Eswatini’s sugar industry sold more sugar and improved cane yields during 2025/26, but falling prices, costly debt, import competition and climate disruptions exposed the financial risks facing growers.
SIBUSISO MNGADI | EDITOR-IN-CHIEF
MBABANE — Eswatini’s sugar industry generated a record E8.08 billion in revenue during the financial year ended March 31, 2026, strengthening its position as one of the country’s most important agricultural, employment and foreign-exchange engines.
However, a closer reading of the Eswatini Sugar Integrated Annual Report shows that the headline revenue figure does not tell the full story.
Sales volumes increased sharply, agricultural output showed signs of recovery and foreign-exchange gains improved. Yet gross margins weakened, borrowing requirements rose, finance costs consumed almost the entire operating profit and smallholder growers remained exposed to low sugar prices, expensive electricity and unpredictable weather.
For farmers and other agribusiness operators, the report offers an important financial lesson: higher production and rising revenue do not automatically translate into stronger profitability or healthier cash flow.
The sugar industry contributes approximately 4.1% of Eswatini’s gross domestic product, generates about 7% of national export earnings and supports more than 16,000 permanent and seasonal workers. Around 90% of locally produced sugar is exported. Small-scale farmers account for 93% of active growers but contribute only about 29% of cane harvested, highlighting both the industry’s inclusive reach and its productivity imbalance.
REVENUE ROSE, BUT PRICES REMAINED UNDER PRESSURE
Group revenue increased by 4.9%, from E7.71 billion in 2024/25 to E8.08 billion in 2025/26. The report attributes this mainly to higher sales volumes.
Sugar sales rose by approximately 9.4%, from 591,986 tonnes to 647,572 tonnes. This means volume growth was almost twice the rate of revenue growth—an indication that the industry earned less revenue from each additional tonne sold than it would have under stronger market conditions.
That pressure is also visible in gross profit, which declined from E419.42 million to E398.64 million. The gross margin narrowed from approximately 5.4% to 4.9%.
The lesson is simple: revenue measures the total value of sales, not the amount that remains after production, distribution, financing and administrative costs.
There is also an important structural distinction. Eswatini Sugar is a statutory marketing and regulatory body rather than a conventional profit-maximising company. Proceeds are distributed to millers and growers, and these distributions are recorded as part of the cost of sales. Therefore, the reported zero profit for the year should not be interpreted as evidence that the organisation made no economic contribution.
What matters more is how much value was available for distribution—and whether that value was sufficient to cover growers’ rising costs.
FINANCE COSTS CONSUMED ALMOST ALL OPERATING PROFIT
The most revealing numbers appear below the operating-profit line.
Operating profit before financing costs increased to E337.07 million, from E302 million in the previous year. However, finance expenses rose by 12.2% to E335.36 million.
In other words, interest and financing charges absorbed approximately 99.5% of operating profit.
The report explains that financing requirements increased because sugar sales—particularly in the Southern African Customs Union market—moved more slowly than anticipated due to an influx of imported sugar.
When sugar remains in warehouses or customers take longer to pay, growers and millers still need to be funded. The industry therefore borrows against inventory and expected receipts. The longer the delay between producing sugar and collecting payment, the greater the interest burden.
The bank overdraft increased by E295.73 million to E1.36 billion, while short-term borrowings climbed by more than 50% to E584.99 million. Trade and other receivables increased by E215.39 million to E958.83 million, partly because substantial sales were concluded near the end of the financial year.
For farmers, the wider lesson is that working capital can determine whether an otherwise viable business survives.
A profitable crop sold on long credit terms can still leave a farmer unable to pay wages, electricity accounts, loan instalments or suppliers. Farmers must therefore monitor not only expected income, but also when the money will actually enter the bank account.
OPERATING CASH FLOW REMAINED NEGATIVE
Eswatini Sugar recorded a net operating cash outflow of E397.28 million. This was an improvement from the E706.01 million outflow recorded in the previous year, but it still demonstrates the significant amount of external financing required to carry stock, fund operations and bridge delayed receipts.
The organisation received E205 million in new borrowings and increased its use of overdraft facilities. Investment in property, plant and equipment almost doubled to E64.39 million, reflecting continued spending on infrastructure and operational capacity.
The report nevertheless concludes that Eswatini Sugar remains a going concern and has sufficient resources to continue operating. The underlying financial statements received an unmodified audit opinion.
That assurance is important, but it does not remove the need to reduce financing pressure. A business that increasingly relies on overdrafts becomes vulnerable to interest-rate changes, delayed customer payments and sudden deterioration in market prices.
MORE CANE DID NOT PRODUCE MORE SUGAR
Agricultural performance showed improvement, but the production numbers contain another important lesson.
