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Grain and Flour Market in Sudan

09 September 201410 min reading
Being among the major wheat importers of the world, Sudan continues to develop in the milling industry together with the wheat import. In the country where there are over 30 mills, most of the mills have old technology and low capacity. Around 5 mills are adapted to the latest technology. Most of these companies have realized their investments on technology in the recent years. The increasing demand especially for the wheat flour consumption points that these investments on technology would increase. Being among the major sorghum producers of the world, Sudan realizes sorghum production between 2,5 and 4,5 million tons annually. However, failure to achieve stability in production and the problems related with this failure are effective on the increase of the demand for wheat flour. Thus the wheat import of the country continues to increase in the recent years. Today, wheat is the most important item among all of the imported goods by Sudan as a country and constitutes approximately 8% of the imports. Dried legumes and wheat flour are among the major import items. CEO of El-Hamama Flour Mills as one of the most important flour mills of Sudan, Ahmet Eltigani A. Moniem Musa states that there are over 30 mills in the country but most these mills have old technology and low capacity and only 4-5 companies have the latest technology in the country. When the latest investments are taken into consideration, it is seen that the mills in the country are more active on investing on technology and growth. Increase in the demand for the flour consumption depending on the failure to achieve stability especially in sorghum production and some other factors points that the industry would develop more. Companies that are aware of that trend seem to already plan their investments for the future. GENERAL ECONOMIC OUTLOOK IN SUDAN There have been positive developments in the Sudan’s economy arising from the petroleum industry in the recent years. The improvement in the petroleum industry increases foreign investments and brings high rate of increase in national income together. Rapid increases made by the government in the public expenses in parallel with the petroleum income have affected the economy positively. Sudan’s economy realized high rate of economic growth such as 11,3% and 10,2% in 2006 and 2007. GDP, which was 27,4 billion dollars in 2005, was realized as 63,8 billion dollars in 2011. However starting to decline in July 2011 by the separation of the South, Sudan’s economy is estimated shrinking 8,7% in 2012. According to the purchasing power parity as of 2013; per capita income is estimated being as 2.750 dollars. It is foreseen that as of 2012 agriculture constituted 32% of GDP, industry constituted 25% and service industry constituted 43%. 80% of the working population ism in the agricultural industry, 7% is in the industrial sector and 13% is in the service industry. Sudanese government has been trying to realize structural reform programs in the economy with IMF since 1997. In this context; successful results have been obtained on controlling inflation, monetary value protection, high economic growth, retention of current account balance and privatization issues. Geographical position of Sudan provides economic advantages to the country. It has a more advantageous position compared to the neighboring landlocked countries. Within this scope, Ethiopian Government uses Port Sudan by an agreement with Sudanese Government. As a result of the economy policies trying to attract foreign investment, increase has been seen in the investments on the country in the recent years. Although most of the foreign investors head for the petroleum industry; it is seen that China, Malaysia and India that are in this industry show interest in finance and communications industry. Besides, it is seen that Arabian companies from the Gulf countries have signed important agreements on agricultural production. AGRICULTURE IN SUDAN Agricultural industry is the largest economic industry in Sudan due to both its share in GDP and contribution to the employment. According to the estimations of IMF, it provides job opportunities for about two-thirds of the population. Agricultural industry including livestock and forestry constituted approximately 32% of GDP in 2012. The share of the agricultural industry, which constituted 80% of the export income of the country before the petroleum industry started gaining importance, in the exports decreased by years. As of 2012, agricultural/food products have constituted approximately 9% of the total exports. Sudan is among the important countries of the world in the sesame production. Sesame that has various usage areas like vegetable oil production, food industry and animal feed has important contributions to the country economy. Sudan ranks fourth in the world ranking of the sesame production. Cotton, gum arabic, sugar cane are among the other important agricultural products grown in the country. The diversity of the climate, soil and water resources enables growing various garden plants throughout the year (especially during winter months). That the production of vegetable and fruit in Sudan is realized especially during the winter months and that the production of these products cannot be realized in these months in European and North American countries provide advantages to Sudan in terms of exports. Due to the fact that new investments are not made on the irrigation channels, the industry remained vulnerable to climatic changes. Agricultural production has not shown improvement due to the displacement of the farmers by the civil war and the lack of transport networks. Cotton has left its place as the export product providing the most revenue traditionally until the start of petroleum export to sesame and livestock since 1996. Although Sudan is a self-sufficient country in terms of the food industry, the country has to import many food products as a result of that good transfer between the south where agricultural production is made and the north where the demand is more intense was very limited during the civil war, arable lands cannot be supported by the irrigation projects and the product distribution channels are not operated well. GRAIN PRODUCTION AND CONSUMPTION When the grain production of Sudan is reviewed, it is seen that sorghum is prominent just like many other African countries. Being among the top 10 countries in the world sorghum production, Sudan realizes 2,5-4,5 million tons of sorghum production annually. According to the data of United States Department of Agriculture Foreign Agricultural Service (USDA FAS); having an unstable course, country’s sesame production reached to the highest production amount of the last 10 years in 2004/04 season. 