Current Disruptions in Sudan and Its Implications on Palm Oil Imports

1. The Latest Political Situation in Sudan

Sudan is facing a lot of disruptions because of the latest revolution. The country has descended into crisis after the military dissolved the country’s power-sharing Sovereign Council and the transitional government, and temporarily detaining Prime Minister, several articles of the constitution have been suspended, state governors removed, and declared a state of emergency in October this year. Sudan had been ruled by an uneasy alliance between the military and civilian groups since 2019. The move has crushed hopes for a peaceful transition of power following the ousting of former President Omar al-Bashir in 2019.

Masses of Sudanese protesters took to the streets demanding that the 2019 transition deal be honored and calling for an elected government. There were also pro-military protests opposing the civilian government. There has been an increase in violence, including the sub-national conflict in Darfur and Kordofan since October. The overall security situation in Darfur, South Kordofan, and West Kordofan remain tense and volatile. Over 83,000 people have been displaced due to inter-communal conflict in Central, North, and West Darfur and thousands have been displaced in Kordofan. The main priority needs of the displaced people include protection, shelter and non-food items, food, water, as well as health, nutrition, and protection assistance. Most of the affected people are yet to receive humanitarian assistance mostly due to conflict or insecurity.

2. Economic Consequences amid Current Disturbances

Sudan’s economy has been in a deep crisis, with high inflation and shortages of food, fuel, and medicine. The protests have collateral damage to the Sudanese economy, which has already suffered greatly from international exclusion and the COVID-19 pandemic. Cases of vandalism and property damage have become commonplace. Recent protests have seen fires spreading across Khartoum from burning tires. With no end to the protests’ insight, the government will likely be forced to pay significantly more to repair key infrastructure in the city. 

The coup has alarmed many international powers who have only recently been forging relations with Sudan after years of isolation. The World Bank has suspended its aid to Sudan after the military there staged a coup against the civilian government. Political leaders were arrested, sparking nationwide protests and international condemnation. The African Union (AU) has also suspended Sudan from the bloc over the “unconstitutional” seizure of power. The US has frozen $700m (£508m) in aid. The sudden cut to aid is likely to have dire consequences for Sudan’s battered economy, at a time when it was just starting to get back on its feet. The removal of economic support is likely to result in persistent currency depreciation with high volatility, rising inflation, and high domestic and imported food and non-food costs.

3. Oils and Fats Synopsis

Sudan produced 232,400 MT of oils and fats in 2020; with groundnut oil leading most of the production at 158,000 MT, accounting for 68% of total domestically produced oils & fats. This is followed by sunflower oil 16.3%, sesame oil 8%, and cottonseed oil 7.4%. The local production of edible oil is sufficient to cover 46% of local demand. Consumption of oils and fats were recorded at 503,600 MT, palm oil is the main consumed oil with a share of 34%, followed by sunflower oil at 33%, and groundnut oil at 24.8%.

Total imports of oils and fats amounted to 324,500 MT in 2020, palm oil was the main oil accounting for 52% of the total imports, followed by sunflower oil with a share of 47%. Palm oil imports amounted to 168,000 MT of which around 100,000-110,000 MT is palm stearin mainly for soap production. Since the ban on the import of tallow, the Sudanese soap industry mainly depends on palm stearin. The majority of imported palm stearin has been supplied from Indonesian origin.

According to Oilworld, Malaysian palm oil contributed only about 10% of palm oil imports to Sudan, Indonesian palm products are dominating the market with a share of 48%, and some imports from Egypt with a share of 17%. Malaysia’s palm oil exports to Sudan in 2020 amounted to 38,075 MT compared to 22,312 MT in 2019 an increase of 70%. In 2020, the highest oil product exported is palm stearin recorded at 14,701 MT, followed by palm olein amounted to 10,237 MT. In Jan-Oct 2021, Malaysian Exports to Sudan dropped by 9% to a record 7,695 tonnes.

Product Group 2019 2020
FINISHED PRODUCTS 10,652 10,801
PALM KERNEL OIL 277 834
PALM OIL 7,457 25,926
PALM-BASED OLEO 3,927 514
Total 22,312 38,075
Palm oil products 2019 2020
RBD PALM OIL 219 47
RBD PALM STEARIN 14,701
RBD PALM OLEIN 6,150 10,237
PALM FATTY ACID DISTILLATE 213
COOKING OIL 688 865
DOUBLE FRACT. RBD PALM OLEIN / SUPEROLEIN 186 76
Total 7,457                                7,457 25,926

4. Implications on Palm Oil.

Continued disruption has reduced supply lines. The closure of Khartoum’s airports and the banning of international flights, coupled with large protests in Port Sudan have aggravated existing shortages of crucial commodities. Port blockades have not only caused damage in Sudan.  In neighboring land-locked South Sudan, port blockades have produced turmoil over the country’s crucial exportation of oil.

Last September, the Beja tribe, one of the largest population components in eastern Sudan, began closing the country’s main port and placed barricades “barriers” in many cities and points on the main road through which the country’s exports and imports pass, as well as closing the two-oil export and import lines. During the closure Hundreds of trucks packed with goods stand idle in Port Sudan, dozens of container ships lie anchored and untouched. For more than a month demonstrators have blockaded Sudan’s key seaport. Roughly 60 % of trade passes through Port Sudan with an average of 1,200 containers daily. Port Sudan received only 27 ships in September, down from 65 in August, according to the country’s cargo association.

Port Sudan is divided into four zones or areas. The North Zone has storage tanks for edible oil with 50,000 tons capacity. It also has 119 warehouses owned by private trading companies and 25 government-owned warehouses. All equipment is operational but the luffing cranes for moving general cargo need repair. This makes the port operation too slow. Adding that closing the port prolonged the delay severely. According to industry sources, a shipment to Sudan is stuck now for four months. Shipping companies are avoiding shipping to Sudan, as it is risky. One of the alternative routes for exporters is to ship to the port of Sokhna in Egypt and transmit it by road trucks to Sudan.

At this time, palm olein is facing challenges in Sudan. On one hand, some stock of palm olein is still available at a lower cost which was imported before the implementation of the new higher customs tariff, it is sold for 34 USD per 18 Litre jerrycan while the price of the newly imported will be 36 USD/jerrycan. The government of Sudan has lately reviewed import duties on vegetable oils and fats. The move is mainly to encourage local production and lower the dependency on imports due to the shortage of foreign currency in the country. According to the Sudanese Customs Authority Portal, crude vegetable oils are subjected to 3% duties while refined vegetable oil is subjected to 40% duties. Around 47% of the total imports are in crude form to support the local refiners in Sudan. RBD palm olein is imported in bulk, then repacked in different packs without any further refining process since it is determined as RBD oil. It was highlighted that the current changes in government policy could be a result of edible oil refineries pressure as they feel threats of palm olein low price affecting their local products. On the other hand, the groundnut oil, the locally produced oil prices have declined due to the abundant production, making its price as low as 27 USD per jerrycan. It is much cheaper than palm olein and it is the most preferred oil by Sudanese consumers.

5. Conclusion

Sudan is a potential market for investment in the vegetable oil industry. It can cater to many landlocked neighboring countries. Malaysia’s share in the total palm oil imports into Sudan is still very minimal. There is a great opportunity to focus on exports of palm stearin since it is considered as fat used for manufacturing processes thus it has a privilege of the import duties at 3% only. Malaysia’s exports of palm stearin constitute only 14% of the total amount of palm stearin imported to the country amounted to 100,000 MT.  There is also a window for solid fats potential in the biscuits industry to be tapped.

Prepared by Lamyaa El Enany 

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