Cane crushed increased by 1.9% to 5.46 million tonnes, while the harvested area grew slightly to 59,979 hectares. Cane yield improved from 89.94 tonnes per hectare to 91.06 tonnes per hectare.
However, sucrose yield declined marginally from 12.67 tonnes to 12.61 tonnes per hectare, while sugar production fell slightly from 640,738 tonnes to 639,998 tonnes.
This means that growers delivered more cane, but the additional cane did not produce a corresponding increase in recoverable sugar.
For commercial sugarcane farmers, tonnes of cane per hectare are not the only measure that matters. Income is ultimately influenced by sucrose content, crop age, harvesting efficiency, cane freshness and the performance of the milling process.
The industry also ended the season with 264,115 tonnes of uncrushed cane following weather-related harvesting disruptions. Late-season rainfall, drainage problems and harvesting constraints reduced the industry’s ability to convert all available cane into saleable sugar.
This is why financial planning must be connected to agronomy. A farmer may achieve a high physical yield but still earn a weak return if the crop has low sucrose content, is harvested late or remains in the field beyond the milling window.
SACU CONCENTRATION REMAINS A MAJOR RISK
The Southern African Customs Union market accounts for approximately 72% of Eswatini’s sugar sales, making it the industry’s most important and generally highest-returning market.
The European Union and United Kingdom account for 16%, regional African markets for 9% and the United States for 3%.
This concentration creates financial vulnerability. Rising imports into SACU, combined with low world sugar prices and weaker tariff protection, forced Eswatini’s industry to discount prices to remain competitive.
The annual report indicates that global sugar prices fell from above 25 US cents per pound two years earlier to below 14 cents per pound. At the same time, recovering production in countries such as India and Thailand moved the global market towards a projected surplus.
Council expects import pressure, weak global prices and currency volatility to continue affecting the 2026/27 season.
The lesson applies across agriculture: relying heavily on one buyer or market may initially deliver efficiency, but it also creates concentration risk. When that market slows down, the entire value chain—from the exporter to the smallest producer—feels the impact.
VALUE ADDITION IS BECOMING A FINANCIAL NECESSITY
The industry’s strategic response is to move more sugar away from low-margin bulk exports and into direct-consumption, packaged and specialty products.
During the year, Eswatini Sugar commissioned the Mhlume Very High Polarised sugar-bagging facility, secured the Nucane production patent and completed a trial shipment of bagged sugar to the United States.
These initiatives are designed to retain more value inside Eswatini instead of exporting raw sugar for overseas refiners and packers to capture the final margin.
Specialty products such as low-glycaemic-index Nucane, Demerara and sustainability-certified sugar can attract premium prices. However, achieving those premiums requires investment in processing, conditioning, storage, packaging, branding, certification and reliable logistics.
Bonsucro certification achieved by Simunye Mill and Tambankulu Estate, together with Eswatini Sugar’s Chain of Custody certification, is therefore more than an environmental achievement. It is becoming a commercial requirement for accessing international buyers.
SMALLHOLDER PRODUCTIVITY IS THE UNTAPPED OPPORTUNITY
Small-scale farmers form the overwhelming majority of Eswatini’s active cane-growing community, yet their contribution to total cane remains disproportionately low.
Closing the productivity gap between smaller growers and large estates could increase national sugar production without requiring substantial additional land.
The report identifies several interventions: improved extension services, governance support, pest and disease surveillance, locally adapted cane varieties, digital crop monitoring, better irrigation management and renewable energy.
By March 2026, 40 growers had installed a combined 10 megawatts of solar capacity. Three new cane varieties were ready but awaiting approval, while plans were progressing for a domestic research and development hub.
These developments show that smallholder competitiveness will depend increasingly on access to technology, affordable finance, professional governance and reliable technical advice—not merely access to land.
THE CENTRAL LESSON FOR AGRIBUSINESS
The 2025/26 sugar results demonstrate the difference between production, revenue, profit and cash flow.
Production tells the farmer how much was grown. Revenue shows the value of what was sold. Profit measures what remains after costs. Cash flow determines whether the business can meet its obligations today.
A sustainable agribusiness must manage all four.
Eswatini’s sugar industry remains productive, internationally competitive and strategically important. Its revenue increased, sales volumes recovered and investment in value addition continued. But its experience also shows that weak prices, costly working capital, climate disruptions and dependence on a concentrated market can quickly erode the benefit of higher production.
The next phase of growth must therefore be measured not only in additional hectares or tonnes of cane, but in sucrose per hectare, energy cost per tonne, interest paid, cash collected, value added locally and the returns ultimately reaching growers.
That is how Eswatini can ensure that its “green gold” continues generating sustainable wealth—not only impressive turnover
