and private sector• strive towards obtaining fair prices • encourage research and promote training • promote transparency through statistics • promote the elimination of trade barriers• encourage consumption of chocolate and cocoa-based products • promote cocoa quality and develop food safety procedures • implement strategies to enhance the capacity of local communities/farmers for poverty alleviation• facilitate access to credit and approaches to managing risk

COTE D’IVOIRE

Ivory Coast Cocoa Premium Bloomberg 18/05/12Ivory Coast cocoa from the season starting in October was at a premium of as much as £85/MT [US$134] on speculation shipments may be delayed.

The premium for Ivorian beans in Europe to the price on the NYSE Liffe exchange in London ranged from £45, depending on the shipment period and on the quality agreed. A higher premium was being charged for shipments in the fourth quarter.

There are concerns the implementation of a new selling system in Ivory Coast will lead to “substantial” delays in exports. Ivory Coast, the biggest grower, plans to sell 70% of its 2012-13 crop before the harvest starts as part of wider industry reforms.

The so-called forward sales started on Jan. 31 even as some details of the reform still need to be finalized. An agreement with cocoa exporters over transportation and handling fees will be reached by Sept. 15 according to Agriculture Minister Mamadou Sangafowa Coulibaly.

Cocoa from the current crop in Ivory Coast is not trading in Europe as the main crop has ended. The smaller of two annual harvests, known as the mid-crop, is off to a slow start. Beans from the current crop in Ghana, the second-largest producer, were trading in Europe at a premium of £75-85 pounds a ton, unchanged from last week.

Cocoa from the new crop was at a premium of £90-100 a ton, from £90-95 a ton the week before. Premiums for the new crop in Ghana may be supported by potential export delays in Ivory Coast.


COCOA

03

Ivorian Prime Minister Officiates At World Cocoa Conference LaunchICCO 14/05/12At a ceremony held in Abidjan on 09/05/12, the Ivorian Prime Minister, H.E. Mr Jeannot Ahoussou-Kouadio, officially launched the ICCO’s World Cocoa Conference, due to take place in the city 19-23 November.

The event will be the first global cocoa forum to bring together all the significant stakeholders in the cocoa value chain to discuss and take action on the most serious issues affecting the trade and industry.

For full details:www.worldcocoa.agraevents.com

Ivorian Cocoa Crop To Hit 1.35 Million TonnesReuters 10/05/12According to the International Cocoa Organisation Ivory Coast will produce around 1.35 million tonnes of cocoa during the 2011-2012 season, down from a record 1.5 million last season. A 5-month dry spell in that lasted until mid-March cut short the October to March main-crop and has delayed the start of the mid-crop, which farmers and exporters expect to pick up gradually this month.

Output in Ghana, meanwhile, will reach 970,000 tonnes for 2011-2012, down from more than 1 million the season before, the ICCO said - in line with its previous forecast.

No. 3 producer Indonesia will increase output from 450,000 to 500,000 tonnes, while No. 4 producer Nigeria will see output drop from 240,000 to 210,000 tonnes, and No. 5 producer Cameroon will see a decrease from 230,000 to 200,000 tonnes.

The organisation has forecast a global cocoa deficit of 71,000 tonnes this season, following 347,000-tonne surplus the year before.

Ivory Coast Rains Brighten Cocoa Mid-CropReuters 01/05/12Rainfall at the start of month across most of Ivory Coast's cocoa-growing regions has improved the outlook for the April-to-September cocoa mid-crop, with abundant volumes expected from June.

Buyers and exporters have complained of low quantities and poor quality beans in recent weeks due to a dry spell from November 2011 to March 2012.

Marketing of the mid-crop usually begins in early April but is running late. Small amounts of beans will begin leaving the bush early May following the harvesting of the first ripe pods of the mid-crop. Harvesting is expected to be slow in May, but in June there will be enough cocoa to sell.


COCOA

04

GHANA

Ghana's Cocobod Probes 70,000 Tonne Discrepancy Reuters 01/05/12Ghana's cocoa regulator Cocobod is investigating a shortfall of around 70,000 tonnes of beans between official cocoa purchases and its inventory after buyers reported inflated volumes.

A fall in cocoa output combined with tight credit conditions, could have contributed to local buyers overstating cocoa purchases in order to gain advance funding - bruising Cocobod's reputation for being a low risk loan recipient.

The government of Ghana has a monopoly over the export of cocoa beans. But domestic purchasing of beans is carried out by licensed buying companies [LBCs] who pay a fixed price to cocoa farmers, before selling to Cocobod, who pays them commission and transport costs on top of the producer price.

Cocobod provides seed funding to the LBCs for purchases at the beginning of the cocoa season, based on a combination of the LBC's market share in the previous season and the set price.

There is usually a lag between official purchases and warehouse stocks as it takes time from when cocoa is bought for it to be graded and sealed, but traders said the difference is wider than usual for this point in the season.

As LBCs are also entitled to top-up funds midway into the season from Cocobod, if they are able to prove that they have exhausted the initial seed fund, some could be misrepresenting their purchases in order to get additional money.

Cocobod's purchasing data is based on information provided by licensed buyers and the official said that at least one of the licensed buyers has admitted that they sometimes report targets instead of actual purchases.

Cocobod held a meeting with licensed buyers in early April in an effort to resolve the issue. The meeting was inconclusive and Cocobod will investigate further as to which buyers are involved. Traders said a sharp fall in Ghana's official purchases in recent weeks could indicate Cocobod is already addressing the issue.

Latest figures show that cocoa purchases declared to Cocobod for the week ended April 5 were 1,777 tonnes - down from 2,108 tonnes the week before and substantially lower than the 9,373 tonnes purchases in the comparable week last year. Cocobod's official purchases data hit 720,000 tonnes by April 5 since the season began in October.

"If you consider that almost no cocoa has been declared over the past 2/3 weeks, normally people expect April purchases to amount to between 30,000-50,000 tonnes, if it continues this way it might be only 10-15,000 tonnes," said a European trader.

That will make it tough for Cocobod to hit an 870,000-tonnes target for the October-to-May main crop. If purchases remain at historically low levels into the

coming months it may also prompt some trade houses to revise down their estimate for the Ghana crop. Ghana produced a record over 1 million tonnes during the 2010/11 season and was aiming to rival that level this year.

