Sugar exports drop by 18.6%

MBABANE –The delayed orders from the European Union (EU) resulted in a drop in the country’s sugar exports by the end of the first half of the 2009/2010 season.

According to the Central Bank of Swaziland (CBS) Quarterly Review of September 2009, export volumes decreased by 18.6 per cent to only 139 232 metric tonnes by the end of the first half of the 2009/2010 season.

Sugar is one of the country’s main agricultural export products and the EU is one of the country’s major sugar export markets.
 “This decrease resulted from the delayed orders from the European Union (EU) customers as they waited for the final 21.7 per cent sugar price cut effected on October 1, 2009,” reads the report in part.
The EU sugar price cut has been reduced by a cumulative 36 per cent to date since July 2006, as part of the EU Sugar sector reforms.

The report also says; “Since sugar is sold on forward contracts and on fixed prices, the Swazi sugar industry did not benefit from the world sugar prices which surged from an average of US$ 428 per tonne in the first quarter to US$521 per tonne in the second quarter. Most of the 2009 production was committed to the EU and the Southern Africa Customs Union (SACU). Only four per cent of the 2009 production will be sold to the world market in the current season.”

The report says the fall in sugar prices and export volumes resulted in reduced export receipts. It says export receipts fell by 20 per cent to E541.8 million during the first half of the 2009/2010 season.
“Sugar sales to the SACU market however, rose by 7.9 per cent to 180 767 metric tonnes during the period under review, compared to the 167 602 metric tonnes recorded in the same period in 2008/2009. Sugar production is expected to increase in the medium-term, flowing the successful implementation of the Lower Usuthu Smallholder Irrigation Project (LUSIP) and the Komati Downstream Development Project (KDDP),” reads the report in part.

It says the industry intends to export more sugar to the EU market under the newly signed interim Economic Partnership Agreements (EPAs) that allow for duty free, quota free access of Swazi goods into the EU.  
Meanwhile, the report says sugar production during the six months to September 2009 fell by a marginal 1.4 per cent to record 479 847 metric tonnes, compared to the 486 759 metric tonnes produced during the same period under the previous cropping season.

This slight decline can be associated with the comparatively higher opening stocks in the 2009/2010 season. Production is however, expected to increase in the current season, in line with the increased area under cane production and improved cane yields per hectare harvested, which will benefit from favourable weather conditions,” reads the report in part.