‘SACU SUGAR MARKET AFFECTED BY IMPORTS’

MBABANE – The Southern African Customs Union (SACU) market has been affected by significant imports, and there has been a need to discount prices in order to secure market share – 20.6 per cent on white sugar and 13.5 per cent on brown sugar.

The Royal Swaziland Sugar Corporation (RSSC) Managing Director Nick Jackson, reported that there has been only sluggish growth in consumption, although the situation could well improve once the higher tariff takes effect, when discounts could be phased out. “As well as these reductions in price, there was no price increase in February, which has been the normal practice in prior years. This has resulted in close to a 27 per cent reduction in prices,” reported Jackson in the 2018 integrated annual report.

Sales

He said the regional market was well-supplied and sales prices for both brown and white were attracting a premium to world market levels. Jackson said while lower world market prices impacted on regional prices and premiums, recovery was expected. “It will be important to capitalise on the regional trade agreements to which Eswatini is a signatory.It is very gratifying to note that, despite the wider context of depressed markets, the pressures exerted by the exchange rate and the residual effect of the drought, we have seen a good crop yield in 2018,” Jackson mentioned.

On the ethanol production front, Jackson said an explosion occurred in the number two plant, severely impairing our operational capacity for approximately five months, with a concomitant effect on profitability. Nevertheless, he said they were able to overcome great technical difficulties, and instituted the necessary repairs in a far shorter time than originally anticipated. He said it was also pleasing that the lessons they  learned during the drought have improved our water security, with reservoirs and inter-basin transfers now an established feature of our agricultural landscape.

Jackson said the makeup of the sugar industry in the country has been static for the past 50 years, and there was a need for new agreements  and structure to take them forward for the  next period.  The MD said in their view, the current structure, along with the agreements were no longer sustainable and this required ongoing scrutiny and negotiation. “Although world prices have fallen and prospects are bearish in the short-term, they will not remain so, and global consumption, even when conservatively projected, is still growing by 1.3 per cent, or 2.4 million tonnes per annum. We believe that the EU market will still need to source some of its sugar from reliable, quality suppliers such as Eswatini,” added Jackson. 

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