Cocobod funds its cocoa purchases with an annual syndicated loan facility which totalled US$2 billion and was oversubscribed by over 20 international and local banks for the 2011/12 crop.

It's the largest soft commodity deal in sub Saharan Africa and Cocobod financing has been seen as one of Africa's most solid investments.

"If it is true that there has been misreporting of up to 70,000 tonnes and it turns out the mid crop is not good and the suppliers cannot make up the difference, then it could damage the reputation of this financing for Cocobod, because in the past it has been one of the safe bets when it comes to trade finance in Africa. But ultimately if the shortfall is only 70,000 tonnes it won't affect the ability of Cocobod to repay as this represents less than 10% of expected production for the season."

Edward GeorgeHead of Soft Commodities Research at Ecobank, which participated in the 2011/12 syndicated loan.


COCOA

05

Africa Export-Import Bank Mulls Loan for Ghana Cocoa FactoryBloomberg 09/05/12The African Export-Import Bank is in talks with a Ghanaian company for a US$54 million loan to build a plant to process cocoa beans for export.

Afreximbank has already agreed to provide a 5-year, US$40 million facility to upgrade 2-cocoa processing factories in south-western Ivory Coast near the country’s second-largest port of San Pedro.

The loans are part of the Cairo-based lender’s plan to help cocoa-producing western African states increase shipments of processed cocoa beans, instead of exporting the commodity in raw form, to increase revenue and create jobs.

Ghana Starts US$10 Million Cocoa-Farm Rehabilitation ProgramBloomberg 30/04/12The Ghana Cocoa Board has begun a program to distribute higher-yielding trees to farmers in a bid to rehabilitate old plantations and boost output. The US$10 million program will replace over-aged and unyielding trees and increase national output.

As many as 20 million seedlings will be sent to farmers. Ghana has been seeking ways to boost output of the beans, the country’s second-biggest foreign-currency earner, including supplying farmers with fertilizer and pesticides to increase yields.

Production rose to a record high of more than 1 million MT last season and output is seen at 850,000 tons to 900,000 tons for the 2011-2012 year.

Ghana Cocoa Premium To Drop With Ivorian Trade DecliningBloomberg 11/05/12The premium paid for cocoa from Ghana fell in the past 2-weeks as higher prices for nearby delivery encouraged sales.

Ghanaian beans in the European market cost £75-£85/MT [US$121] more than futures on NYSE Liffe in London. The premium was £85-90 on April 27. Cocoa futures for May delivery are £14/MT more expensive than the July contract.

That means traders have less incentive to store beans. The contracts moved into the so-called backwardation on 10/05/12. The premium in Europe for Ghanaian beans from the next crop starting in October was unchanged at £90-95/MT.

There was little trading of cocoa from Ivory Coast in the European market because the mid-crop, the smaller of two annual harvests that usually starts in April, is delayed, according to the traders. Harvesting will start “soon,” the International Cocoa Organization said in a report this week.

Ivorian beans from the new season were trading in Europe at a premium of £55-85

depending on the shipment period. Cocoa for July delivery fell 0.2% to £1,539/MT on NYSE Liffe on 11/0512.

NIGERIA

FG Pledges To Boost Cocoa Production With N5.6mVanguard 24/05/12The Federal Government will soon release N5.6m counterpart funding to boost cocoa production in Nigeria. A delegation from the International Cocoa Coordination Organisation [ICCO], led by Dr Koname Lucien, Regional Director, has recently been in Abuja.

The ICCO is working on an international project to re-enforce the capacity of cocoa producers in the sub-region by ensuring effective use of pesticides. Countries involved are Nigeria, Cote d’Ivoire, Cameroon, Ghana and Togo.

N3.6 million has been approved under the Common Fund for Commodities for pests control and packing for Nigerian cocoa farmers. A price list has also been developed to let Nigerian farmers know how to manage fluctuation of cocoa prices.


COCOA

06

Cocoa demand may exceed production by 1 million MT by 2020, creating a shortage of as much as 25% of the current global supply. Consumption of the chocolate ingredient is estimated to rise by nearly 30% in the next 10 years. Growth will be driven by rising population and rapid development in China, India and Brazil. Cocoa output is forecast at 3.96 million tons in the season started in October.

Cocoa Shortage One Million

Tonnes By 2020


COCOA

07

GENERAL

El Nino Could Cut Global 2012/13 Cocoa OutputReuters 17/05/12Possible El Nino weather conditions later this year could exacerbate a potential global cocoa deficit in the coming 2012/13 season, causing prices to climb. El Nino - the warming of the Pacific Ocean leading to a shift in weather patterns - caused a drop of 2.4% in world cocoa output on average when it occurred over the last 60 years, according to ICCO data. Such a drop equates to around 100,000 tonnes of cocoa at current production levels.

"If we are in a period when we have already a deficit, and in addition we have this factor that adds to the deficit, the impact on price would be even higher."

Laurent Pipitone, Statistician International Cocoa Organization [ICCO]

The ICCO has predicted a deficit of 71,000 tonnes in 2011/12 [October-September], after a record surplus the previous year, when ideal weather boosted West African output. West Africa produces around two thirds of the world's cocoa, led by Ivory Coast.

ICE cocoa futures prices hit a 32-year high in March last year after a disputed presidential election saw a temporary ban on cocoa exports in Ivory Coast, but prices have since fallen by around 40%. Crop prospects for the tail of West Africa's 2012/13 October-March main crop along with the 2012/13 April-September mid crop is most at risk from potential El Nino weather conditions later this year.

The effect of El Nino weather events on the cocoa crop differs according to the duration, severity and time in the crop cycle at which the weather arrives. Such weather typically means drier conditions in Malaysia, Papua New Guinea, the Philippines and Indonesia, the third's largest cocoa producer, where the harvest has fallen 2.4% on average during past El Nino periods.

West Africa also sees lower rainfall, with average drops of 2.03% and 1.72% in the world's first and second largest producers, Ivory Coast and Ghana.

Cocoa Shortage May Be 1 Million T By 2020Bloomberg 09/05/12Cocoa demand may exceed production by 1 million MT by 2020, creating a shortage of as much as 25% of the current global supply. Consumption of the chocolate ingredient is estimated to rise by nearly 30% in the next 10 years. Growth will be driven by rising population and rapid development in China, India and Brazil. Cocoa output is forecast at 3.96 million tons in the season started in October.

