Tonne of sugar cane price to be reviewed

MBABANE – The buying price of sugar cane will soon be reviewed following the changes observed in inflation and the sugar market.

This was disclosed by a source close to the matter, who could not confirm when the review was expected to happen.

He said the market was open, and the increase in interest rates, inflation, and demand led to the review.

It is worth noting that a tonne of sugar cane currently costs E4 500, and the price was revised six times last year. A tonne was worth around E3 500 last year in March, and the prices were reviewed six times to date, increasing by almost E1 000, excluding tax. The sugar cane market is one of the most lucrative businesses in Eswatini; the demand is higher than the supply. Currently, the country is failing to meet both export and inland market demands for sugar cane.

Escalating

The sugar cane industry is embattled by the continuous escalating costs of farming inputs, which has affected the quality and quantity of the cane in the previous financial year. The Eswatini Sugar Association’s (ESA) business revenues were reported to have contracted by 5.57 per cent in the current reporting period.

This was mentioned in the group’s consolidated and separate financial

A TABLE SHOWING THE INCREASE IN SUGAR CANE PRICE PER TONNE

PERIOD

May 2022

July 2022

September 2022

November 2022

PRICE

E3 500

E3 700

E3 810

E4 000 attributable to a decrease in sale volumes and foreign exchange rates, even though the selling prices were better compared with to previous year.

The cost of sales also decreased from E5.92 billion to E5.66 billion in line with the decrease in distributable proceeds.

Profits

The group attested that profits that were made by the association were distributed in full to the millers and growers and formed part of the cost of sales.

Distribution costs incurred during the year totalled E17.2 million compared to E13.8 million in 2021, increasing marginally compared with the previous year.

Foreign exchange gains of E64.1 million were realised, compared to a gain of E26.3 million in the previous year.

ESA said this was mainly because of the better rate that was taken in the previous year. Worth noting, ESA has three subsidiary companies: Eswatini Sugar Assets Limited, Sugar Assets Limited (Mhlume), and Sugar Assets Limited (Simunye).

ESA reported that interest paid decreased from E87.2 million to E75.3 million due to decreased production levels as well as good working capital management compared with the previous year.

They said total overheads decreased from E109.04 million to E88 million, mainly because some costs were deferred to the following year due to COVID-19 restrictions.