Determinants and Performance of Sugar Export in Tanzania

Abstract

Tanzania ministries as well as the sugar board of Tanzania are not aware of recent sugar markets trends. This study attempts to examine the performance of Tanzania sugar exports and estimate sugar exports supply function for the 1977-2013 periods. To estimate annual growth rates for quantities of sugar produced, consumed, imported and exported, the geometric average was used by means of detailed data from country statistics through NBS, FAO and ITC computations. A multivariate regression model was used to estimate the supply function. The results of the estimation revealed that, for the period of 35 years, annual growth rates of Tanzania sugar production and consumption was 3% and 7% respectively. Since, domestic factories was less than 60% productive efficient, indicating that there remains considerable scope to increase production hence exports by improving technical and allocative efficiency of existing idle resources. Thus, sugar export price has positive significant relationship while consumer price index has negative relationship with sugar exports supply. Quantity of domestic product of sugar, exchange rate and GDP are not statistically significant in explaining their impact on sugar exports supply. Moreover, Tanzania is a net exporter of molasses which is extracted or refined from sugar and is a net importer of sugar confectionery by-product. Thus, these are major sugar by-products which have significant economic implications to sugar industry stakeholders, whereby, the country is losing from sugar confectionery and gaining significantly from molasses. It is recommended that, production of sugar should increase significantly so as to satisfy both domestic and regional/foreign markets.