Mbabane- Eswatini’s sugar industry has recorded an estimated E200 million decline in revenue this year, despite production levels remaining largely unchanged.
Speaking in an interview with Eswatini Tv-s Market View, Eswatini Sugarcane Growers Association CEO Dr Sipho Nkambule said the downturn over the past year has been driven primarily by price fluctuations rather than reduced output. He explained that sugar, as a global commodity, is influenced by supply and demand forces, with producers often acting as price takers.
World sugar prices have declined from around 22 US cents per pound to approximately 14 US cents per pound, intensifying competition and lowering returns for local producers.
To remain competitive, growers have had to offer discounts within the Southern African Customs Union (SACU) market, where most of Eswatini’s sugar is sold. However, Nkambule warned that without such measures, storage constraints could have disrupted production continuity.
Domestic consumption remains limited, accounting for less than 10 percent of total production, estimated at about 700,000 tonnes annually. Within SACU, roughly 61 percent of output is sold, while the remainder is exported to markets such as the United States and the European Union, with only a small portion entering the global market.
Nkambule noted that the small domestic market largely due to the country’s population of about 1.2 million limits the industry’s ability to scale internally.
Looking ahead, production is expected to remain relatively stable, though rising input costs, particularly energy pose a significant challenge.
Electricity tariffs have increased by 11.74 percent year-on-year, while diesel prices have risen by E5.35 per litre, with energy costs accounting for more than half of production expenses in some cases.
Preliminary estimates suggest these increases could push production costs up by about 11 percent, potentially reducing profit margins by 26 percent this year.
Despite these pressures, Nkambule acknowledged government efforts to support the sector. These include a E200 million allocation to moderate electricity tariff increases and an estimated E232 million subsidies to offset diesel costs.
He also welcomed broader plans to invest E1.76 billion in developing and diversifying energy sources, particularly renewable energy, which could help stabilize costs in the long term.
Nkambule stressed that electricity is critical, especially for irrigation, which is essential to sugarcane production in Eswatini. Increased electricity costs directly affect water pumping and irrigation systems, raising overall farming expenses.
Diesel is equally important, used in land preparation, transport, and agrochemical application. Rising fuel costs, he warned, have a ripple effect across the entire production chain, increasing operational costs for growers.
In addition, higher fertiliser prices could further strain the sector, potentially forcing farmers to reduce application rates, which may negatively impact productivity in the long run.
While some input price increases may be temporary, Nkambule cautioned that prolonged cost pressures could significantly affect the industry’s sustainability.
He noted that the sector’s recovery will depend largely on stable input costs and reliable supply chains. As global market pressures persist, the industry will need to adapt while maintaining production levels and profitability.
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