Market For UTZ Certified Cocoa Doubles Reuters 16/05/12UTZ Certified is a sustainability programme that seeks to improve living conditions for farmers and ensure constant supply of commodities. A total of 42,704 MT of UTZ cocoa was sold to chocolate manufacturers and other producers during 2011 up 50% from 2010.

Volumes of UTZ certified cocoa also doubled to 200,000 MT as the programme added new origin countries such as Nigeria and Cameroon. UTZ cocoa also made its way to several Asian markets for the first time, such as Japan.

Armajaro Trading Gets US$55 Million InvestmentThe Chronicle 07/05/12Armajaro Trading has announced that it has received a US$55m investment from IFC [a

member of the World Bank Group] and the IFC African, Latin American and Caribbean Fund [IFC ALAC Fund]. The investment will increase Armajaro Trading's sourcing capabilities in origin countries and help farmers to enhance their livelihoods through sustainable farming practices, while improving Armajaro Trading's funding flexibility and strengthening its balance sheet.

Armajaro Trading specialises in the sourcing and delivery of cocoa, coffee and sugar and currently has commercial operations in 21 countries and sourcing operations in the world's key cocoa and coffee producing countries including Ghana, Nigeria, Ivory Coast, Indonesia, Vietnam Brazil, Colombia, Ecuador, Kenya and Tanzania.

Future growth will be substantially driven by developing infrastructure to meet the demand for traceable and sustainable commodities and by offering value added services such as long term supply agreements and price risk management.

Blommer Sustainability ProjectsBloomberg 09/05/12North American Blommer Chocolate Co is investing US$45 million in cocoa sustainability projects by 2020. The company has already invested nearly US$13 million to date to help the cocoa sector meet rising demand.

While land-based expansion is not feasible, more environmentally desirable practices for existing cocoa farms are required to address the looming supply crisis.

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.

Date ICCO daily price [SDRs per tonne]

ICCO daily price [US$ per tonne]

London futures [£ sterling/tonne]

NY futures [US$ per tonne]

1 May 12 1543.24 2395.17 1520.33 2327.33

2 May 12 1568.32 2424.44 1543.33 2352.00

3 May 12 1538.68 2378.42 1517.33 2304.00

4 May 12 1530.77 2366.47 1511.67 2295.00

7 May 12 1562.42 2411.25 1518.17 2368.00

8 May 12 1552.80 2394.16 1524.67 2327.67

9 May 12 1560.68 2403.12 1529.33 2342.33

10 May 12 1564.29 2406.17 1531.67 2340.00

11 May 12 1554.28 2388.98 1528.67 2323.00

14 May 12 1515.16 2324.47 1494.67 2242.67

15 May 12 1527.52 2341.87 1500.33 2282.00

16 May 12 1551.81 2366.13 1526.67 2302.33

17 May 12 1521.05 2317.62 1513.33 2242.33

18 May 12 1540.39 2348.33 1532.67 2279.33

21 May 12 1519.32 2321.89 1519.33 2247.33

22 May 12 1485.16 2266.86 1493.67 2180.00

23 May 12 1452.02 2210.87 1469.33 2118.33

24 May 12 1455.89 2210.67 1459.33 2132.67

25 May 12 1452.47 2204.95 1463.67 2121.67

28 May 12 1454.62 2208.22 1466.67 2118.17

29 May 12 1450.50 2199.68 1463.33 2114.67

30 May 12 1428.78 2159.72 1443.33 2079.67

31 May 12 1437.52 2171.03 1463.00 2090.00


COCOA

08

CAMEROON

Cameroon Robusta, Arabica Export Price RiseBloomberg 21/05/12The export price for both robusta and arabica coffee from Cameroon rose in the week to May 20. The price for robusta climbed 6.3% to 1,019 CFA francs. Arabica coffee increased 3.3% to 1,884 francs. Cameroon has exported 775 MT of arabica since the season started in October and 7,703 MT of robusta since December.

Cameroon Robusta Coffee Exports NosediveReuters 17/05/12Cameroon robusta coffee exports hit 7,433 tonnes by the end of April since the season started in December, marking a nearly 60% decline from the 18,042 tonnes exported during the same period a year ago. The National Cocoa and Coffee Board said the decline in exports may be due to farmers stockpiling coffee beans in hopes prices will rise later in the season.

Officials have also blamed changes in weather patterns in the central African state, where coffee output has dropped steadily in recent years. Robusta exports last season totalled 29,559 tonnes, from 43,985 tonnes the year before. Exports in April totalled 5,198 tonnes, up from 508 tonnes in March, and roughly at par with the 5,023 tonnes exported in April 2011. Cameroon's arabica exports, meanwhile, hit 775 tonnes by the end of April since the season started in October, down from 905 tonnes during the same period last season.

ETHIOPIA

Coffee Exports 50% Below Target In Ethiopia Merkato 09/05/12Coffee exports in Ethiopia were 50% below target in the past 9-months of the financial year and are expected to decrease even further. Ethiopia had anticipated raising US$1.17 billion from the export of 288,000 tons of coffee. The failure to meet targets was due to the instability of the international market.

It is expected that coffee exports will reach 70% of target by the end of the fiscal year. Ethiopia exported 98,000 tons of coffee in the first 9-months which amounted to 48% of target exports raising 66% of the target revenue. It is hoped that new contracts will increase exports. Coffee contracts for 23,000 tons and 33,000 tons were signed with international buyers and exporters in April and May respectively.

The price of coffee beans went down as the international market for coffee slowed leading to a decline on the Ethiopia Commodity Exchange. The decline in prices has resulted in coffee suppliers hoarding their product to wait for the prices to increase on the international market said the expert. Suppliers should be selling to at least break even. It is expected that the export of other agricultural products such as oilseeds will compensate for the deficit in coffee.

Ethiopian Coffee Enterprise Earns 209 Million Birr Ethiopian Business News 03/05/12The Coffee Plantation Development Enterprise of Ethiopia [CPDE] has earned 209 million birr from the sale of coffee this fiscal year. The revenue was earned from the sale of more

than 75,000 quintals of coffee. Export markets included Belgium, Germany, Italy, Japan, Netherlands and Russia. CPDE achieved 85% of its target to harvest 77,000 quintals of coffee this season. This year’s coffee output of 75,100 quintals was 13% up from the 58,000 quintals harvested last year. Coffee sales decreased compared to last year because of lower coffee prices on the international market and the global financial crisis. CPDE will remove and replaced old coffee trees from 500 ha of land with newer and high yield species.

