Africa-Press – Eswatini. The implementation of protectionism policies in international markets is likely to negatively affect Eswatini’s sugar industries.
The Eswatini Sugar Association (ESA) in its integrated annual report for 2022/2023, lamented that the growing protection of domestic markets, changing customer demands and volatile world market prices were putting strain on their limited resources, and pose several emerging threats and challenges for the Eswatini sugar industry and ESA alike. ESA also said the mounting uncertainties in both global and regional markets have triggered structural and functional changes that are expected to shift industry dynamics.
Threat
The sugar association said the rising protectionism and push for domestic sugar industry across Southern Africa Customs Union (SACU), regional markets and the European Union (EU) is a threat for Eswatini sugar,which could lead to difficult market conditions in future. The association also mentioned that the changing face of the sugar industry also included the volatile world market prices. The association said with continued supply of low-cost sugar from major global sugar producers, world market prices for raw sugar and white sugar remained volatile, sometimes creating pressure on traditional revenue streams. ESA said customer demand has shown a shift across global markets, demand for specialty products and customised packaging has been on the rising trend. ESA added that sustaining competitive advantage in terms of quality, service and product offering amidst volatile sugar prices could be the key differentiator with emphasis on food safety, refining processes and global quality standards.
The association said to overcome the internal industry challenges in the form of stakeholder alignment and develop mutual beneficial roadmap for sustainable industry. ESA said focus on incorporation of more sustainable practices, efficient growing and milling processes were becoming an industry norm across key production centres globally to curb climate change and reduce the carbon footprint. ESA’s Corporate Strategy and Marketing Plan (2021-2026) therefore, aims to reinvent and reposition the organisation for the future and ensure continued success amidst an ever-changing environment.
Guide
It is based on a number of measurable objectives that guide their operations and signal a new direction for the organisation. The sugar association stated that recent shifts in regional and world sugar market trends, coupled with eroding sales margins and evolving consumer preferences, meant that they were compelled to develop new markets and product portfolios to ensure the long-term growth and sustainability of the Eswatini sugar industry. ESA said consistency in the quality of sugar and associated products was critical for maintaining the industry’s position as a reputable and reliable supplier. The ESA commercial team continued to explore opportunities to expand sales in the region, working hard to mitigate potential disruptions along the supply chain, and provide superior and dependable marketing and logistical services. ESA added that the state-of-the-art sugar bagging and warehousing facility at Ubombo, which began operating in August 2021, allows them to deliver more sugar in the different bag
Managed
The association added that though challenging, they managed the situation by delaying deliveries and short delivering some products to enable them to meet most of their contractual obligations. “Whereas bulk sugar generally attracts a lower price compared to the other products due to the further processing it requires, bagged sugar requires no further processing and is intended for direct consumption and is sold to the domestic and export markets for a better return,” read the report. ESA highlighted that they have been researching new opportunities to increase the returns attained for our members and, with markets opening up, there were opportunities to expand their sales further into the rest of Africa.
ESA said similarly, if the returns attained in international markets were to decline as world market price falls, African markets, which were geographically closer, have growing consumption rates and tend to command higher prices, were expected to continue to yield good returns. ESA lamented that sugar, however, was particularly susceptible to external factors beyond our control. They noted that prices were currently bolstered by the Russia-Ukraine war and other emerging geopolitical factors, but a change in the fundamentals could have a reverse effect.
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