Sugar Annual

An Expert's View about Tropical and Subtropical Fruits, Sugar Cane in Swaziland

Posted on: 27 Apr 2012

The report focuses on the production and usage of sugar in Swaziland.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 4/13/2012 GAIN Report Number: Swaziland Sugar Annual The report focuses on the production and usage of sugar in Swaziland Approved By: Ross Kreamer Prepared By: Dirk Esterhuizen Report Highlights: For the 2012/13 season, post forecasts that sugarcane production in Swaziland will increase to 5.2 million tons, as additional land will be planted to sugarcane in the next few years. As a result, sugar production in the 2012/13 season could reach 650,000 tons Tel Quell (672,750 MTRV), an increase of four percent from the previous season. Swaziland?s sugarcane production for the 2011/12 season stayed constant at an estimated five million tons, while sugar production increased by seven percent from the previous year?s 582,019 tons Tel Quell (602,390 MTRV) to an estimated 625,000 tons Tel Quell (646,875 MTRV), due to better cane-to-sugar yields. Executive Summary For the 2012/13 season (April to March), post forecasts that sugarcane production in Swaziland will increase to 5.2 million tons, as additional land will be planted to sugarcane, especially under expanded irrigation. Swaziland?s sugarcane production for the 2011/12 season is estimated at five million tons. This is marginally less than the 2010/11 season?s revised figure of just over five million tons. Post forecasts that sugar production in Swaziland in the 2012/13 season could reach 650,000 tons Tel Quell (672,750 metric tons raw value (MTRV)) on the back of more land being utilized for the cultivation of sugar. In the 2011/12 season, sugar production increased by seven percent from the previous year of 582,019 tons Tel Quell (602,390 MTRV) to an estimated 625,000 tons Tel Quell (646,875 MTRV), due to better cane-to-sugar yields. Swaziland?s exports to the EU markets are expected to grow in the 2012/13 season due to higher sugar production, while sales in the SACU and regional markets are expected to stay constant as South Africa?s sugar production is expected to increase by about 15 percent on better climatic conditions. Swaziland is expected to deliver on its United States tariff-rate sugar allocation in the 2012/13 season. Sources: http://www.ssa.co.sz http://www.illovo.co.za http://www.huletts.co.za US$1= R8.00 = E8.00 (04/11/2012) Sugarcane Production Swaziland, Africa's fourth largest producer of sugar (after South Africa, Egypt and Sudan), is set to increase production in the next few years as more small-scale farmers take up sugarcane cultivation and access to irrigation increases. Furthermore, sugarcane farmers in Swaziland stand to benefit from a European Union's EUR19.5 million (US$25.6 million) grant, which will finance sugarcane production for the next six years. The grant will be use for new sugarcane projects that will be implemented in Swaziland's ?sugar belt?, consisting of the Hhhohho, Manzini and Lubombo regions. A replanting program with higher-yielding varieties is also underway. Through the grant, the European Union aims at improving the productivity and efficiency of small and medium sugarcane growers and to improve provision of social services in the ?sugar belt?. The grants expected results include increasing yields of both new and existing small and medium growers as well as the efficient use of water resources, reduced transport costs and lower input costs. For the 2012/13 season (April to March), post forecasts that sugarcane production in Swaziland will increase to 5.2 million tons as additional areas of land will be planted to sugarcane, especially under irrigation. Swaziland?s sugarcane production for the 2011/12 season is estimated at five million tons. This is marginally less than the 2010/11 season?s revised figure of just over five million tons. The 2012/13 season?s crop will be produced on 53,000 hectares (forecast), compared to the 51,000 hectares (estimate) of the 2011/12 season and 50,473 hectares of the 2010/11 season. Table 1 illustrates the production of sugar in Swaziland for 2010/11 (actual), 2011/12 (estimate) and 2012/13 (forecast) marketing years. Table 1: The production of sugar in Swaziland from the 2010/11 season Season Area Area Yield Cane Sugar Cane/sugar Planted harvested (MT/HA) crushed produced ratio (HA) (HA) (MT) (MT*) 2010/11 53,372 50,473 95.9 5,029,235 582,019 8.4 2011/12 54,000 51,000 98.0 5,000,000 625,000 8.0 2012/13 55,000 53,000 98.1 5,200,000 650,000 8.0 *Tel Quell x 1.035 = Raw value, Refined x 1.07 = Raw value The structure of the industry Sugar represents the single biggest industry in Swaziland and accounts for almost 60 percent of agricultural output, 35 percent of agricultural wage employment, and contributes about 18 percent to the country?s Gross Domestic Product. The sugar industry in Swaziland consists of four components, namely, large millers and estates (77 percent of production); large growers (17 percent), medium size growers (5 percent) and small growers (1 percent). While accounting for a smaller volume of total production, the largest number of growers fall under the category of medium and small growers. South Africa?s three biggest sugar companies, Illovo Sugar Ltd, Tongaat Hulett Sugar Ltd, and Tsb Sugar RSA Ltd are involved in the Swaziland sugar industry through their co-ownerships in production estates and