KENYA

Judge Throws Out Coffee Directive Business Daily 17/05/12A court has annulled the powers of the Commissioner for Co-operative Development who directed coffee societies to deliver their products to a particular miller. The circular issued by the commissioner 7-years ago had no legal effect. On 19/10/05, the Co-operatives Development minister told Parliament that his ministry had written to co-operative societies indebted to the Kenya Planters Coffee Union [KPCU] directing them to deliver their produce to the troubled firm.

The government felt that the co-operative societies were not honouring their obligation to KPCU and the ability of the societies to mill and market their coffee through other millers and agents denied KPCU the ability to collect its debts.

Aggrieved by the government’s directive, Thika Coffee Mills Ltd and Morendat Limited moved to court in 2007 seeking to quash the

commissioner’s powers and the extent to which the State can regulate the marketing of coffee. The 2-millers argued that the directive was contrary to sections 4 and 27 of the Co-operative Societies Act 1997 and denied members the right to choose the most competitive service providers. The companies said the directive was opposed to the Coffee Act, 2001 which was enacted to liberalise the coffee industry.

TANZANIA

Tanzania Coffee Board Will Purchase Beans From May to March Bloomberg 07/05/12The Tanzania Coffee Board announced its coffee-buying season will begin this month and continue until March. The board cut its production forecast for the 2011-12 marketing season by 18% to 37,000MT after a drought reduced yields. Tanzania grows both the robusta and arabica varieties of coffee in the western Kagera region, while the northern Kilimanjaro and southern regions mainly produce arabica.

Coffee Production Boosting Programme Bears Fruits Tanzania Daily News 06/05/12The Tanzania Coffee Research Institute [TaCRI] has distributed 14 million seedlings of improved coffee varieties. The move will contribute to the rejuvenation of the coffee industry as detailed in the Strategic Action Plan [SAP]. The 5-year SAP, which expires next year, was intended to promote and disseminate appropriate and financial viable technologies to farmers and agencies.

TaCRI Sub Station Map


COFFEE

09

UGANDAN COFFEE EXPORTS PLUNGEUganda Sees May Coffee Exports To FallBusiness Recorder 17/05/12Uganda's coffee exports in May are projected to fall 29% compared to the same month a year ago, depressed by slow bean drying and transportation due to heavy rains.

Uganda was likely to export 180,000 60-kg bags of coffee in May, down from 253,270 bags in the same month last year, the state-run Uganda Coffee Development Authority [UCDA] noted. May exports are projected at 180,000 bags due to the current rains being received especially south of the Equator which are delaying the drying and transport process.

There are also minimal Robusta stocks at exporter level. Uganda, which primarily cultivates the Robusta variety, substantially relies on exports of the beans for its foreign exchange earnings.

UCDA said Uganda earned US$21.4 million from the 141,220 bags of coffee shipped in April. Cumulatively Uganda has exported a total of 1.34 million bags in the first 7-months of the 2011/2012 [October-September] coffee year, compared with 1.32 million in the same period last season.

Uganda Coffee Exports Plunge 20% In AprilReuters 09/05/12Uganda coffee exports slid 20% to 141,220 60-kg bags in April from the same month last year, weighed down by farmers' reluctance to sell their coffee after prices fell. The figure was down from 176,561 bags in the same period last year.

A kilo of Arabica dry cherries was going for around 10,000 shillings in mid March but as we speak it's down to about 7000 shillings according to the Uganda Coffee Development Authority [UCDA].

Exports of coffee constitute a key source of hard currency for Uganda, which is also gearing up to become a top-50 crude oil producer. It cultivates mostly the robusta variety. Exports are likely to edge up again in the next 2-months as stocks build up in the south and south-western regions, where the harvest is ongoing.


COFFEE

10

COTE D’IVOIRE

Ivorian Cotton Forecast Lowered Ahead Of New SeasonReuters 22/05/12Ivory Coast has slightly lowered its cotton production forecast for the 2012/13 season to 300,000-315,000 tonnes according to the Ivorian ginners association. The forecast is down from the 334,500 tonnes forecast last month but up from about 260,000 tonnes reached in the 2011/12 harvest.

Ivory Coast's new cotton season was due to begin on May 20. The farmgate price for the new campaign was set at 265 CFA francs [US$0.52] per kg, the same last season. This year farmers will also receive an unspecified bonus at the end of the season if prices remained firm on the world market.

MALAWI

Malawi Registers Sharp Cotton Production GrowthXinhua 22/05/12Cotton production in Malawi in the 2011/2012 growing season leapt by 365%. Malawi President Joyce Banda attributed the increase in cotton production to the government's deliberate efforts to promote production of the cash crop. The government has allocated US$6.4 million in its 2011/2012 national budget to cater for the procurement of farm inputs for cotton production.

Estimated cotton production for 2011/2012 is 244,000 tonnes compared to only 52,000 tonnes which was produced in the 2010/2011 season. The government has procured 3-ginneries, through a line of credit from the government of India that would be operated by the Agricultural Development and Marketing Corporation [ADMARC] in the cotton producing districts of Ngabu, Balaka and Karonga. For the 2012/2013 season, the hectarage for cotton production is expected to increase from 236,269 to 250,000.

Cotton sales in Malawi had been unattractive until 2011, when the prices of seeded cotton went up 3-4 fold thereby, attracting more farmers into the production of the cash crop, which ranks 4th in the country after tobacco, sugarcane and tea.

MALI

Mali Sees Higher Cotton Output Despite Instability Reuters 17/05/12Mali has confirmed its forecast for a strong rise in local cotton production for the 2012/2013 season despite unrest that included a March 22 military coup and a rebellion that has since gained control of the northern part of the country. The CMDT cotton company forecast is for 500,000 tonnes against 445,143 tonnes for 2011/2012. Favourable rainfall plus steady local farmgate cotton prices would buoy output. Mali's cotton output is based in the south of the country and production for each new season runs from May to October.

West Africa once represented about 15% of the world's cotton exports, analysts say, but was hit hard by a market crash in the early 2000s, which West African states blamed on subsidies in competing growers such as the United States. The crash prompted many

farmers, who saw little potential for profit, to switch to other crops. A rally in world cotton prices through 2010 and 2011 started to draw farmers back into the fields but prices are back down at 2-year lows with world cotton stocks at record highs.

