March 15 (Bloomberg) -- Sudan will boost exports of gum arabic, used in the manufacture of soft drinks, pharmaceuticals and cosmetics, by 20 percent this year as demand from Far Eastern markets grows, the industry board said.
Shipments may climb to 60,000 metric tons in 2013 from 50,000 tons last year, Abdelmagid Abdelgadir, secretary general of the state-run Gum Arabic Board, said in an interview on March 12. China, which previously obtained most of its gum from European traders, is increasingly buying directly from Sudan, according to Abdelgadir, with Malaysia also showing interest.
Sudan is trying to diversify an economy that contracted 11.2 percent last year after it lost control of about three-quarters of its oil production when South Sudan seceded. Companies including Coca-Cola Inc. and Pepsico Inc. use gum arabic in their products, according to the World Bank. The commodity’s importance to western markets led the U.S. to exempt it from a trade embargo first imposed on Sudan in 1997 because of the country’s alleged sponsorship of terrorism.
“Sudan has lost a lot of petrol resources to the south, meaning we have to find other source of revenue,” Abdelgadir said. Gum arabic producers are receiving increased financing from domestic banks and “they’re also being encouraged by rising global prices. Good rainy seasons have helped production too.”
Prices for top-quality gum arabic are currently about $3,000 per ton, according to Abdelgadir. That compares with about $2,500 per ton in 2011, he said. France, the U.K., India and the U.S. are other major buyers named on the Central Bank of Sudan’s export list.
Extracted from the branches of acacia trees grown in Sudan’s southern savannah, gum arabic is a natural emulsifier, holding together substances that don’t mix well. Starches, the most popular alternative, are less successful at retaining flavors and their use can mean shorter shelf lives.
Beverage makers “have to buy it no matter the price and the same goes for the medical industry,” Abdelgadir said. “The sweets industry can switch to starches, to jelly, and many did long ago to save costs, but lately they are coming back.”
The most recent data available from Sudan’s central bank show the country earned $81.8 million from selling 45,633 tons of gum arabic in 2011, compared with 18,202 tons valued at $23.8 million a year earlier.
While comparative data for gum arabic exports are scarce, Abdelgadir put Sudan’s global market share at more than 80 percent. That figure may be inflated and closer to 40 percent, Abda El-Mahdi, a Khartoum-based economic consultant and former state minister of finance, said in an e-mailed response to questions.
Total output was about 77,000 tons in 2012 and Sudan is targeting 100,000 tons this year, Abdelgadir said. Output that isn’t exported goes into storage or is used to cater for growing domestic consumption, currently about 9,500 tons, he said.
Sudan is considering leasing land to foreign companies for them to grow and harvest their gum arabic needs, Abdelgadir said. Chinese companies are currently in talks, he said, without identifying them.
Sudan mostly produces the hashab, or hard, variety of gum arabic, according to the World Bank. It’s main competitors include Chad and Nigeria, which mainly produce the lower quality talha, or flaky gum.
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