Friday, May 07, 2010

Experts urge stop to sugar estates’ expansion

Experts urge stop to sugar estates’ expansion
By Chiwoyu Sinyangwe
Wed 05 May 2010, 08:20 CAT

Workers at Nakambala Sugar Estate in Mazabuka inspecting the irrigation system
ZAMBIA Sugar Plc and Consolidated Farming (Kafue Sugar) should not be allowed to undertake any further expansion programmes as this may pose a serious threat on water availability in the Kafue River, a study has suggested.

The Kafue River is the country’s single most important source of irrigation water for sugar production as it accounts for 99.4 per cent of national sugar output.

Illovo Sugar group-owned Zambia Sugar Plc is the largest producer, with Nakambala estate and a mill in Mazabuka with approximately 89.6 per cent of total production while Consolidated Farming Limited (CF) is second, contributing about 9.8 per cent towards national production at its estate and mill in the Kafue flats in Kafue.

The odd one out is little-known Kalungwishi Estates Limited of Kasama accounting for the remaining 0.60 per cent of the sugar production.

Currently, Zambia Sugar Plc produces 357,000 tonnes of sugar every year; Consolidated Farming (Kafue Sugar) 23,000 and Kalungwishi Estates Limited produces 1,400 tonnes per year.

According to the Strategic Environmental Assessment (SEA) study of the Sugar Sector in Zambia funded by the European Union, the lower Kafue River Basin is becoming water stressed due to the multiple water users and the regulation of flows at the Itezhi-Tezhi dam.

The report by three consultants Juan Palerm, Tonnis Sierevogel and Munguzwe Hichaambwa revealed that there were indications that water rights already allocated to Zesco and both Zambia Sugar and Consolidated Farming might be exceeding future water availability.

It stated that climate change was also expected to result in lower rainfall and a reduction of the rainy season in Zambia, leading to increased pressure on scarce water resources.

The report stated that the government needed to conduct a comprehensive water balance study of the whole Kafue River Basin and not limit to the flats, to establish a realistic estimate of water availability for any increase in irrigated agricultural activity.

It regretted that the government had not treated the water balance study of Kafue River Basin with the importance it deserves and that a policy promoting further expansion of sugar cane production must address water availability.

“The government needs to conduct a comprehensive water balance study of the whole Kafue River Basin to establish a realistic estimate of water availability for any increase in agricultural production under irrigation,” the report stated.

“The moratorium on the allocation of water rights in the Kafue Flats should be maintained until completion of the water balance study. No new sugar cane expansions or developments should be allowed in the area until it is clear that water will be available.

Development of additional hydropower capacity should be sought in other places other than the present Kafue Gorge hydropower station site. Institutional and capacity building programmes need to be developed and implemented for the new natural water resources monitoring programme.

Institutional and capacity building should be undertaken to ensure effective implementation and operation of the new structures foreseen under the coming National Water Policy like envisage decentralised structures of the Water Resource Management through catchment and sub-catchment administrations, and Water Users Associations.”

Due to the lack of accurate figures on the actual use of water in the Kafue Flats, since 2008, the Water Board has put a moratorium on the allocation of new water rights as the Department of Water Affairs recognises the need for a detailed water balance of the entire Kafue River Basin.

The report criticised the usage of furrow irrigation, the most common irrigation system in most sugar estates as being the least water-efficient.

It supported Zambia Sugar Plc and Consolidated Farming’s recent indications of shifting to centre-pivot irrigation.

The report, however, stated that the expected development of the 750 megawatts Kafue Gorge Lower and the 120 megawatts Itezhi-Tezhi hydropower stations does not provide a threat to the water availability in the Kafue River Basins.

The Kafue River is the country’s most important source of hydropower hosting the 990 megawatts Kafue Gorge Hydropower with projections indicating that the river would be able to produce 1,860 megawatts in the next five years once the Kafue Gorge Lower and the Itezhi-Tezhi hydropower stations come on stream.

The report stated that hydropower potential and capability of the Kafue River was under threat from the effects of climate change, worsened by increased water uptake by agricultural activities in the river basin.

“Projections to 2070 show a slight increase in average rainfall but also a larger inter-annual variability. This would mean that dry years will occur more often, even if rainfall generally increases. Also, an increase in average temperatures of about two degree Celsius for 2010-2070 is expected,” it stated. “The increase in temperatures will be followed by increased evapotranspiration, which will generally decrease water resources.

The combined effects of climate change will probably be less river flows during extreme dry years, which determine the firm power and safe yield of dams…For a time period of five to 10 or even 20 years the effects of climate change is relatively small compared to the natural variation in river flows.

The trends reported, however, further accentuate the potential water availability conflict in the Kafue River and give further motivation of leaving extra margins when allocating water. This scenario would imply the development of hydropower at sites other than the Kafue Gorge. If, however, Zesco would increase its capacity at the Kafue Gorge then part or all of this surplus available water would be absorbed.”

The report stated that there was need to give the Kafue River Basin some relief and consider other water basins in the north of the country such as the Chambeshi and Kalungwishi River basins which have abundant water and are, from a water availability perspective, good options for development.

Both the Chambeshi and Kalungwishi have the potential to sustain large expansions in irrigation and several sites in the Kalungwishi have been identified for their hydropower potential

The report also observed that although the domestic sugar industry had one of the world’s lowest production costs and excellent agro-climatic conditions in the cane growing regions, the sector has weak transport infrastructure and high initial cost of land development.

“…The size of the industry is constrained due to two major weaknesses…the country’s landlocked location - when coupled with poor transport infrastructure, it makes it very expensive to access export markets,” stated the report. “The high initial cost of land development, owing to the need to develop bulk water capacity and in-field irrigation and drainage infrastructure. These weaknesses have prevented the industry from expanding beyond the size of its domestic, regional and preferential export markets.”

The sugar sector makes a strong contribution to the country’s Gross Domestic Product (GDP), accounting for around three to four per cent of the national income and also makes an even larger contribution to the national export earnings, corresponding to around six per cent over the last few years.

The sugar industry provides employment for around 11,000 workers, with a total of dependents probably exceeding 75,000.

However, the report stated that the EU’s EBA (Everything But Arms) initiative had presented new market opportunities from 2009, albeit at greatly reduced prices.

“Although sugar prices in the EU will, on average, offer producers a better return than the world sugar market, the reduction in prices presents a considerable challenge if the industry is to exploit fully its potential,” stated the report.

“It will reduce the profitability of current operations, which derive around 11 per cent of their revenue from sales to the EU, the industry incurs considerable social costs associated with provision of education, health and other basic amenities to the employees and the local community, and high cost of land development and accessing export markets means that financial returns from expansion projects are modest in relation to the risks associated with making investments.”

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