TANZANIA

Concern As Tanzania Cotton Firms Blacklisted The Citizen 30/04/12Cotton farmers, ginners and other stakeholders are embroiled in an internal conflict, pitting those who are for contract farming and those who are against it, subjecting the sub-sector to confusion only few weeks ahead of the onset of buying season. It has also emerged that some

Tanzanian ginners are on an international default list, threatening the reputation of the nation’s cotton industry which accounts for 25% of the country’s economy.

The Minister for Agriculture, Jumanne Maghembe, has formed a 12-man committee, that has been given a month to establish the problems and suggest how they should be addressed. The team was in Mwanza to meet stakeholders in a gathering organised by the Tanzania Cotton Association [TCA]. It is at this meeting where stakeholders raised their concerns over the problems threatening to cripple the agriculture sub-sector.

According to Food and Agriculture Organisation [FAO] data, Tanzania is now ranked the world’s 17th producer of raw seed cotton, well below other African nations like Burkina Faso and Nigeria, while it also fairs poorly in productivity and quality standards.

Reports state 7-ginners in Tanzania have been blacklisted in recent years, meaning they cannot sell their cotton in the world market, giving the sector a bad name. Some have been blacklisted for allegedly violating sales contracts with international buyers and have subsequently been placed on the default list of the International Cotton Association [ICA].

On contract farming, the Minister urged stakeholders to accept the system, for it would help to redeem Tanzania’s cotton standing in the international market. Some of the ginners refused to implement the system while others invested by extending loans to farmers; hence the controversy as the buying season nears. It was apparent that ginners who have invested billions of shillings in contract farming want the concept to continue

while others, who find themselves short of the essential funding, felt that they were being pushed out of business.

ZIMBABWE

Zimbabwe Government Intervenes In Cotton WarThe Herald 18/05/12The Zimbabwe Government has intervened in a cotton pricing dispute between farmers and merchants. The Minister of Agriculture has been tasked to meet stakeholders to find an amicable solution within the coming week. Government is also working on establishing a commodity exchange as a way to resolve pricing issues as a long-term solution.

The exchange would enable maize, cotton, tobacco and other agricultural commodities to have a market driven platform where farmers are able to extract maximum value for their products. The Ministry is also concerned about agro-processing, moving up the value chain in terms of cotton so that it can set up a cotton cluster mooted to be based in Kadoma for processing of cotton and then build supporting industries and infrastructure for the cluster.

GENERAL

Cotton Extends Slump to 21-Month Low as Supplies ExpandBloomberg 11/05/12Cotton tumbled to a 21-month low. World stockpiles will climb 10% to 73.75 million bales in the season that starts Aug. 1. Industrial output slowed in China

and shrank in India, adding to concern that global economy will weaken as the European debt crisis worsens.

Cotton futures have plunged 64% from a record in March 2011 as higher prices encouraged farmers to plant more and demand fell in China. The commodity was down by more than any of the 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index, which fell for an 8th straight session, the longest slump since December 2008.

Cotton futures for July delivery fell 3.1% to 79.3 cents a pound at 8:29 a.m. 11/05 on ICE Futures U.S. in New York, after reaching 77.16 cents, the lowest for a most-active contract since July 2010. Futures declined for an eighth day, the longest losing streak since June 4, 2010.


COTTON, TEXTILES & LEATHER GOODS

11

Kenya New Rules for Fruit Juice Package LabelsThe Star 24/04/12The Kenya Bureau of Standards [KEBS] is determined to stop fruit juice and soft drinks manufacturers from displaying images of fruits on their packaging material if the content inside is less that 35% of the fruit extract. Meanwhile KEBS hope to have an SMS based reporting service which will soon be activated which will allow consumers to counter check the standards certification by texting the code displayed on the packaging material, and get realtime confirmation on whether the KEBS stamp appearing on products is genuine.

These issues were raised at a 2-day workshop on ISO Technical Committee 34 [ISO TC 34] on food and food products in Nairobi. Kenya is using the forum to have nutritional values included as part of benchmark requirements for food exports to Europe and other markets outside Africa. Currently the sanitary and phytosanitary concerns dominate the standards.


FOODSTUFFS, NUTS, PULSES, SPICES, FRUITS & VEG

12

PALM

OIL


PALM OIL

13

CAMEROON

Cameroon Says Cargill Eyes 50,000-Ha Oil Palm ProjectReuters 22/05/12According to the Cameroon's Investment Promotion Agency [API] U.S agribusiness conglomerate Cargill plans to invest up to 200 billion CFA francs [US$390 million] in a 50,000-ha oil palm plantation in Cameroon. Cargill already has investments in Cameroon's cocoa sector where Telcar Cocoa, its joint venture partner, is the country's leading cocoa exporter.

The oil palm sector in Cameroon and other sub-Saharan African nations have attracted interest from international agro-industry groups. New York-based agricultural company Herakles Farms plans to develop a US$350 million 60,000-ha oil palm plantation in the country, while Biopalm Energy, a subsidiary of Singapore's Siva group said in August it will launch a 900 billion CFA Francs [US$1.75 billion] palm oil investment project.

Cameroon Palm Oil Production To Hit 265,000 TonsXinhua 18/05/12Palm oil production in Cameroon will increase by 55,000 tons to 265,000 tons this year, up from last year’s 210,000 tons, thanks mainly to an increase in output from small-scale farmers in the south-western and littoral regions, according to the Ministry of Agriculture and Rural Development [MINADER]. Buyers from the neighbouring countries, such as Gabon, go as far as to dealing directly with farmers in villages since most industrial production is scheduled for exports. As a result, the price on the local market has risen from 550-600 CFA francs/litre in the previous year to 650-700 CFA francs/ litre.

Encouraged by the growing interest in oil palm production, the ministry will deploy more technicians to train the small-scale farmers on better farming techniques in the 2-regions as well as in the southern region, with similar climate. Cameroon’s palm oil output is expected to go up to 300,000 tons and above by 2016, thanks to Biopalm Energy Ltd, a subsidiary of Singapore’s Siva Group which launched a CFA 900 billion project in the sector in August 2011 in collaboration with the National Investment Corporation [SIC] over 200,000 ha.

