SUGAR

The world production of sugar is about 155 million tones with more than one hundred countries producing sugar, of which the largest are Brazil, India and China. Sugar is produced in tropical regions from sugar cane, and in temperate regions from sugar beet. Most of the sugar production is consumed in the countries of origin, with only about 28% traded in the world market. The large exporters are Brazil, Thailand, Australia, Cuba and India.

The sugar trade is made of two closely related but different products – raw and white sugar. Olam’s primary participation is in the white sugar business.

Olam’s sugar business

Olam’s sugar business was started in 1995 with the import of its first consignment into Nigeria and Ghana. In these countries Olam had already established a widespread procurement network and infrastructure including warehouses for its sourcing operations. The same network was used for distribution of sugar, enabling us to provide sugar as close to the point of sale or consumption as possible. The knowledge and understanding developed in Ghana and Nigeria was built upon and leveraged to expand the sugar distribution business into other countries like Uganda and Madagascar.

Olam’s sugar business was given a big thrust with the commencement of its direct sourcing operations out of Thailand , Brazil and India. This has not only enabled larger participation in the trade flows, but also increased value appropriation. Our focus is to maximize value from managing commercial, financial and logistics arbitrages. In south East Asia Olam’s marketing activities has been focused on Indonesia, Bangladesh and Sri Lanka. More recently we have commenced direct marketing operations in the Middle East, and in Russia.

Olam’s sourcing and trading headquarters in Singapore acts as the centre for all its physical and futures trading activities. The sourcing and marketing offices in Africa, America and Asia provide valuable information which are continuously collated to build a market view basis which we are able to give valuable information and suggestions to our suppliers and customers.

Olam’s future strategy

Olam will continue to build strategic alliances to ensure cost competitive supplies, and value enhancing homes for our goods. In its quest for added value appropriation, Olam is looking at investing in

1. sugar milling activities at origins which can give it a competitive advantage in origination
2. refining activities at destination which are large markets and which do not have potential to produce/grow enough sugar cane/beet
3. processing activities in geographies which allow specific opportunities to derive attractive economic rents based on geographic or political barriers.