Kilombero Sugar Company

Summary

The African Wildlife Foundation (AWF) has partnered with Kilombero Sugar Company, the largest sugar producer in Tanzania to work with sugarcane farmers on climate-smart land and water management practices. The programme focuses on improving the sugarcane value chain by enabling farmers to access attractive lending options and provide them with a new variety of seed which delivers higher yields and promotes conservation and restoration of habitats.

Background

Tanzania’s Kilombero Valley is one of the most important agricultural districts in the Morogoro region and is part of the Southern Agricultural Growth Corridor, an area that produces more than half of all the food grown in Tanzania. Sugarcane in particular is vital to the economy, with the valley making up 33% of the total sugar produced in the country [1]. More recently the Government committing to self-sufficiency in sugar production by 2025. However, Kilombero is facing escalating challenges as climate change and unsustainable land use is reducing wildlife habitats and putting pressure on water sources. In addition, access to finance and high costs make it difficult for farmers to efficiently grow sugarcane in the region.

What is the Project?

SUSTAIN-Africa is a public-private partnership aimed at improving agricultural productivity, investment, food security and livelihoods in the corridor. Implemented since 2015, this programme through African Wildlife Foundation, an NGO, partnered with Kilombero Sugar Company (KSC) to address the barriers to implementing a resilient supply chain model. KSC is the largest producer of sugar in Africa and covers 26,000 hectares of sugarcane crop across the region. The company currently supports 11,000 growers in accessing climate-smart seeds, training in sustainable land management practices and accessing finance, recognising the role local communities can play in conservation.

The Role of Kilombero Sugar Company

KSC plays an important role in bridging the gap between financial institutions and farmers. Working first-hand with farmers, KSC plays a pivotal role together with AWF and other stakeholders in the organisation of an annual Kilombero cane farmer days. These days bring together local growers, district authorities, conservation organisations such as IUCN, small, medium and large-cale entrepreneurs in the cane value chain and local financial institutions such as NMB bank and CRDB bank, Tanzania Agricultural Development Bank and microfinance institutions. Farmers also receive loans from international banks such as Stanbick and Access bank. These days provide opportunities for roundtable discussions to help farmers access the necessary funds to improve their production, supporting the collaboration and coordination between financial bodies and farmers themselves. Loans can range from a few hundred dollars to several thousand, and cover costs for seed canes, crop husbandry and farm management. Medium to large scale operations secure loans up to TZS 600 million (USD 21,936) depending on the size of farming, whilst loans for cooperatives are up to TZS 1.5 billion (USD 548,400) which are used to purchase machinery, infrastructure and farm expansion. The proactive role that KSC takes enables the necessary access to funding while providing reassurance to banks.

In addition to loans, Cane Supply Agreements are agreed between KSC and farmers, whereby KSC provides the seedlings for farmers and cooperatives for a guaranteed supply of sugarcane. Individual agreements account for production costs and market conditions which ensure that a fair price is set and sold. The agreements ensure that the farmers have a stable revenue stream while KSC has a steady supply of produce. AWF in collaboration with KSC and the Tanzania Agricultural Research Institute (TARI) established 174 hectares of seedcane nurseries which has produced 17,400 tons of seed cane, distributed among 1,470 smallholder farmers. Revenue that is generated from the sale of seed cane is reinvested into a revolving fund to ensure the long-term funding of seed cane to farmers.

AWF and KSC also provide training for farmers so they can adopt climate-smart agriculture practices. Training for farmers are delivered on a quarterly or semi-annually basis, and typically take the form of workshops, field demonstrations and financial literacy. AWF also provides structured programmes via Field Farm Schools. Programmes are aimed at ensuring an effective use of resources and increasing revenues for farms through sustainable farm management and practices. They also support the upstream community to have sustainable catchment practices, introduce agroforestry systems so they can grow different crops, and protect water sources by planting natural tree species.

Support from Local Government

The programme is integrated into local districts’ strategies and operates within existing governance structures, supported by Extension Officers. Extension Officers provide technical assistance to farmers on sustainable land management practices and act as a connection point between local government. Their work ensures that local strategies are efficiently implemented at the grassroots level, directly benefiting farmers and contributing to overall district development goals.

The Outcomes

The price of sugarcane is primarily determined by its sucrose content and the expected yield. By providing farmers with a new variety of seed that is drought resistant and has a higher sucrose content, farmers can expect to generate a higher return. Revenues vary from individuals as the revenue generated also depends on their yields, and the adoption of farming practices.

By planting the new variety of seeds and improving agriculture practices, farmers have reduced the demand for cropland, promoted habitat restoration and improved water quality. Farmers have, in some cases, increased production per hectare by 70%. The revenue they generate goes back into improving their farming practices and into the local community to support families and improve livelihoods.

What’s next?

Kilombero Sugar Company is committed to supporting farmers and is exploring scaling the model in other countries across Africa. Expansion is driven by the effectiveness of the programme implemented in Tanzania. The expansion plans aim to support an additional 8,000 farmers to join the programme and it is estimated that the increase in cane volumes supplied by the growers will triple the revenues to around USD 98 million (TZS 270 billion) by 2028 [2].

The model provides an example of an integrated approach to ensure a more resilient supply chain. The model’s adaptability demonstrates its suitability to be replicated in other agricultural sectors as it addresses the fundamental needs of access to capital, market stability and skill development. Through its experience and refining its company strategy, KSC is able to support farmers in transitioning to climate smart practices, boosting the economy, increasing revenues for farmers and ultimately strengthening the supply chain on which KSC relies.

Updated as of October 2024

Sources:

1. African Wildlife Foundation (2019) A drought-resistant seed boosts sugarcane yields, stops habitat loss in southern Tanzania
2. Illovo Sugar Africa (2024) Kilombero announces significant sugar expansion project
3. Interview with Pastor Magingi and Clarence Msafiri, African Wildlife Foundation