Representatives of 17,000 small-scale Mauritian sugar farmers – who contribute 28% of national sugar production – have raised concerns that they are not benefiting from the revenue diversification that has taken place from the processing of Mauritian sugar cane. According to an IPS news report, a farmer from a Mauritian cooperative commented, “we are paid for the amount of sugar produced… and some peanuts for the bagasse the use to produce electricity”, but added that farmers receive no benefit from the revenues generated as a result of the sugar sector restructuring process, from the sale of electricity, ethanol and bio-plastics produced from molasses.
Farmers’ representatives argue that unless farmers get a better deal, more smallholder farmers will leave the sugar sector and no younger farmers will enter the sector. The issue of revenue diversification at the level of sugar cane farmers has become a more important issue as EU policy changes have impacted on prices received on this major export market. In an effort to boost earnings, 5,000 Mauritian smallholder farmers have sought Fairtrade certification, producing some 21,000 tonnes of fair-trade sugar in 2013.
In Swaziland, meanwhile, a local press report notes that the area under sugar cane “increased by almost 12% in the past five years, as more small-scale farmers took up sugar cane cultivation and access to irrigation increased through significant investments by the Swaziland government, the EU and other donor organisations”. These developments resulted in sugar cane production reaching 5.6 million tonnes in 2012/12, its highest level to date, with a further increase to 6.5 million tonnes expected by 2016/17.
Between 2012/13 and 2014/15, Swazi sugar production is projected to increase from 679,934 tonnes to 725,000 tonnes (+6.6%). Exports to the EU are projected to increase by 3% to 385,000 tonnes in 2014/15, while exports to the SACU market are projected to remain unchanged (340,286 tonnes in 2013/14). While the US “allows preferential access for Swaziland sugar under its tariff rate quota”, exports are focused on the EU market because of the higher return currently enjoyed.
While the number of smallholder sugar farmers in Mauritius is falling, the number in Swaziland is growing. Smallholder farmers in both Mauritius and Swaziland are likely to face a projected fall of sugar prices in the EU of 35% between 2013 and 2017 (see Agritrade article ‘ More limited market prospects projected for sugar imports beyond 2017’, 3 March 2014). Since cane farmers’ revenues are based primarily on the revenues derived from raw sugar sales, and the EU is a major market, the issue of the financial benefits derived by sugar cane farmers from the production of new products from the sugar cane they provide to the mills will take on more significance in the coming years.
This is likely to be particularly important in Swaziland, where newly established farmers have taken on extensive loans to enter sugar production. In the past, declines in revenue from sugar sales have resulted in Swazi smallholder farmers facing serious financial difficulties, with the government having to step in and take over financial responsibility for certain investment costs, initially taken on by newly established smallholder farmers.
Establishing policies as a part of sugar sector restructuring programmes, in order to address the issue of the distribution of revenues from new income streams between farmers and millers, would therefore appear to be of growing importance in ACP countries where smallholder farmers play a significant role in sugar cane production.