This record is a partial extract of the original cable. The full text of the original cable is not available.

170715Z May 06

UNCLAS LAGOS 000664 
 
SIPDIS 
 
USDA FOR FAS /FAA/FAS/RANDY HAGER 
USDA FOR FAS /CMP/FRANK LEE 
USDA FOR FAS /CMP/HTP/LARRY DEATON 
 
FROM AGRICULTURAL ATTACHE LAGOS 
 
TOFAS 009 
 
E.O. 12958, N/A 
TAGS: EAGR NI
SUBJECT: Privatized Sugar Sector Assumes Production 
 
 
¶1.  Summary. Nigeria is expected to resume sugar production 
this year with a modest 40,000 tons after four consecutive 
years of depending exclusively on imports.  Savannah Sugar 
Company, privatized in 2003, is expected to resume milling 
operations in May 2006 under a new management.  Nigeria's 
sugar consumption is increasing steadily in step with growth 
in population and industries utilizing sugar as raw 
material.  At present, the bulk of Nigeria's sugar 
requirement is imported raw and refined locally.  Brazil is 
the dominant supplier of brown and refined sugar to Nigeria. 
End summary 
 
 
¶2.  Prior to 2003, Nigeria had only four government-owned 
and government-operated sugar companies.  Savannah, Bacita, 
Sunti and Lafiaji.  Due to the large capital investments 
required, private sector investment was limited to a few mid- 
sized cane farmers, small mini plants and out-growers for 
the estates. Nigeria's sugarcane production was almost 
entirely dependent upon these poorly managed government- 
owned and operated companies.  The companies manually had a 
combined installed processing capacity of about 400,000 tons 
of refined sugar annually, but had not at any point produced 
more than 20,000 tons of sugar per year. 
 
¶3.  In 2003, the long awaited privatization of government- 
owned sugar estates commenced with the public sale of 
Savannah Sugar Company, Nigeria's largest sugar estate. 
According to the GON, privatization of these estates is key 
to revamping the sugar industry and increasing local 
production.  Dangote group, with a long history in sugar 
imports and the owner of the only sugar refinery in the 
country, emerged as the preferred bidder. 
 
¶4.  The management of the estate was formally handed over to 
Dangote industries in late March 2003. In what appears to be 
a major success story for privatization, Dangote Group has 
completely rehabilitated the cane fields and the mill. 
Field visits by the Agricultural Affairs Office to the 
facility in Numan, Adamawa State, revealed that the estate 
has been completely revamped.  Currently, the company has 
3,000 hectares of cane fields at varying stages of maturity. 
Harvesting and milling operations are expected to commence 
in May 2006.  Savannah  (Dangote Grouup) Sugar Company has a 
total of 32,000 hectares of land available with excellent 
irrigation facility and plans to expand very quickly to use 
all the land. 
 
¶5.  Also, the company in partnership with the National Sugar 
Development Council is developing a robust out-grower scheme 
to provide economic support to the local community around 
the estate.   The first phase of the out-grower scheme will 
involve 400 farmers with average farm size of two hectares. 
Under the scheme, Savannah Sugar will prepare the land, 
provide irrigation, seed cane and other inputs on a cost 
recovery basis. The other estates in Bacita and Sunti are at 
varying stages of rehabilitation under new managements and 
could resume milling operations in 2007.  Privatization has 
undoubtedly improved the management of these estates and 
stimulated new investments in the industry. 
 
¶6.  For the last four consecutive years, Nigeria depended 
almost exclusively on imports to satisfy growing demand, 
estimated at 1.3 million tons.  Growth trends in population 
and in industrial activity utilizing sugar as input, suggest 
that demand for sugar will rise.  Industrial usage accounts 
for almost 35 percent of the total sugar consumption in 
Nigeria.  Soft drink production alone accounts for about 
half of total industrial usage.  The bulk of Nigeria's sugar 
requirement (about 80 percent) is imported raw and refined 
locally.  Dangote is the owner of the only operational sugar 
refinery in Nigeria.  Another investor is expected to 
commission the second refinery in late 2006.  Brazil is the 
dominant supplier of brown and refined sugar to Nigeria. 
 
¶7.  The GON requires all sugar for household consumption be 
fortified with vitamin A.  At present, Dangote refinery is 
the only supplier of fortified sugar in Nigeria. 
Importation of non-fortified sugar is allowed but only for 
industrial use. 
 
Browne