Sugar farmers urged to diversify as EU slashes subsidy

The recent drop in world sugar prices, coupled with a change in European Union (EU) purchasing agreements, is threatening to put Swazi producers out of business. Sugar is Swaziland's biggest industry, delivering an annual turnover of about US $1.5 billion and exports of more than $637 million. For years the government made a concerted effort to wean peasant farmers from monocropping maize, the staple food, and form cooperatives to grow sugar cane as a cash crop. More acreage is now under sugar cultivation than ever before, but some producers have begun to express regret over their over reliance on the crop. "King Mswati personally told me to grow sugar cane. This was in 1997 - I asked him how I should support my family. His advice was good then; now the prices are going this way and that, and I am concerned that I have put all my eggs in one basket," said small-scale farmer Sipho Thwala. "Sugar is called 'Swazi gold' because it is the most lucrative product of the agricultural sector," Martin Dlamini, governor of the Central Bank of Swaziland, told IRIN. The EU subsidised Swaziland's sugar industry, including small farmers like Thwala, by purchasing an annual quota for more than the global ruling price. Under its EU protocol agreement, Swaziland exports 116,400 mt per year and another 30,000 mt under a Special Preferential Sugar agreement. The EU's plan to slash by 37 percent the price it will pay to suppliers in the African, Caribbean and Pacific Least Developing Countries (ACP/LDC) prompted the Swazi Ministry of Foreign Affairs and Trade to join other ACP/LDC nations in lodging a protest. "We realise subsidies cannot last forever, but the imminence of the change, scheduled for next year, would be devastating," a ministry source told IRIN. This week the EU offered to soften the impact of lower sugar payments by providing financial assistance to farmers adjusting to other crops in the affected countries. Swaziland would continue to have access to the EU market, but the price cut will remain, bringing the EU price closer to the ruling rate for sugar on the world market. "I earnestly appeal to new and aspiring farmers to look into growing other crops beside sugar cane," Minister of Agriculture Mtiti Fakudze said recently. "As a country, Swaziland needs to diversify its crop production in order to enjoy food security. For the sake of the wider economy, I hope that the confidence that the financial institutions have shown towards sugar cane farming will be replicated in projects involving various other crops," he urged. Small farmers can easily diversify crop production, but this is a less viable option for the large sugar cane producers of Swaziland's eastern lowveld. Last year output grew by 16.4 percent and export volumes increased by 34.4 percent, allowing Swaziland to meet its quotas with the EU, the United States and Southern African Customs Union countries. "Favourable climatic conditions, high sucrose content due to good quality cane, expansion of area planted by some major sugar estates, coupled with an increased number of new small-scale farmers venturing into sugar cane growing, contributed significantly to the growth in production," noted a Central Bank report. With the gains in one of the few thriving sectors of the weakening economy now under threat, farmers have already considered moving into other cash crops. "I have saved some cash for a pump. I can irrigate my fields and grow tomatoes, or whatever is selling. I will learn to follow the market," said Thwala.