PR - ANALYZING THE IMPACT OF EU TRADE POLICY REFORM ON THE SUSTAINABILITY OF SMALLHOLDERS SUGARCANE FARMING IN SWAZILAND

Abstract:

This paper analyses the impact of the European Union (EU) trade policy reform on the sustainability of smallholder sugarcane farming in Swaziland, as well as the level of government intervention in the sugar industry. To analyse sustainability, the study measured profitability and efficiency of the farmers using the Policy Analysis Matrix (PAM). Results of the PAM indicated that at current prices and policies, farmers made positive private profits but negative social profits. This means that farmers were competitive (positive private profits) although inefficient as shown by the negative social profits. The study also discovered that there is high level of government involvement in the farming system at Komati area. Sensitivity analysis results suggested that farmers will not be able to sustain their enterprises if the EU reforms its trade policy on sugar. Considering the fact that smallholder sugarcane farming plays a crucial role in rural poverty mitigation, it is very important that smallholder sugarcane farmers be assisted to improve efficiency. This will enable them reduce production costs and improve revenue so that they will be able to sustain their businesses. Government could also assist by exploring alternative markets where Swaziland sugar can be sold at favourable prices so that the price reduction with EU reforms does not drastically affect smallholder sugarcane farmers in Swaziland.

Keywords: Trade reform, sustainability, profitability, efficiency, competitiveness, Policy Analysis Matrix.