French firm Tereos to shut sugar operations in Kenya and South Africa

KENYA – French sugar maker Tereos said Tereos Commodities will close its offices and halt sugar trading in Kenya and South Africa as part of a global review of its strategy.

Tereos, which reported a sharp drop in profits in the past fiscal year due mainly to a slump in global prices for sugar, it will be exiting the two African markets by the end of March 2020, Reuters reports.

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 “Tereos Commodities is planning to develop its organisation in certain geographies,” it said.

“This will be achieved by closing its offices in SA and Kenya and ending its sugar trading and distribution activities in these countries on March 31 2020, at the latest.”

Tereos Commodities, which also has offices in France, Switzerland, Singapore, Brazil and India, said when it opened its trading desk in Nairobi in 2016 that the aim was to meet growing African sugar demand.

The company has also announced the departure of Patrick Dean, head of Tereos Commodities’ white sugar unit.

Dean led Tereos Commodities at its launch in 2014 and was global head of sugar merchandising and distribution before being asked to head the white sugar unit in 2019.

His teams would report to Alexandre Leite, executive director of Tereos Commodities Sugar.

Sugar imports

The sugar industry in both countries have been grappling with the effects of cheap sugar imports, illegal imports and the health promotion levy in south Africa which has hit farmers revenues.

Kenya, for instance, has recorded massive decline in sugar production forcing the country to resolve to imports from and outside the East Africa bloc into the wider Common Market for Eastern and Southern Africa (COMESA) region as well as international markets such as Brazil.

Kenya’s sugar imports in the first five months of the year climbed up 112 percent hitting 172,213 tonnes compared with the same period of the prior year on the back of persistent decline in local production.

Some of the factors the industry is grappling with include limited supplies of cane, which has led to the mills operating below 50 per cent of their installed crushing capacity.

While the sugar industry supports more than one million livelihoods in South Africa, lobby groups have pushed for implementation of bold tariff measures to safeguard local production and call a halt to any broadening of the sugar tax.

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