US increases Malawi sugar quota by 45%

United States government has increased Malawi’s country-specific allocation of the tariff-rate quota for raw cane sugar imports by 45 percent this year, a development that is expected to increase the country’s market access for sugar.

The development comes in the wake of the abolition of European Union (EU) production quotas next month where Malawi, alongside other sugar producing countries, stand to lose a significant portion of their export market when the EU ends production quotas for its 19 members.

Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi said in an interview that while the abolition of EU quota means reduced profits for local sugar exporters and tough competition to the EU, the move by United States (US) government means increased exports and markets for the industry.

“This is good news to Malawi and we hope both Illovo Sugar [Malawi] Limited and Salima Sugar Factory will take advantage of this and increase their production. Since this is one of the products to be promoted in the National Export Products [NES], we hope this fulfills our dreams as a country,” he said.

According to a statement released by the US Embassy in Malawi on Wednesday, the country’s initial World Trade Organization tariff-rate quota (TRQ) for fiscal year 2017 was 10 530 metric tones raw value (MTRV).

But Malawi has received 1 327 MTRV in re-allocation and 2 622 MTRV in increased allocation, for a total of 4 728 MTRV additional for fiscal year 2017.

U.S. ambassador to Malawi Virginia Palmer said in the statement the quota increase for fiscal year 2017 could mean an additional $4 million (about K3 billion) sugar exports to the US.

“Malawi exported $10.7 million [about K8 billion] sugar to the US in 2016, an increase of 25 percent from 2015.  This quota increase for fiscal year 2017 could mean an additional $4 million [about K3 billion] Malawian sugar exports to the US.  The US remains committed to increasing trade between the United States and Malawi,” she said.

Sugar is Malawi’s third largest export to the United States, following tobacco and tea.  Other significant exports include coffee, macadamia nuts, and apparel.

Since 2013, sugar exports from Malawi to the United States have more than tripled, accounting for 14 percent of Malawi’s total exports to the United States.

In 2016, Malawi exported $75.6 million (about K55 billion) worth of goods to the US, while it imported $46.6 million (about K34 billion).