Big Sugar in southern Africa: rural development and the perverted potential of sugar/ethanol exports

Abstract

This paper asks how investment in large-scale sugar cane production has contributed, and will contribute, to rural development in southern Africa. Taking a case study of the South African company Illovo in Zambia, the argument is made that the potential for greater tax revenue, domestic competition, access to resources and wealth distribution from sugar/ethanol production have all been perverted and with relatively little payoff in wage labour opportunities in return. If the benefits of agro-exports cannot be so easily assumed, then the prospective ‘balance sheet’ of biofuels needs to be re-examined. In this light, the paper advocates smaller-scale agrarian initiatives.

Keywords:

• sugar
• ethanol
• agro-exports
• rural development
• Zambia

Notes

¹The domestic market for ethanol in Africa is anticipated to be much lower in comparison to its export market. The International Energy Agency (2006) expects African demand for biofuels to be two billion litres by 2030, but this will be almost exclusively concentrated in Nigeria and South Africa, the major oil users at present.

²The lower GHG emissions of sugar cane are partly due to its biology since cane has a high sucrose content and needs less fossil fuel fertiliser than other biofuel feedstocks such as maize. It is also partly due to the location and practices by which it is farmed, given that it is generally not planted on peat or recently deforested land, because the leftover cane leaves (bagasse) can be used to power the processing factory rather than coal, and because cane-burning in some countries, such as Brazil, is being phased out in favour of mechanised harvesting.

³It should be noted that not all countries in the region have gained from EU sugar reform. The non-LDC countries that previously had quota access to the EU market, including Mauritius and Swaziland, have lost a high-priced guaranteed market that they are not able to replace by exporting to other markets.

⁴A 12-month sugar cane crop requires 36,000 litres of water per hectare, four times as much as an annual maize crop (Wetlands International 2008, 33).

⁵The growth rate for GDP per capita, which is at Purchasing Power Parity, was calculated across 1990–2007; the national poverty line from 2000 to 2006.

⁶Companhia de Sena, which ran Mozambique's large Marromeu mill in the Zambezia Province town of Sena, was bought by a Mauritian consortium in the 1990s, with the national government retaining a minority stake.

⁷The simultaneous threat posed by liberalisation of cheap import competition was mitigated when prohibitive tariffs on sugar were re-installed.

⁸In 2008, 4.5 million tonnes of sugar were produced in southern Africa (excluding Mauritius, which produced 0.5m tonnes) of which 2.93 million tonnes were from the three stated companies (Illovo 2009a, Tereos 2008, Tongaat-Hulett 2008).

⁹The research station is in Ghana and is an office of Brazil's national agricultural research corporation, Embrapa. Embrapa has considerable experience in sugar cane production and actually helped decode the sugar cane genome.

¹⁰Interview with T. Chisambo, Biofuels Association of Zambia, Lusaka, 3 December 2009.

¹¹The market factors attributable for this stagnation are higher labour costs and lower yields in the traditional sugar-producing countries compared to the ‘new’ LDC producers, as well as a reduction in the guaranteed EU price for Mauritian sugar exports.

¹²Interview by telephone with G. Nkombo, MP for Mazabuka District, Zambia, 9 February 2010.

¹³Local communities were also affected by effluent discharge from the sugar estate and the illegal fishing and hunting of its migrant workers. The WWF has since been working to restore 50,000 hectares to the Kafue Flats by creating a conservation area, which has cost the organisation [euro]1m over the course of a decade (see WWF 2005).

¹⁴The company in question is the Kaleya Smallholders Company Limited (KASCOL), the business set up to negotiate with Zambia Sugar on the smallholders' behalf. KASCOL provided training, irrigation, chemicals, cane cutting, haulage, re-planting, and administration services – leaving the smallholders just to water, weed and spray their plots, and then help in the harvest (Fynn 2008).

¹⁵Interview, sugar industry employee, Mazabuka, 7 December 2009.

¹⁶As of early 2010 the conflict with Kabanje village had not been resolved. The solution favoured by Mr Nkombo, a swap of the village's 50 ha for 250 ha of local state-owned land (only 60 ha of which is arable), had been met with indifference by the central government (interview by telephone with G. Nkombo, MP for Mazabuka District, Zambia, 9 February 2010).

