DROPPING SUGAR PRICE THREAT TO SUSTAINABILITY

BY PHEPHILE MOTAU
MBABANE-The continuous drop in world sugar prices and strengthening of the Rand presents a threat to the viability and sustainability of sugar operations.

This was said by the Chief Executive Officer(CEO) of the Swaziland Sugar Association (SSA) Phil Mnisi.
He said this would result in reduced revenue and profit.

“Unfortunately, this presents a threat to the viability and sustainability of some of our sugar cane operations, which is also against a backdrop of increased production costs, such as electricity and finance costs,” he said.

Mnisi said forecasts for the year 2018/19 indicated that world market sugar prices would continue to fall. He said this was driven primarily by world market production of sugar which exceeds consumption.

“This comes in the wake of production exceeding consumption in 2017/18, as well as emerging market changes in the trade of sugar worldwide, as well as the influx of cheap sugar imports from the world market into regional markets” he said.

He said as a result, the Swaziland Sugar Association (SSA) and its membership of sugar cane millers and growers had begun digging deep into its marketing intelligence and was exploring impermeable strategies to retain Swazi sugar’s competitiveness in the market.
Mnisi said world market prices were forecasted to remain depressed, which would impact returns from regional and world export sales.
“This also renders imports from the world market into the Southern African Customs Union (SACU) market cheaper, thus in turn impacting sales and returns from the SACU market,” he said.

The CEO said in light of this looming transformation of the local sugar narrative, alternative export markets to divert volumes from the traditional markets such as the EU were being pursued, with focus being on East African markets.
“The industry is also continuously reviewing processes to improve efficiencies and thereby reduce costs, in order to remain competitive,” he said.

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