Ethiopian Sugar Industry Profile

historicIt 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 one thousand four hundred quintals of sugar a year. 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 1,700 quintals of sugar production capacity a day. The two factories known by the name Wonji Shoa Sugar Factory altogether had the capacity of producing 750,000 quintals of sugar per annum till recent time 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 2011 and 2012 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 1.3 million quintals 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 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.

Later in 1992 when the Corporation which had administered all sugar factories was dissolved by statute; all the above factories were reestablished as separate 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.

Fincha Sugar Factory as the third sugarcane crushing mill to the nation came into existence in late 1998 though its establishment process and other activities dated back to 1975. 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 500,000 quintals 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.   

In 2006 Tendaho Sugar Development Project was established as a fourth two-phased project in the country. Construction of the first phase of the factory has started production in 2015. The two-phased project, reaching its maximum crushing capacity, eventually enables the factory produce 3 Million quintals of sugar and 30 million Litters ethanol a year. The factory, with its first phase factory construction finalized, has started producing sugar. The factory will in total have 50,000 hectares of sugarcane cultivation land.

It was during the inception of Tendaho Sugar Factory that the Ethiopian Sugar Development Agency came into existence replacing the support center to assist the sugar factories in project development, research and training.

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 replacing the former Ethiopian Sugar Development Agency.

 Currently, with the Regulation No. 916/2015 instituted to determine the authority and practice of FDRE Executive Bodies, the Corporation is operating under a Board of Management while it is organized under Ministry of Government Enterprises.

The Corporation, during the First GTP, has carried out various activities such as building various infrastructures as well as social institutions carrying out wide sugarcane plantation activities and creating large job opportunities. On the other hand, the Corporation, from the concluded GTP exposure, has learnt that it has got a lot to do to increase the number of sugar factories as well as amount of sugar production and co-products.

Hence, the Government has come to a conclusion that the Corporation, to attain the mission it is expected during the Second GTP, has to make certain structural changes which enable it accomplish the goals of the Second GTP of the sector. Accordingly, the Corporation, with a new structure which is believed to efficiently conduct sugar development activities at a large scale in the nation, is now carrying out various activities.

Strategic Framework of 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, wide and proved irrigable agricultural land (more than 500 thousand hectares) as well as abundant resource of water to use through canal schemes. And, the Government, to ensure equitable share of the nation’s resource among its peoples, has started broadening the sugar development sector which had been limited around Wonji Shoa, Metehara and Fincha Sugar Factories for long years to Oromiya, Afar, Amhara, Tigray and Southern Nations, Nationalities and Peoples regional states.

Accordingly, various activities are being carried out to build two sugar factories each with a capacity of crushing 12 thousand tons of cane (TCD) at Tana Beles Sugar Development Project in both Amhara and Benishangul Gumuz regions and these two factories all together have 50 thousand hectares of sugarcane cultivation land.

Likewise, activities are being carried out at Omo-Kuraz Sugar Development Project of South Omo, Bench-Maji and Kaffa zones of Southern Nations, Nationalities and Peoples Regional State where four sugar factories are at different levels of construction owning 100 thousand hectares of sugarcane plantation land. Among them three are each with a crushing capacity of 12 thousand tons of cane a day while one with 24 thousand TCD. Omo-Kuraz Factory One is almost to start production in early 2017.

Similarly, the construction of one sugar factory with 24 thousand TCD using 50 thousand hectares of cane plantation field is underway at Wolkayit Sugar Development Project of Tigray Regional State.

Though the sugar industry sector of the nation has more than half a century of experience the disparity in demand and supply of the product has prevailed due to the following factors :-

  • Tardiness of the construction of sugar factories;
  • The huge rise of demand of the community for the product due to the fast economic growth the nation has registered;
  • Amount of production of sugar in existing sugar factories has become unable to satisfy the growing domestic demand;
  • Rise of population of the nation and
  • Increment of industries which use sugar as input to their product.  

Domestic Supply of Sugar

The current annual domestic supply of sugar is between 6 to 6.5 Million Quintals of which 3.25 to 4 Million Quintals of sugar are produced domestically while the rest is imported to fill the gap between demand and supply of the product with a subsidized price. Currently a rough study conducted on the annual consumption of sugar at an individual level is more than 10 Kilo Gram while the supply is only 7 Kilo Gram. And, to do away with above trend, the Government has put the sugar industry sub sector as one among other mega manufacturing industry sectors which have got great attention both in the first and second GTPs.

Accordingly, the Government is currently carrying out huge sugar development projects to:-

Eliminate the gap between demand and supply of sugar domestically;

Create wide job opportunities to citizens and there by improve their living conditions;

Ensure the benefits of communities living around sugar development projects;

Export sugar and thereby get foreign currency.

Accomplishments of the First Growth & Transformation Period

  • Modernize existing sugar factories (Wonji Shoa - replaced with new one & Fincha sugar factories) and upgrade their production capacity.
  • Increase annual sugar production of the nation from 2,903,740 to 4,000,000 quintals.
  • Expand sugarcane cultivated area from 30,397,000 to 65,363 hectares which is 215% increment.
  • Boost production of ethanol from 7,117 to 19,804 meter cube out of it 18,480,000 is consumed as fuel blended with benzene.
  • Develop research works which have increased sugarcane productivity.
  • Carry out construction of provisional dams, water weirs, large irrigation structures, internal roads, houses as well as new huge sugar factories and land preparation works have been done.
  • Exporting 31 Mega Watt electric power to the national grid is made possible.
  • Kessem and Arjo Didessa sugar factories have entered regular production.
  • Actions which will enable Tendaho Sugar Factory Phase-One enter into trial production have become successful.
  • Lives of natives living around sugar factories/projects have improved through social institutions as well as infrastructures constructed.
  • Youths of natives around have got job opportunities being equipped with various skills through training.
  • Youths organized in micro and small enterprises are enabled to participate in sugar development projects.
  • Irrigable lands are made available to natives living around from which they are benefitting producing various crops and later on supply sugarcane to factories working as out growers of sugarcane.
  • Favorable situations are created in the sector in the first GTP so as to enable the nation become one among the ten top sugar producing countries of the world in the future.
  • More than 350,000 citizens have got regular, casual as well as contractual job opportunities from the sector.