| dc.description.abstract | Whereas the potential for increased sugar production exists,
Tanzania imports sugar. Production targets set have never been
realized. Increase in sugar production has failed to match the
corresponding increase in consumption. with rapidly growing demand
for sugar in Tanzania, there is a need for increasing production.
This study set to give an economic analysis of the sugar industry
in Tanzania, using Kilombero Sugar Company (KSC) as a case study.
The study was aimed at understanding the major problems facing the
industry with respect to production and processing of sugarcane.
A survey approach of a randomly selected sample of 41
outgrowers was used, while for the nucleus estate and the factory,
data sources were based on secondary information. The production
function approach and the production costs and returns analyses
were used to assess the productivity of outgrowers' farms, the
factory and the estate, while the factory cost function was for
determining the economic capacity of the factory.
The study revealed that Kilombero outgrowers are faced with
many problems which tend to lower their productive capacity. These
included poor drainage, low levels of fertilizer and herbicides
use, lack of extension services, lack of credits, food shortage,
poor services from KSC, poor sugarcane pricing, poor road networks
and inadequate farm machinery. Using official prices, returns on
sugarcane were higher and resources were efficiently utilized than
in paddy enterprises.
Resources in sugarcane processing were found to be
inefficiently utilized, and there were excess capacity problems in
the factory. Reasons for excess capacity included downtime, old age
of the machinery coupled with poor services, lack of
lack of sugarcane haulage equipment, decline in TCH (tonne
cane/hectare and poor ex-factory pricing.
The estate had higher yields compared to outgrowers' farms.
However, both yields were lower compared to other sugar estates in
East Africa. Production costs were higher in the estate than in
outgrowers' farms. Gross margins in the estate were positive but
due to high overhead costs, the net returns were low in ratoons and
negative in plant cane.
It was recommended that extension services and the services
provided by KSC be improved. Financial institutions should extend
their credit to farmers. Outgrowers should increase their yields,
by improving crop husbandry and considering the use of animal
power.
The government is advised to allocate enough foreign currency
to KSC in order to finance the purchase of spare parts and
machinery. However, KSC management should improve efficiency of
resource utilization by reducing production costs and improving
yields. Reduction in the present average ex-factory price of sugar
was found as one way of encouraging KSC to operate at economic
capacity. | en |
