THE local sugar industry is reeling from low global prices stemming from surplus stocks and is seeking alternative markets, a unit of sugar producer Tongaat Hulett said yesterday.
The low global prices are a setback for the sector that was supposed to enjoy benefits after government put restrictions on sugar imports.
In a statement accompanying the financial results for the year ended March 31 2015, Hippo Valley Estate Limited said global sugar consumption was expected to grow by 2% per annum whereas demand growth in Southern and Eastern Africa is expected to be 30% over the next six years.
“The current surplus global stock levels have also been putting pressure on local and regional prices as well as the EU market, amplified by the EU market reforms. The industry is steadily shifting export sales from the EU to regional deficit markets, in addition to focusing on capturing and growing local sales,” it said.
Hippo Valley is 50,3% owned by Tongaat Hulett.
In the outlook, Hippo Valley said the industry seeks to attain the sugar production installed capacity of 640 000 tons per annum. It said the industry hopes to attain that in the 2018/19 season.
In its financial results, Hippo recorded an 8% increase in revenue to $146,8 million from $136,1 million in 2014.
In the outlook, Hippo said the industry seeks to attain the sugar production installed capacity of 640 000 tons per annum. It said the industry hopes to attain that in the 2018/19 season.
Hippo Valley said sugar production was down 5% to 228 000 tons attributed to the absence of deliveries from the independent ethanol plant at Chisumbanje Estate and the negative impact of low dam levels for irrigation at the end of 2013 which only recovered in 2014.