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Sweeter Earnings for Cane Growers
Grantee: Ruembe Outgrowers Association
Country: Tanzania
Project Title: Tanzania Ruembe Sugar Project
Project Amount: $228,000
Duration: FY 2004-2008
The production of sugar for regional and international markets has expanded rapidly in southeastern Tanzania’s Morogoro Region over the past five years. The Kilombero Sugar Company, a subsidiary of the South Africa-based Illovo Group of companies, has purchased the region’s large state-owned sugar processing plant and made considerable investments in its rehabilitation. The company’s rapid expansion has boosted local demand for raw sugar cane and provided thousands of independent cane growers with new opportunities to expand their sales and personal incomes.
 Yet many Morogoro sugar outgrowers lack the necessary capital, technology, and training to take advantage of the improving market. Low capitalization hinders the rehabilitation of older farms and the purchase of tools, fertilizers, and high-quality seed cane. Inadequate loading services prevent farmers from harvesting and delivering their cane when its sugar content peaks. Poor cane husbandry methods significantly reduce average yields per hectare, and feeder roads and drainage systems, which decayed during the 1970s and 1980s, pose additional obstacles to effective transportation and land use.
Independent farmers across the region split their production between growing staple grains and vegetables and cultivating sugar to generate cash earnings, and most farmers earn significantly less than Tanzania's per capita income (US $236 vs. US $300).*
During FY 2004, ADF provided two groups of Morogoro smallholders, the Kilombero Cane Growers Association (KCGA) and the Ruembe Outgrowers Association (ROA) funding to increase the quantity and quality of their output by:
- Financing revolving loan funds to support improved land-preparation methods and the introduction of more appropriate fertilizers and herbicides;
- Providing the associations with monies to purchase cane loaders and other vehicles to help them transport raw cane from smallholder fields to the Kilombero processing plant;
- Supporting the training cost of association staff in business management and financial accounting practices; and
- Supporting the training cost of smallholder members in sugar cane husbandry and HIV/AIDS prevention.
 The goal of both projects is to assist the associations in raising their members’ average incomes by helping members produce more raw cane and deliver their cane to local processing facilities when it reaches its peak quality and value. It is expected that farmer incomes will increase significantly over five years. KCGA currently has 1,600 members, and ROA serves nearly 1,000 members.
In financing the KCGA and ROA projects, ADF is seeking to replicate the success of its support for the Mtibwa Outgrowers Association (MOA), which received US $246,000 in financing from ADF in FY 2001 to help its 2,500 members become profitable suppliers to the Mtibwa Sugar Estate, an internationally owned sugar company. Over the past four years, MOA has expanded its gross revenues from $1.188 million to $3.118 million, an increase of 262 percent.
ADF provided MOA with financing to improve the quantity and quality of its production through the provision of improved sugar varieties and other inputs. The improved cuttings have helped MOA deliver more of its crop to agro-processors at peak periods in the annual price cycle and generate significant earnings for its members.
ADF also provided financing for a credit system that has helped MOA members purchase new farm implements and access to extension services. MOA staff received training in agribusiness management, price negotiation, bookkeeping, and marketing, and the association now coordinates smallholder sugar production and marketing operations in 16 villages.
The association has also demonstrated an impressive capacity to scale up production and secure new investment capital. In FY 2001, increased association income allowed MOA to obtain a loan from the Government of Tanzania that was used to purchase three new sugar cane loaders. As a result, the association's members increased their planted area of sugar cane by 34 percent. In FY 2003, MOA obtained a second one-year loan of $146,100 from the Cooperative and Rural Development Bank of Tanzania to finance members' sugarcane production costs.
*Atlas method
[PRINTER FRIENDLY VERSION]
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