COTE D’IVOIRE

Ivory Coast's Sifca Looks To Central AfricaReuters 11/05/12Ivory Coast agro-industry group Sifca is looking to set up palm oil and rubber plantations in central Africa to boost output. Sifca, one of the biggest companies in the West African country, is part-owned by Singapore's Olam International and Wilmar International. Sifca produces palm oil, cotton seed oil, natural rubber and sugar in the West African countries of Ivory Coast, Liberia, Nigeria and Ghana.

"We are looking in central Africa for rubber and palm oil, it's a question of land and finding the right partners. It's on the table right now. We're talking about plantations and factories."Jean-Louis Billon, Chairman of Sifca

Billon said when it came to palm oil production, the company's goal was first to boost its own supply to meet the capacity at its 500,000 MT pa refinery in Abidjan, Ivory Coast. The refinery is the largest in Africa but does not have enough supply. Sifca’s objective is to reach full capacity, and then go beyond. Whilst Sifca is focusing on its core businesses of natural rubber, palm oil and sugar, it is also looking to grow rice in Ivory Coast.

LIBERIA

Equatorial Palm Bullish On Palm Oil As Prices RiseProactive Investors 10/05/12Equatorial Palm Oil expects demand for palm oil to outstrip supply this year with prices set to rise further. Equatorial made its first sales in 2011 with revenues of US$385,000 and a reduced loss for the year of $2.17 million [US$4.4 million]. Significant shortfalls in production at a time when demand is expected to continue would cause the palm oil price to strengthen further and help the company.

Equatorial has an estate of about 169,000ha at Palm Bay, Butaw and River Cess in Liberia. A mill capable of processing 5-tonnes of fresh fruit bunches per hour started up at Palm Bay a year ago. Progress in planting at the Palm Bay Estate and the expansion of nurseries provides a basis for future operations.

GENERAL

Feronia Posts FY Revenue Increase Of 91%, Palm Oil Production Up 61%ProActive Investors 01/05/12Africa-focused farming and oil palm plantation company Feronia narrowed its full year losses in 2011, as revenue grew 91% on improvement in crude palm oil production and higher prices. For the period that ended 31/12/11, revenues grew to US$7.45 million from US$3.91 million a year earlier. The company narrowed its net loss to US$5.7 million compared to a loss of US$6.87 million in 2010.

Crude palm oil [CPO] production was up 61% to 7,981 tonnes for the full year, up from 4,951 tonnes in 2010. A total of 12,110 ha of oil palms were replanted during the year. The company also reported that realized average sales price for CPO was US$984 per tonne in 2011, up from US$746 per tonne a year earlier.

Feronia raised new equity which allowed the company to accelerate its re-planting program and advance the construction of a new palm oil mill at Yaligimba plantation in DRC and commenced construction of a drying, storage and processing facility. The palm oil mill, which is being commissioned in Q4 is expected to have an initial processing capacity of 30 tonnes per hour. The capacity is expected to be increased to 60 tonnes per hour in a Phase 2 expansion, which will be implemented as the mill approaches full capacity utilization.

Feronia said that key objectives in 2012 include completing up to 5,000 ha of re-planting across its oil palm plantations, and proving commercial yields of rice and beans at its arable farming division.


PALM OIL

14

MALI

Illovo Pulls Out Of Mali Sugar ProjectReuters 28/05/12South African group Illovo Sugar has pulled out of the 2.6 billion rand Markala sugar project in Mali, largely due to political risk and also funding difficulties, and will focus on growth opportunities elsewhere in East & Central Africa. The project, a proposed private-public partnership between the government and Illovo, was expected to produce 1.5 million tonnes of cane per year. Illovo ended its interest after the government failed to finalise funding and complete undertakings with regard to infrastructure development. The security risk was also a concern after a recent coup. Illovo, a unit of Associated British Foods and Africa's biggest sugar producer, has operations in South Africa, Malawi, Mozambique, Swaziland, Tanzania and Zambia.

NIGERIA

Dangote Sugar Refinery To Acquire Savannah SugarTimes 21/05/12Dangote Sugar Refinery Plc [DSR] shareholders approved the proposal to acquire Savannah Sugar Company which would reduce DSR’s dependence on imported raw materials and save costs. DSR is the Nigerian market leader with 70% and the largest sugar refinery in Sub-Sahara Africa with installed sugar refining capacity of 1.44million MT pa. The company is looking to expand its export horizon beyond Ghana.

SWAZILAND

Swaziland To Increase Sugar CapacityKuwait News Agency 16/05/12The Swaziland government met with Kuwait's Chamber of Commerce to discuss trade cooperation. Swaziland produces an annual 700,000 tonnes of sugar – 90% is sold to the US, Europe and Africa. The size of the production is not enough to accommodate the huge domestic demand, which is why Swaziland seeks to increase this, calling on Kuwaiti investors to production, storage and transport of sugar.

TANZANIA

Tanzania To Start Exporting SugarTanzania Daily News 03/05/12Tanzania may soon start exporting sugar to other East African countries after increased supply of the commodity in the local market despite closure of 4-factories for maintenance. The Sugar Board of Tanzania [SBT] has received applications from manufacturers seeking export permits of sugar after learning that there is excessive supply in the market. Among the 4-factories in the country, Kilombero Sugar Company is expected to resume production later this month and others including Kagera, TPC and Mtibwa next month. Harmonisation of supply and price in neighbouring countries has discouraged smuggling. In March, SBT gave registered importers 10-days to bring in the sweetener tax-free as per their permits or face the risk of losing their licences. About 26 companies were licensed to import duty-free 100,000 tonnes of sugar to cover the shortage in the country and curb rising price. SBT report for April, said the supply of sugar is good in all regions and pushed down the average price to 1,800/kg at retail outlets. The maximum price of sugar ranging between 2,500-2,600/kg was recorded in Tabora, Mbeya and Rukwa regions mainly due to transport costs.

UGANDA

Firm to Set Up Busoga Sugar FactoryThe Observer 24/04/12Sugar and Allied Industries Limited [SAIL] intends to set up a sugar factory in Busoga by January 2013. SAIL also plans to build a power plant to produce 12 MW, some of which will be connected to the national grid. Preparations to launch the sugar plant on a 50-acre piece of land are on course. Already, Kakira Sugar Limited in Jinja is producing its own power using the same model. SAIL is one of the plants that were licensed last year after an abrupt sugar shortage sparked off public acrimony. Other licensed companies are Mukwano sugar industry in Masindi, Tirupati Development in Nakasongola, Uganda Crop Industries in Buikwe, Kafu Sugar in Masindi, Kamuli Sugar in Kamuli, Kenlon in Namasagali and Bugiri Sugar company in Bugiri.