5,1 million-ton production in 2003/04 season decreased to 2,6 million tons in 2010/11 season, increased to 4,6 million tons with a significant increase in 2011/12 season and remained at 4,5 million tons level in 2012/13 season. However, there was again a significant decrease in the production in 2013/14 season and country’s sesame production was realized at 2,2 million tons level. USDA projects that the country’s sesame production will increase to 3,8 million tons in 2014/15 season. Entire sorghum production is used for domestic consumption. After sorghum, maize is the other grain product produced mostly but maize production is very limited compared to the sorghum. USDA data show that maize production in the country is between 600 and 700 thousand tons. Wheat is consumed intensely but its production is significantly low. USDA data show that Sudan’s wheat production varies between 200 and 600 thousand tons. However, consumption continues to increase day by day. Realized at 1,3 million tons level in 2003/04 season, wheat consumption in the country reached to 2,3 million tons in 2013/14 season. Wheat consumption is projected to be realized at this level also in 2014/15 season. FOREIGN TRADE IN SUDAN Petroleum has a significant importance on the country’s trade. Together of the beginning of Sudan to petroleum export in 1999, there have been big changes in the foreign trade structure of the country. While agricultural products constituted nearly all of the exports until that date, petroleum started to constitute three quarters of the exports after that date. Losing 75% of the petroleum reserves together with the separation of South in 2011, Sudan lost up to 60 percent of exports in 2012 and had almost 4 billion dollars foreign trade deficit. Recovering in 2013, exports were realized over 6 billion dollars. Most important products in the export of Sudan besides petroleum are sesame gum arabic, gold, cotton, sugar, ethanol, plants used in perfumery and pharmaceutical, livestock and mutton. Reaching to the highest level with 11,9 billion dollars in 2010, Sudan’s import regressed with the separation and was realized under 8 billion dollars in 2012 and 2013. Mostly imported products by Sudan are wheat, sugar, pharmaceuticals, tires, shoes, petroleum oils, telephone, automobile, milk, automotive industry products, business and mining machinery and their parts, tractor, furniture, plastic goods, iron and steel and glass tableware and kitchenware goods. Before the petroleum export, Saudi Arabia was on top among the countries to which Sudan makes export mostly. However together with the petroleum export; Sudan’s most important export markets became China, Japan, India and South Korea. Other important countries are Egypt, Canada, France, Jordan and Lebanon. After becoming a petroleum exporter country, the countries from which Sudan makes import changed as well. While Lebanon was the country from which Sudan made imports mostly and imported petroleum in 1990s, Sudan started to make imports mostly from China as of 2003. As of 2013; other important countries in Sudan’s import are India, Egypt, Uganda, Germany, Australia, Turkey, Italy, Thailand, South Korea, UK and Canada. THE PLACE OF GRAINS AND FLOUR IN THE FOREIGN TRADE Most important item in the imports realized by Sudan as a country is wheat. Wheat constitutes approximately 8% of the total imports. As it is stated above, country’s wheat production is very limited but it shows increase each passing day. Accordingly wheat import continues to increase day by day. According to the USDA data; wheat import, which was 995 thousand tons in 2003/04 season, reached to 2,3 million tons as the highest level of the last 10 years in 2012/13 season. Declining to 1,7 million tons in 2012/13 season, import reached to 2 million tons level again in 2013/14 season. Country’s wheat import is projected to be realized around 2 million tons again in 2014/15 season. A great part of the wheat import is made from countries such as Australia, Canada, Kazakhstan, Russia and Germany. Dried legumes and wheat flour are also among the major import items. Realized with a value of 54 million dollars in 2011, Sudan’s dried legumes import reached to 86 million dollars in 2012 and remained at 64 million dollars level. Realized with a value of 35 million dollars in 2011, country’s wheat flour import decreased to 32 million dollars in 2012 and reached to 44 million dollars by increasing again in 2013. Turkey is one of the most important suppliers in dried legumes and flour. FLOUR MILLIN IN SUDAN CEO of El-Hamama Flour Mills as one of the most important flour mills of Sudan, Ahmet Eltigani A. Moniem Musa states that there are over 30 mills in the country but most these mills have old technology and low capacity. Telling that only 4-5 companies have the latest technology in the country, Eltigani informs that product with good quality is obtained from these mills. According to the statements of Eltigani; when the latest investments are taken into consideration, it is seen that the mills in the country are more active on investing on technology and growth. Increase in the demand for the flour consumption depending on the failure to achieve stability especially in sorghum production and some other factors points that the industry would develop more. Companies that are aware of that trend seem to already plan their investments for the future.
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