Sweet deals

Syria is positioning itself to become a player in the Middle East’s lucrative sugar market, hoping that the opening of a new processing plant will allow it to cater to the region’s sweet tooth.

A $90m sugar refinery at Jindar in the province of Homs was opened on May 14, marking a new phase in the Syrian sugar industry. The plant is the first major agriculture processing partnership between the Syrian private sector and international investors. Operating as the National Sugar Company, 51% of the refinery is held by Mohammed
Najib Assaf, the Syrian chairman of the company, while minority shareholders include US agribusiness giant Cargill and Brazilian sugar producer Crystalsev.
With an annual capacity of 1 million tons, which the partners say could be doubled in the future to meet regional export demands, the Jindar refinery is one of the largest of its kind in the world. Cargill will provide management and sales expertise for the project, while Crystalsev is to supply most of the raw material through bulk shipments of unprocessed sugar.
Amir Hosni Lutfi, Syria’s minister of economy and trade, said the plant would reduce reliance on expensive imports and would provide an opportunity for developing an export market. “The refinery’s high production capacity, which exceeds the demand of the Syrian market, will give us more strength and flexibility to compete with imported products,”
Lutfi said at the opening of the facility.
Cargill’s involvement in the project might raise some eyebrows, given Washington’s sanctions against Syria. However, its stake in the refinery does not fall within the terms of the executive order originally signed by President George W Bush in May 2004. While the sanctions prohibit the export of most products, with the notable exception of many food products and medicines, and restrict the export of any product that contains more than
10% of US-made components regardless of where produced, they do not actually stop a US firm from investing in Syria.
Indeed, bilateral trade between the US and Syria is on the increase, rising 7.7% last year to $472m, mainly driven by Syria’s need for grain.
According to Rateb Shallah, the chairman of the Damascus Chamber of Commerce, there is an increasing US interest in new projects in Syria. “Syria now has more business opportunities to offer and as such there is no way to ban or stop American businesspeople from participating in this process,” Shallah told local media on May 18.
National Sugar’s refinery marks another step in the industry’s move away from state control. The Syrian General Foreign Trade Organisation (GFTO), the body charged with overseeing public sector imports, has handed over the responsibility for the refinery’s sugar purchases to the company itself. This step was part of the program to open up the
economy, said Marwan al-Fawaz, GFTO’s chairman. “It makes more sense this way,” Fawaz told the press early this year.
“The company with the sugar refinery is now in charge of importing its needs of the raw product.”
With consumption estimated to be around 700,000 tons annually, Syria’s own producers are currently only able to meet a fraction of domestic requirements.
The country’s sugar beet production has also been hit by drought and disease, which have lowered harvests of many basic crops. Syria has thus become a major importer of both refined and raw sugar, purchasing a combined 650,000 tons annually. Last year 368,500 tons
came from Brazil alone, earning that country $111.7 million, according to the local press. Most of the imports come in the form of raw material, which is processed at a series of refineries located throughout the country.
While the new refinery may be good news for Syrians with a sweet tooth, it may not be as welcome for local sugar beet growers, processors and importers.
National Sugar’s chairman Assaf has promised the plant’s product will cost less than imported goods, though close to international prices. With the state looking to cut subsidies as part of its program to develop a market economy, local operators could face higher costs, making it even harder for them to compete.