Gum Arabic Company (GAC)
Company Profile and History
Sudan is the world’s largest producer of gum Arabic. All the gum Arabic produced in Sudan, mostly hashab, is exported. From the 50’s to the early 90’s, Sudanese gum accounted for 80 percent of the global gum trade. From 50,000 tons per annum in the 50’s and 60’s, Sudan’s gum exports declined to around 25,000 tons in the late 80’s. Since then, Sudanese exports have been at an average of 25,000 tons.
Export marketing of gum Arabic for Sudan has been characterized by the monopoly of the Gum Arabic Company over export of raw gum Arabic. In 1969, the Minister of Supply and Internal Trade granted the Gum Arabic Company (GAC), a public company incorporated under the Companies Ordinance of 1925, an exclusive concession to export raw gum Arabic. Responsibility for technical support to producers was later transferred to the National Forestry Corporation of the Ministry of Agriculture.
The cleaned grade, which constitutes the bulk of GAC’s exports, is exported mostly via the GAC “international agents”: international companies which are GAC marketing agents with exclusive rights. Four of these international agents buy an estimated 70 percent of the GAC’s exports; they have their own processing capacity, and sell processed gum (usually powder or spray dried) to large confectionary and soft drinks manufacturers in Europe and the US.
At Port Sudan, the Khartoum Gum Arabic Processing Company (GAPC) maintains a fully-equipped laboratory and warehouses, ensuring quality-tested supplies for export. The company, which is 60 percent-owned by the GAC, operates a modern processing plant at the port, providing powdered and kibbled gum Arabic to order.
In Country Location
Tel: + (249) (1) (83)-462111, 461960;
Fax: + (249) (1) (83)-467923, 461960
The gum is produced in Kordofan region 49.3 percent; Kassala region 24.4 percent; Darfur region 23.4 percent; and White and Blue Nile region 2.9 percent
Services and Products
GAC is involved in purchasing, preparing, and exporting gum Arabic kordofan (hashab) and talha gum worldwide.
Number of Employees
Approximately 500 employees
Total Annual Sales Volume: US$50 Million - US$100 Million
GAC had a monopoly on the export of raw Gum Arabic from the Sudan from 1969 until June 2009. In June 2009 President Omar Al-Bashir issued a decree ending the monopoly rights held by the Gum Arabic Company on the trade and export of Gum Arabic.
GAC’s stated objectives are: To organize the gum trade aiming to maximize hard currency revenue; to enable gum producers to achieve fair share of revenue; to afford better services and quality for importers and end users, strengthen trust in global markets; to organize efforts with concerned parties to maximize production and protect botanical resource to satisfy markets needs; to prepare feasibility studies to establish Gum Arabic processing; to finance the maximum possible share of gum purchases to alleviate financial pressure on the banking system; to increase national earnings by facilitating the collection of taxes in one place; and to encourage nationals to invest in the gum Arabic sector .
“GAC aims to provide its customers and clients with the highest quality of Gum Arabic that meets their needs, expectations and supporting the Gum Arabic producer. New beverage innovations, such as wine coolers, novel confectionery coatings, high fiber drinks and powders, and synergistic combinations with other gums, attest to ongoing research and new product formulation using Gum Arabic. New patents utilizing Gum Arabic in confectionery coatings and lithography have been recently granted, and funding for further research into new uses for this product has been made available by both the Gum Arabic Company and international aid organizations.
GAC is placing strong emphasis on gum Arabic as a natural, organically-produced ingredient. We are trying to provide the product in a different form because so far we have been trading most of our supply in its simple, raw state. The company is investing in plants which will process gum Arabic into a powder form. We would like to join forces with an established European company to establish processing plants that meet international standards. Distribution would ideally be run in a joint venture with European companies dealing with gum Arabic. But we also want to stimulate demand in Sudan to cut costs and to make use of the distribution channels that are already in place."
Ownership of Business
GAC is 61 percent owned by about five thousand Sudanese shareholders, the Sudanese Government owns 30 percent and Unions 10 percent
Benefits Offered and Relations with Government
In 1969, the Minister of Supply and Internal Trade granted GAC an exclusive concession to export raw gum Arabic. Granting GAC an exclusive concession over raw gum Arabic export had one main objective: to exercise market power at the international level (i.e. to regulate exports to achieve advantages in price) in order to support the country’s export revenues in foreign currency. This was justified by Sudan’s large share of the world market. Two other objectives were: (a) to guarantee production and protect producers through the provision of a minimum price policy (floor price) and the implementation of gum production development programs (through provision of water, seedlings, research services…), and (b) to protect the environment because of the expectation that the policy would encourage the maintenance of gum Arabic trees.
The involvement of the Sudanese government in GAC management is very strong: the board of the Gum Arabic Company is chaired by the Under Secretary of the Ministry of Trade, and comprises the General Manager of the National Forest Corporation, the Governor of the Central Bank of Sudan, in addition to representatives of the Sudan Farmers Union.
Taxes are levied at locality level; they represent currently between US$200 to US $400/MT. Additional taxes are collected from transport operators by localities on the way to Khartoum and Port Sudan where GAC and processors have their stores and processing facilities; processors and transporters claim that some of these taxes are illegal.
The impact of key policy changes on the sector over the last fifteen years are: From 1990 to 1992, the GAC concession was withdrawn. During this short period, traders and banks bought gum Arabic from auction markets, domestic demand was high, and producers received a high share of export prices. At the end of 1992, the exclusive GAC concession was reintroduced; in 2002, a presidential decree was passed to withdraw the concession from GAC with the objective to allowing more firms to trade in raw gum Arabic in order to revive gum production. Three months later, the Parliament refused to endorse this decree; and in 2003 and 2004, the Ministry of Investment granted 12 licenses to gum processors, including the four main GAC international agents who established processing facilities (crushing facilities to make “cleaned grade”) in Sudan in order to ensure improved supply of gum for their processing lines in Europe or America.
On November 01, 2006, the Economic Committee of the Council of Ministers issued a directive to the Ministry of Trade to terminate the current monopoly export powers held by the Gum Arabic Corporation. The monopoly was terminated in 2009.
Nothing of importance to report