¹⁷According to Fynn, who conducted the feasibility study into the smallholder extension, nine of the 100 households in the Magobbo community ultimately expressed a reluctance to take part in the smallholder project. Alternate land was meant to be found for these people (Fynn 2008, 30).

¹⁸Interview with P. Chilenga, Consumer Unity And Trust Society programmes officer, Lusaka, 10 December 2009.

¹⁹Interview, Zambian Revenue Authority, Lusaka, 4 December 2009.

²⁰Interview, sugar industry employee, Mazabuka, 7 December 2009.

²¹Personal communication with H. Kumwenda, Zambia Ministry of Commerce, Trade and Industry Trade, received 16 December 2009.

²²Interview, sugar industry employee, Mazabuka, 7 December 2009.

²³Interview with T. Chisambo, Biofuels Association of Zambia, Lusaka, 3 December 2009.

²⁴Zambia Sugar produces between 50,000 and 80,000 tonnes of molasses per year. Converting this into ethanol at a rate of one tonne to 300 litres would yield 15–24m litres of biofuel, or roughly 6 percent of the country's petrol demand (Interview with T. Chisambo, Biofuels Association of Zambia, Lusaka, 3 December 2009).

²⁵Accounting for inflation, which averaged 12 percent over the period in question, the average price roughly stayed the same, although it is worth noting, with respect to purchasing power, that wages typically lag behind inflation.

²⁶Interview with P. Mulemba, Jesuit Centre for Theological Reflection trade analyst, Lusaka, 8 December 2009.

²⁷Interview by telephone with H. Kumwenda, Zambia Ministry of Commerce, Trade and Industry, 16 December 2009.

²⁸Interview, sugar industry service supplier, Lusaka, 11 December 2009.

²⁹In 2005, 4.9m people of the 12.6m population of Zambia had jobs, 17 percent of which were as waged employees (Zambian Central Statistics Office 2009).

³⁰According to Nakaponda (2005), Illovo has, aside from the direct housing and health assistance accorded to its employees, helped rehabilitate two hospital wards, provided support to the four government schools and one private school located on its estate, sponsored the local football club and traditional ceremony events, and made donations to orphanages and the local radio station.

³¹Interview by telephone with G. Nkombo, MP for Mazabuka District, Zambia, 9 February 2010.

³²Interview with M. Phiri, Plan International programmes co-ordinator, Mazabuka, 7 December 2009.

³³In 2009 61 percent of the permanent workforce and 48 percent of the seasonal workforce had undergone Voluntary Counselling and Testing for HIV/AIDs (Zambia Sugar 2009, 8).

³⁴Interview, sugar industry employee, Mazabuka, 7 December 2009.

³⁵Likewise, the expansion and training of smallholders for Illovo's two estates in Malawi has been supported by [euro]2.4 m from the EU pledge and $1.5m from the African Enterprise Challenge Fund.

³⁶The export of ethanol is especially prone to being destabilised. Taking the EU as an example, an increase in second-generation biofuels in meeting renewable targets, the liberalisation of the EU market to Brazilian imports, and the future electrification of transport could each drastically reduce the demand for African ethanol.

³⁷At one point Illovo attempted to introduce mechanical harvesters on the estate but was strongly rebuffed by the government who feared the repercussions of a large reduction in seasonal cane-cutting work (Interview, sugar industry employee, Mazabuka, 7 December 2009).

³⁸One example of the missed opportunities of contracting in Zambia is the import by the World Food Programme of a maize-sugar-soya blend from Germany. All these products are grown domestically but fears over safety standards mean they are imported instead.

Additional information

Notes on contributors

Ben Richardson

I thank Ian Scoones, Matthew Watson and the three anonymous reviewers for their helpful comments on earlier versions. I also thank the interviewees in Zambia for giving up their time and the organisers and participants of the JPS and Initiatives in Critical Agrarian Studies (ICAS) workshop on ‘Biofuels, Land and Agrarian Change’ in October 2009 for stimulating insightful and friendly debate on this topic. Any mistakes or omissions remain my own.