mills. Sugarcane growing in Swaziland is only permissible through a quota issued by the Sugar Industry Quota Board. Sugarcane growers and millers are represented by the Swaziland Cane Growers Association and the Swaziland Sugar Millers Association. The interests of the different industry players are reconciled within the framework of the Swaziland Sugar Association. The Swaziland Sugar Association was formed in 1964 and is govern by the Sugar Act of 1967. The Swaziland Sugar Association is responsible for providing the services necessary for the general development of the industry and the marketing of Swaziland?s sugar. The Swaziland Cane Growers Association and the Swaziland Sugar Millers Association are equally represented on the Swaziland Sugar Association?s Council, the highest policy making body in the sugar industry. The Council is chaired by an independent person, who has no interest in the growing, milling, and marketing of sugar. Sugarcane for Centrifugal Swaziland 2010/2011 2011/2012 2012/2013 Market Year Begin: April 2010 Market Year Begin: April 2011 Market Year Begin: April 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 53 53 54 55 Area Harvested 51 50 51 53 Production 5,100 5,030 5,000 5,200 Total Supply 5,100 5,030 5,000 5,200 Utilization for Sugar 5,100 5,030 5,000 5,200 Utilizatn for Alcohol 0 0 0 0 Total Utilization 5,100 5,030 5,000 5,200 1000 HA, 1000 MT Sugar Production Swaziland has three sugar mills (Mhlume, Simunye and Ubombo) with a combined annual production capacity in excess of 600,000 tons. The industry produces raw, refined and brown sugar. Post forecasts that sugar production in Swaziland in the 2012/13 season could reach 650,000 tons Tel Quell (672,750 MTRV) on more irrigated land being utilized for sugar cultivation. In the 2011/12 season, sugar production increased by seven percent from the previous year to 582,019 tons Tel Quell (602,390 MTRV) to an estimated 625,000 tons Tel Quell (646,875 MTRV), due to better cane-to-sugar yields. Consumption The South African Customs Union (SACU) market is the primary destination for Swaziland sugar. The SACU market comprises South Africa, Botswana, Lesotho, Namibia and Swaziland. Access to the market is regulated by the Southern African Development Community Sugar Cooperation Agreement. South Africa and Swaziland are the only sugar producers in SACU and together produce in excess of the region?s sugar demand, which is estimated at 2.0 MMT or 34kg per capita. The demand for sugar in the SACU market is expected to grow by only two percent in the 2012/13 season. High sugar prices and a slower than expected economic growth rate of only 2.7 percent for South Africa in 2012 are the main reasons for weakened demand for sugar. However, the long-term prospects for increased sugar consumption remain good as the South African economy is expected to accelerate by 3.6 percent in 2013 and by 4.2 percent in 2014, led by robust household consumption and stronger public and private sector investments. It is expected that the South African sugar industry will supply about 1.6 MMT and Swaziland about 340,000 tons to the SACU market in the 2012/13 season. Post estimates that Swaziland supplied 340,000 tons of sugar to the SACU market in the 2011/12 season on higher production and supply restrictions in South Africa due to drought. In the 2010/11 season, Swaziland supplied 333,125 tons of sugar to the SACU market. Trade The Swaziland Sugar Association is responsible for all sales and marketing of sugar produced in Swaziland. The four main export markets for Swaziland?s sugar are the European Union (EU), the United States, Southern African Customs Union (SACU) and other regional markets, with 95 percent of the sugar being sold to the SACU and European Union market. Table 2 shows the different sugar export markets for Swaziland for the 2010/11 (actual), 2011/12 (estimate) and 2012/13 (forecast) marketing years. Sales to the EU markets are expected to grow in the 2012/13 season due to higher sugar production, while sales in the SACU and regional markets are expected to stay constant as South Africa?s sugar production is expected to increase by about 15 percent on better climatic conditions. Swaziland will be able to deliver on a possible United States tariff-rate sugar allocation in the 2012/13 season. Table 2: The different sugar export markets for Swaziland for the 2010/11 (actual), 2011/12 (estimate) and 2012/13 (forecast) marketing years Year SACU market EU market United States Regional market Total sales 2010/11 333,125 278,686 15,700 6,348 633,859 2011/12 340,000 280,000 17,000 5,000 642,000 2012/13 340,000 300,000 18,000 5,000 663,000 Source: Swaziland Sugar Association Sugar, Centrifugal Swaziland 2010/2011 2011/2012 2012/2013 Market Year Begin: Apr 2010 Market Year Begin: Apr 2011 Market Year Begin: Apr 2012 USDA Official New Post USDA Official New Post USDA Official New Post Beginning Stocks 60 60 48 21 25 Beet Sugar Production 0 0 0 0 0 Cane Sugar Production 674 602 680 650 675 Total Sugar Production 674 602 680 650 675 Raw Imports 0 0 0 0 0 Refined Imp.(Raw Val) 0 0 0 0 0 Total Imports 0 0 0 0 0 Total Supply 734 662 728 671 700 Raw Exports 335 300 340 300 320 Refined Exp.(Raw Val) 30 20 30 20 30 Total Exports 365 320 370 320 350 Human Dom. Consumption 320 320 325 325 325 Other Disappearance 1 1 1 1 1 Total Use 321 321 326 326 326 Ending Stocks 48 21 32 25 24 Total Distribution 734 662 728 671 700 1000 MT
Posted: 27 April 2012