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SUGAR SALES UP BY 36.8%

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MBABANE - The sugar industry has shown continuous recovery from the 2015/16 El Nino drought after an improvement in climate conditions, as well as continuous expansion in the Lower Usuthu Smallholder Irrigation Project (LUSIP) for sugar cane production.


 The Central Bank of Eswatini (CBE) in its annual economic review 2018/19 reported that favourable weather conditions resulted in improved cane yields per hectare, from 97 tonnes in 2017/18 to 108 tonnes in the 2018/19 harvesting season. It was reported that consequently, sugar cane production rose by 14.7 per cent to 6.20 million metric tonnes in the 2018/19 harvesting season, from 5.41 million metric tonnes the previous season.


“Sugar production grew by 15.1 per cent to 747,981 metric tonnes in the 2018/19 season from 650,126 metric tonnes the previous season. Total sugar sales volumes increased by 36.8 per cent to 755,556 metric tonnes in the 2018/19 marketing year from 552,135 metric tonnes the previous year, with both SACU and non-SACU sales recording significant increases,” reported CBE. 


Despite the significant growth in sales volumes, it was pointed out that the marketing landscape remained challenging, a development which compelled Eswatini Sugar Association (ESA) to hold back on sales and accumulate stock. Inventory levels stood at 144 866 metric tonnes at the end of the review period, slightly lower than a closing stock of 156,233 in the previous year but significantly higher than the targeted inventory of approximately 65 000 metric tonnes.


Outside


Exports destined outside the SACU market, which were predominantly intended for the EU, increased significantly by 55.9 per cent to 343 640 metric tonnes in 2018/19, from 220 403 metric tonnes in 2017/18. “Sales to the EU market have increased in the past two marketing seasons despite lower prices and an oversupply of sugar to the same market,” mentioned CBE. 


In addition, the ESA continued to intensify its effort to look for new markets in regional blocks such as SADC and COMESA, despite the difficulties associated with penetrating these markets. The industry is facing competition from the cheaper world sugar, coupled with ongoing expansions in the sugar producing countries in the region, a development that leads to these countries not opening up their markets for regional sugar.


Overall sales revenue from the non-SACU market amounted to E1.590 billion in 2018/19 from E1.213 billion received in 2017/18, benefitting from both increased production volumes and a weaker exchange rate over the period.


Domestic sales volume increased by 24.2 per cent from 331 732 metric tonnes in the 2017/18 marketing season to 411 925 metric tonnes in the period under review. CBE stated that due to unfavourable global market conditions, the ESA continued to increase sales volume into SACU and regional markets as they yielded better returns than the other markets. However, the SACU market also remains affected by the influx of sugar from other low-cost producing countries such as Brazil, which limits the penetration of the lucrative SACU market.


The bank said the influx of sugar into the SACU market continued unabated even though there was an increase of the SACU import tariff on sugar. Nevertheless, sales revenue from the SACU market grew by 14.9 per cent to E3.218 billion, broadly in line with volume sales movement. Molasses, which is a bi-product of sugar production and a major input to ethanol production for distillers increased by 3.3 per cent to 250 956 metric tonnes in 2018/19 from 242 889 in the previous season.


“Revenues from molasses sales were also higher at E189 million in the period under review from E185.1 million the previous marketing season,” added CBE. 



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