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I am sure many will agree that this has been an eventful year for the South African sugar industry, particularly from a trade perspective. A few months ago, hardly a week would go by without seeing stories of sugar imports threatening the local industry.

Hence, I was so delighted when I saw the United States Department of Agriculture’s estimates of South Africa’s 2018/19 sugar production painting a positive picture of an 8 percent potential uptick to 2.2 million tonnes. The chart below shows that this is somewhat a return to normal sugar production levels after years of drought. This improvement is mainly based on an increase in sugar cane delivered to the mills for crushing.

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South African sugar production
Source: USDA

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The story is, of course, different when one looks at prices, specifically from a sugar cane farmer’s perspective which is currently seeing an 8 percent decline from the 2017/18 production season’s prices to 2018/19, according to data from the USDA. This decline is mainly on the back of increased supply and a potential reduction in sugar cane quality standards in some areas. Now, South Africa’s sugar cane production is set to increase by 11 percent year-on-year to 19.3 million tonnes in the 2018/19.

Perhaps, the positive message that we can draw from the South African industry this year, is that while trade policy challenges might prevail for some time, there has been a good recovery from the drought years. The year could end in a sweeter way from a production volume perspective.


Follow me on Twitter (@WandileSihlobo). E-mail: wandile@agbiz.co.za

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