Sugar corp, Amibara sign out-grower deal

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Addis Ababa, 27 March 2014 (WIC) – The Ethiopian Sugar Corporation (ESC) signed a first ever out-grower agreement with a private company – Amibara Agricultural Development plc – for the latter to supply sugarcanes for Kessem Sugar Development Project.
Factory erection of the Kessem project, currently underway in Afar region, is entering its final phase. However, lags in sugarcane plantation, caused by low level of water flow to the irrigation dam, prompted ESC to look for other alternatives, according to project manager Kaba Merga.
The three year deal will see Amibara, whose farm is located in close proximity to the sugar project, develop 6,000 hectares of land with sugarcane plantations.
“The company is selected due to its close proximity, adequate infrastructure and capacity to undertake the task and as well as its keen interest to participate in the project,” Damene Darota, ESC deputy director general, said during the signing ceremony held today at the corporation’s headquarters in Addis Ababa.
“We want to avoid a gap in sugarcane supply when the factory begins operation. The deal will help us in smoothly carry out our operation,” Kaba said during the ceremony.
According to the project manager, the Kessem project assisted the private company by providing short trainings to experts and agricultural equipments and inputs. Since last month, 600 hectares of land has been covered with sugarcane plantation and the performance is evaluated every month.    
Amibara had prior working relations with the corporation. The company had rented out a small portion of its plot in Woito area for cane plantation in connection with Omo Sugar Development Project.
Sheik Omer Yusuf Mohammed, owner and CEO of Amibara, expressed his delight to be working with ESC and appreciated the support from the corporation. He remained optimist the cooperation would continue.  
“There could be a possibility of extending the deal. In any case, we may erect our own crushing factory in the future,” said Sheik Omer Yusuf Mohammed, who abandoned his cotton plantation in favor of sugarcane. His company estimates to fetch some five million birr from first cutting.
Although this is the first time for a private company to enter an out-grower deal with the corporation, the state owned sugar factories enter similar agreements with farmers. Last month, Wonji-Shewa Sugar Factory struck the ninth out-grower deal with farmers’ cooperatives agreeing to purchase a quintal of sugarcane for 50 birr.
“We are keen to participate the public and private companies in our sugar projects,” Shiferaw Jarso, ESC director general with the rank of minister, said. “This deal serves the interest of both the corporation and the company.”   
Kessem Sugar Development Project plans to develop 20,000 hectares of land for sugarcane plantations in Kessem and Bolhamon areas. When completed, the factory is expected to produce 153,000 tons of sugar and 12,500 metric cube of ethanol annually at initial capacity.
Kessem is part of the government’s drive to increase the country’s sugar production capacity to 2.25 million tons during the GTP period. Current annual production capacity of the country stands at about 300,000 tons. Annual ethanol production is projected to reach 181.8 million liters, a massive leap from the current eight liters.
The output is not only expected to satisfy domestic demands but also elevate the country to a net sugar exporter. In a bid to achieve the ambitions target, the government is undertaking the construction of ten new sugar development projects and expansion works in the existing sugar factories.