Sugar industry’s future uncertain

THE Swaziland Sugar Association (SSA) forecasts future performance as uncertain although it says current indications are that the industry will remain sustainable and viable.

Commercial Director Sharon de Sousa said there were many downside risks, especially as a result of the new European Union (EU) sugar regime which resulted in lower prices for sugar from the African, Caribbean and Pacific (ACP) group of countries (which includes Swaziland).

“This is compounded by the possibility of Swaziland’s duty free and quota free market access being curtailed through the application of EU safeguards on sugar. The safeguards allow the EU to restrict the amount of sugar that non-least developed countries, like Swaziland, can sell duty free to the EU,” she said.

Adding, de Sousa said this meant that the industry would then have to sell any extra sugar (which is the sugar above Swaziland’s access to the EU) at lower prices in other markets. However, she maintained that the EU remained a highly lucrative price market for Swazi sugar despite the reduced prices.

“There are several interventions being pursued, both from an industry and national perspective to try and adapt to the new market environment. Smallholder growers, who have relatively higher costs of production (and lower yields), are the ones at the highest risk of negative impacts from the EU reforms,” she said.

“As such, this sub-sector receives major attention in interventions being pursued to ensure industry adaptation to the EU sugar sector reforms.”

source: observer