This is according to the South African Sugar Association (SASA) Vice-Chairman Suresh Naidoo who was one of the speakers at the 7th Annual Africa Sugar Outlook 2017 Conference in Nairobi, Kenya. Naidoo’s speech focused on the industry support to indigenous growers and rural communities. “All participating countries were very impressed with our efforts to support and help small-scale growers in South Africa,” he said.
He told conference delegates that South Africa’s rural development model was supported by four key elements: sustainable sugarcane development, diversification for the sustainability of the farmers, people development and provision of basic services by government. He also unpacked the development finance extended to small-scale farmers through entities such as Mthombo Agricultural Finance whose main services have recently been restructured to include: loan administrative services to local entities and banks, provision of savings schemes for small-scale growers, facilitation of the sourcing of funds at an industry level and provision of assistance to medium-scale growers.
The conference discussed a number of important issues regarding the sugar industry on the continent. “But everybody is nervous about the unknown consequences of impending deregulation in the European Union (EU) market,” said Naidoo. According to SASA Commercial Director Judith Wilson, in October this year, the EU will abolish production quotas in favour of EU producers, and it is anticipated that the value of this market will rapidly decrease for traditional suppliers and new quota-holders, such as South Africa. In addition, the pending exit of the UK from the EU may have significant implications on any value remaining in EU access for South African sugar. More than 50% of the total imports required by the EU would be destined for the UK.
“At the end of 2016, South Africa was granted access for 150 000 tons of sugar, on a quota basis, into the European Union, following lengthy inter-governmental negotiations. Access to this market should have been a significant opportunity for the local industry, as the EU market had typically carried a significant price premium to the low-priced world sugar market, and should have been a much sought-after export market for South African sugar surplus to Southern African Customs Union demand. Higher pricing in the EU was previously driven largely by production quotas limiting local supply by EU producers,” explained Wilson.