Call for sugar to be sold locally as exports lose

THE South African Sugar Association (Sasa) is calling for more sugar to be sold in the domestic market as the export market was no longer lucrative enough.

Sasa commercial director Judith Wilson said that South Africa should be doing everything it could not to export the sugar as every ton they sold went at a significant loss.

“It is a challenge and we spend a lot of energy trying to hedge both the price of sugar, which is on the intercontinental exchange and the exchange rate, to secure the best possible revenue for sugar. But nonetheless it is not a profitable market,” said Wilson.

She called for the government to intervene and ensure only the bare minimum of raw sugar was exported to enable local farmers and millers to be more profitable. Sasa said it would this year be working on ensuring that the protection the government gave the industry would be effective.

“It is wonderful to have a sixmonth period with very low imports that are displacing local sales, but we have to be vigilant about that and ensure that it continues so that we can sell as much locally as possible. It will be a big focus for this year.”

The association said they had a number of key focuses for this year which sought to transform the industry and particularly black smallscale farmers.

The industry said it was also working on its profitability to ensure it produced sugar at the lowest cost to ensure future sustainability.

With the economy down in KZN and South Africa, Sasa said it had seen a drop in expected sales compared to the same period last year.

“That is largely down to the economy as well as the sugar tax, which has had a major impact on Sasa’s beverage producers who have had to reformulate away from sugar,” said Wilson.

Wilson, who also runs the South African Sugar Terminal in the Port of Durban, said production had improved dramatically from where it was during the drought period, in which they produced on average an incredibly low 1.5 million tons a season, while the country had the capacity to produce between 2.2 and 2.3 million tons a season.

“In this year we will produce just over 2 million tonnes and going forward we expect to produce a similar number. We are in recovery and getting back to the volumes we would like to be producing. We encourage sugar production because it can be grown in rural areas where there is little other agriculture.”

Wilson said the world sugar market was a dumped market in the sense that the world price for sugar was lower than any producer’s cost of production.

“It is a market distorted by tariffs, subsidies and other things individual producer countries put in place.”