SUGAR

15

ZAMBIA

Illovo Sees 2012/13 Output Above 400,000TReuters 07/05/12Zambia Sugar, a unit of South Africa's Illovo Sugar, expects its sugar output to increase by more than 7% to over 400,000T in the current 2012/13 season from last year. The company, which produced 374 000T of sugar in the last season to end March, said it expected output to rise due to good climatic conditions, increased age of cane and a larger planted area. Improved economic conditions is expected to enhance domestic market sales and the continuing sugar deficit in the region will also benefit the company. Higher than expected European Union exports will further improve export revenue.

GENERAL

Sugar Companies - High Economic Growth PredictedFM 03/05/12In a recent report, the World Bank announced economic growth in sub-Saharan Africa remains strong and is poised for lift-off with growth at 4.9% last year, though if SA [>33% a third of the GDP] is excluded, growth was 5.9%, making it one of the fastest-growing developing regions. Much of the sugar produced will be exported to Europe, with the major attraction in Africa being the cost at which it can be produced.

South Africa’s [SA] sugar giants, Illovo and Tongaat Hulett, operate in several African countries. But, as Illovo has been reminded recently, there are still real risks that go with investment in the sub continent. A big investment in a planned sugar refinery in Markala, Mali, has had to be put on ice after a surprised military coup. Their project team has been withdrawn from the West African country. Illovo is operating in Malawi, which accounts for 45% of its operating profit, Zambia [33%], Tanzania [13%] Mozambique [4%], Swaziland [3%] and SA [2%]. Returns for sugar are better outside SA. Yet SA is a stable base with good logistics and it is a good ramp-off point for Africa. The Mozambican and Tanzanian operations leveraging off the big centre in Malawi.

Operations in Malawi and Zambia have provided an incentive for further investment, with many other opportunities in Africa now being screened. In Tanzania an alcohol distillery at Kilombero is being prepared for commissioning in the middle of next year to maximise usage of the whole plant. That strategy also includes a power co-generation plant in Swaziland utilising sugarcane biomass.

Besides SA, Tongaat Hulett also operates in Zimbabwe, Mozambique, Swaziland, Botswana and Namibia. It owns the leading sugar brands in Botswana [Blue Crystal] and Namibia [Marathon]. The group’s strategy in Africa is to increase production to its installed capacity of more than 2Mt/year of raw sugar. A growth in African sugar production by a further 55%. In the group’s main producing countries - Zimbabwe, Mozambique and Swaziland - raw sugar production grew more than 20% to 664000t in the 2011/2012 season. Mozambique was the star performer for the group, lifting its output by 42% over the previous season.

Zimbabwe showed a 12% increase and Swaziland 9%. Zimbabwe is the biggest operation and already accounts for more than a third of Tongaat Hulett’s operating profit. With more than 29000ha under sugarcane with the potential to produce almost 3,5Mt of cane, Zimbabwe has a sugar milling capacity of more than 640000t/year and ethanol alcohol production capacity of 40m litres a year.

SUGARCOMMODITY WATCHWWW.DELMAS.COM

SUGAR

16

KENYA

Kenya Tea Prices Firm, Volume Offered Reuters 22/05/12Kenya is the world's largest exporter of black tea and the crop is one of its largest hard currency earners, bringing in US$1.27 billion last year. At the 22 May auction 86,983 packages were offered for sale, with 15.38% remaining unsold.

Last week, 81,415 packages were offered with 10.56% of it unsold. Pakistan Packers and Egyptian Packers bought more tea than last week, while Yemen, other Middle Eastern countries, UK, Sudan and Kazakhstan bought similar quantities as last week.

Regulator Tea Board of Kenya expects 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.

Kenya’s Tea Output For Q1 Down 14.9%Xinhua 07/05/12Kenya ’s tea production for Q1 declined by 14.9% to 72.4 million kg compared to 85.1 million kg recorded during Q1 of 2011. The Tea Board of Kenya [TBK] attributed the lower tea production to severe hot and dry weather conditions experienced in most parts of the country particularly during the month of February and March. Total tea production for 2012 will drop by 5% compared to 2011 when the country harvested 378 million kg.

Total export volume for January-March was 118.1 million kg which was higher by 10.7 million kg compared to 107.4 million kg recorded for the same period of 2011. During the period, Kenya tea was exported to 45 market destinations with Pakistan maintaining the lead, having imported 26.5 million kg which accounted for 22% of the total export volume.

Kenya Tea Exports Up 10% In First QuarterReuters 01/05/12Kenya's tea exports rose 10% in Q1 of 2012 even while output fell according to the Tea Board of Kenya [TBK]. Kenya exported 118.1 million kg in January through March, up from 107.4 million kg in the same period of 2011. Drought and frost had led to a 15% drop in Q1 output to 72 million kg but heavy rains are expected to cause a turnaround in tea production.

The Mombasa-based tea auction handled 68.1 million kg in Q1, sold at an average of US$2.96 per kg, down from 65.8 million kg sold in Q1 of 2011. Pakistan was the leading buyer of Kenya's tea, taking 26.5 million kg [22%], while Egypt bought 24.5 million kg and Britain 15.9 million kg. Egyptian purchases rose by 39% growth, while

Pakistan's increased 13% and British buying slowed by 15%.

TANZANIA

Tanzania’s Tea Production May Increase to Record on New FactoryBloomberg 16/05/12Tanzania, Africa’s 4th-largest tea producer, may boost output to a record next year after a new factory is built. Production of the leaves may increase to 36 million kg in the next 12 months from 34 million this fiscal year.

A new factory is being built in southern Tanzania with the capacity to process 1.5 million kg of tea a year. Tanzania’s tea output ranks behind Kenya, Malawi and Uganda. 80% of the leaves are sold to buyers from the U.K., Germany, India and the United Arab Emirates.

