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Sugar barons turn to Africa for growth opportunities; Maharashtra minister to lease 27k acres in Mozambique

PUNE: A sugar cooperative run by a minister in Maharashtra will lease 27,000 hectares in Mozambique to cultivate corn, soyabean and rice, and is eyeing a sugar mill in Kenya as scarcity of resources and oppressive regulations goad sugar barons to turn toAfrica for growth opportunities. 

Abundance of land and natural resources in Africa and prospects of serving both the local market as well as shipping to India are a big attraction for Maharashtra's Rural Development Minister Jayant Patil, who controls Rajarambapu Patil Saharaki Sakhar Karkhana Ltd, a sugar cooperative. He is not alone. 

Natural Sugar and Allied Industries (NSAI), a private mill in Marathwada, kicked off the trend when the Mozambique government gave it 10,000 hectares to set up a sugar mill in 2011-12 with an investment of Rs 150 crore. 

Others are likely to follow. "Africa is the next destination for the world sugar industry due to huge land available in that continent," said Abinash Verma, director-general of the Indian Sugar Mills Association. In this continent, Patil's influence will be handy. Africa has lured companies from all over the world in the agriculture, mining and energy businesses. 

Minister's Involvement to Help 

But several firms have struggled with opaque rules and complex procedures in that continent. The involvement of a minister, and the associated clout and protocol, should smoothen the path for the cooperative, which has a turnover of more than Rs 1,000 crore. 

Abundance of land and natural resources in Africa and prospects of serving both the local market as well as shipping to India are a big attraction.

Patil's Rajarambapu SSK has signed a preliminary agreement with the Mozambique government for the lease of 27,000 hectares and the final deal will be inked after a detailed study. 

"Land is a limited resource in India with less than one hectare land holding in the Kolhapur region. Huge tracts of virgin land are available in Africa suitable for bigger projects. We also plan to give land to member farmers of our sugar mills. They will give us the raw material or we can also give them option of investing in our project and getting shares in the same," said an official at Rajarambapu. 

"We first plan to set up cooking oil extraction plant, maize floor plant and rice mills under our brand name for domestic as well as international markets as the investment for setting up a sugar mill is huge. There is shortage of cooking oil in India. We can sell the soyabean in Africa and import soyabean oil in India," said an official handling the Africa project of Rajarambapu on condition of anonymity. 

The cooperative plans to invest Rs 300 crore in Mozambique. Even though unskilled labour is available in Africa, the Indian sugar mills will have to take machinery and skilled manpower from India.

A delegation from Kenya, where all sugar mills are state owned, had also visited Rajarambapu SSK. "The cooperative is in talks with the Kenya government for taking over the existing sugar mills on lease basis," said the official. 

Most of the sugar industry in Maharashtra is concentrated in the western part of the state and is controlled by cooperatives managed by politicians.

Many sugar cooperatives are in deep financial trouble, but it is very difficult for the efficient mills from both private and cooperative sectors to take over and rescue dying sugar cooperatives due to restrictions in the law governing cooperatives.