Sweet Spot Under Threat: Illovo Sugar’s 25% Production Slump Rings Alarm Bells for Malawi’s Economy

Key Business Points

• Illovo Sugar Malawi’s production has fallen by 25% from its 2021 peak, with the company now producing approximately 200,000 tonnes annually, down from 297,000 tonnes.
• Adverse weather and shifting rainfall patterns are attributed to the decline, reducing processing capacity and impacting sugar production.
• Export strategy adjustment is necessary due to surging domestic consumption and reduced exports, from 120,000 tonnes to 12,000 tonnes in the 2025 financial year, affecting foreign exchange generation.

Illovo Sugar Malawi, a key player in the country’s sugar industry, has experienced a significant decline in production, falling by approximately 25% from its 2021 peak. According to Managing Director Ronald Ngwira, the company’s production has dropped from 297,000 tonnes in 2021 to just over 200,000 tonnes annually. This decline can be attributed to adverse weather conditions and shifting rainfall patterns, which have reduced processing capacity.

The company’s production figures have fluctuated over the years, with a peak of 297,000 tonnes in 2021 and a low of 211,000 tonnes following five adverse weather events, including three cyclones and two floods within five years. Ngwira explained that the rainy season has impacted production, as sugar cannot be processed during this time. The prolonged rainfall in Dwangwa, which continued until the end of May, resulted in the factory losing six weeks of processing capacity, while Nchalo lost about one month at the beginning of the season.

Despite the decline in production, Illovo has a sufficient supply of sugar to meet domestic demand until April, when processing is expected to resume. The company has more than 70,000 tonnes of sugar in warehouses, which is enough to supply the domestic market. However, domestic consumption has surged from 150,000 to 160,000 tonnes a decade ago to over 200,000 tonnes, driven by illegal cross-border trade. This increase in domestic consumption has forced Illovo to adjust its export strategy, as exports have dropped significantly from 120,000 tonnes annually five years ago to just 12,000 tonnes in the 2025 financial year.

The reduction in exports has put pressure on foreign exchange generation, which is necessary for operations. Ngwira emphasized the importance of export predictability to ensure that the company has a steady customer base. As the sugar industry continues to evolve, it is essential for businesses to adapt to changing market conditions and zinthu zikukwela mtengowatu, or factors that affect the market. In this case, Illovo must navigate the challenges of adverse weather conditions, shifting rainfall patterns, and increasing domestic demand to remain competitive and ensure the sustainability of its operations.

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