Type 22 May - US$ per kg 15 May - US$ per kg 8 May - US$ per kg Top Grade $3.68 $3.56 $3.53

Best Broken Pekoe Ones TEABP1-BEST-KE

$3.96-$3.39 $3.81-$3.30 $3.85-$3.20

Best Pekoe Fanning Ones TEAPF1-BEST-KE

$3.66-$3.40 $3.56-$3.46 $3.60-$3.32


TEA

17

GHANA TIMBER

Ghana Risks Becoming A Net Importer Of Wood Africa Report 24/05/12Experts have predicted that if urgent steps are not taken, Ghana can eventually become a net importer of wood in the next 10 to 15 years. The country's forest cover, which stood at 8.2 million ha in 1900, has now been reduced to about 1.2 million ha. In order to avoid this, the country has set to replant 30,000 ha of destroyed forests every year to increase the national forest coverage. This is less than half of what current statistics say the country loses annually. About 65,000 ha of forest is lost annually. The new initiative forms part of plans to revive Ghana's National Forest Plantation Development Programme [NFPDP]. Forestry, wildlife and mining sectors account for about 15% of Ghana's GDP, 25% of government revenues and 60% of foreign exchange. Threats from illegal chainsaw lumbering, mining and general insecurity in landowning have been estimated to cost the nation at least 10% GDP.

Ghana On Track For FLEGT Licenses By March 2013 EUROPA 15/03/12The Government of Ghana and the European Union have reaffirmed their commitment to effective implementation of the FLEGT Voluntary Partnership Agreement [VPA] at the 4th meeting of the VPA Joint Monitoring and Review Mechanism [JMRM] in Accra. It is expected that Ghana will begin to issue FLEGT licences for legal timber by March 2013 in time for the implementation of the EUTR. The Ghana-EU JMRM ensures an effective development of the systems needed to implement the agreement and to follow up on commitments of both parties. The meeting provided the parties with the opportunity to have a firsthand discussion on how to develop a framework for monitoring the impacts of the Agreement. Ghana became the first timber-producing country to sign a Voluntary Partnership Agreement [VPA] with the European Union [EU] in November 2009. Following Ghana's lead, 5 other countries have also concluded VPAs, and more are in VPA negotiations.

During the meeting, the parties discussed progress on implementation of the Agreement. Updates were provided on the components of the Legality Assurance System [LAS] - in particular the progress on the wood tracking system, the legality verification protocols and the independent monitoring of the system, the policy and legislative review, and on the progress on the domestic market policy. The working rules of procedure for the JMRM as well as further elaboration of rules of arbitration have been agreed. In the update, Ghana highlighted advances in the development of a workable system for verifying the legality of timber and will soon contract an Independent Monitor. It is expected that the next series of meetings of the JMRM will be held in Accra in September 2012.


TIMBER

18

MALAWI

Malawi’s Tobacco Yields Down Xinhua 22/05/12President Banda announced Malawi's chief cash crop, tobacco, expected yield was 151 million kg, down 35% on last year's production of 232 million kg. To address the issue of low prices offered at the auction floors the Government will review the Tobacco Act. The Government is also engaging the tobacco buyers as partners in business and development. Tobacco prices at the country's auction floors have improved since President Banda assumed presidency on April 7.

ZIMBABWE

Tobacco Prices Remain FirmHerald 21/05/12Tobacco prices have continued to remain firm at the auction floors, hovering above US$3/kg despite a decline in deliveries. According to statistics released by the Tobacco Industry and Marketing Board, the season average price was US$3,76/kg, which is 41% higher than the US$2,67/kg that was recorded during the same period last year. In terms of the auction floors, Tobacco Sales Floors [TSF] has the highest seasonal average of US$3,71/kg followed by Premier Tobacco Floors [PTF] with an average of US$3,68/kg, Millennium Tobacco Floors [MTF] US$3,67/kg and Boka Tobacco Floors US$3,59/kg.

A total of 92,6 million kg of tobacco has been sold so far this season earning US$362,1 million. Of the 92,6 million kg, 55,9 million kg, valued at US$214,4 million was sold through the auction system while the remainder of 40,3 million kg worth US$147,6 million was sold under individual sales. TSF has sold the highest amount of tobacco under individual sales amounting to 13,4 million worth US$49,8 million followed by Boka Tobacco Floors with 12,4 million kg worth US$44,6 million. PTF was third selling 27,5 million kg valued at US$7,4 million and MTF has sold the least amount of tobacco so far - 6,9 million kg worth US$25,5 million.

In terms of sales TSF had the highest average price of US$3,71 per kg followed by Premier Tobacco Floors at US$3,68 per kg, Millennium Tobacco Floors at US$3,67 per kg and Boka Tobacco Floors at US$3,35 per kg. A total of 150 million kg of tobacco is expected to be delivered to the auction follows during the current season, which opened in February. Analysts believe that the current dip in deliveries is temporary with more tobacco expected to be delivered in the coming months.

GENERAL

African Countries Top Tobacco ExportsThe Herald 20/04/12African countries have taken up a combined 43% of tobacco exports with South Africa topping the list according to the Tobacco Industry and Marketing Board. This is an increase from the same period last year when African countries consumed only 18% of the total exports. Latest statistics from TIMB show that current seasonal tobacco exports to the Far East rose by 4% from last season's 26% mainly attributed to improved exports in China. The Middle East, which used to take more than 15% of total tobacco exports, made a huge slump to 2% in March this year. According to TIMB, this is a result of an 81% decrease in exports to the region. United Arab Emirates is the major player in the region with current monthly imports pegged at 133,000kgs. The UAE consumes cutrag tobacco, which has firmed up both in volume and price over the past two years.

Exports to the European Union have decreased from 36% to 18%. As at 13/04/12 South Africa had imported 2.4 million kg of tobacco worth US$7.5 million from Zimbabwe at an average price of US$3.16/kg followed by China which bought 2,3million kg at US$6.35/kg and Belgium 1,6million kg at US$1,43/kg. Hong Kong was offering the highest price buying 415,800 kg of tobacco at US$6,70 per kg. Countries also offering high prices were Poland US$6.62/kg, and Azerbaijan which bought 19,800kg at US$6/kg. Zimbabwe exports tobacco to African countries which include Mozambique, Angola, Kenya, Congo, Malawi, Tanzania and Lesotho.

Tobacco stocks on hand are expected to go up as a result of increased stocks from the current crop. Flue cured tobacco imports remained stagnant at 515,152kg at an average price of US$2.70/kg. However, seasonal import permits issued increased to almost 12 million kgs as a result of authorisation granted to import 11 million kgs of tobacco. Tobacco production has been on the increase due to the favourable prices being offered on the market. The land reform programme has also contributed towards the increase in production with more than 80% of tobacco producers coming from the A1 and small-scale sectors.


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