One million livelihoods are now closer than ever to the brink of disaster unless all stakeholders – both private and state – in South Africa’s 178-year-old commercial sugarcane value chain urgently and constructively work together to address the multiple heavy, and potentially crippling, blows that just keep on coming.
By Lloyd Phillips, senior journalist at African Farming and Landbouweekblad
Droughts, floods, civil unrest, rising production costs, falling incomes, the health promotion levy (sugar tax), the ongoing influx of dumped cheap sugar and, most recently, an application to have Tongaat Hulett Limited placed under provisional liquidation. These are, in a nutshell, the multiple and multiplying major threats that South Africa’s sugarcane value chain has increasingly had to endure over at least the past 10 years.
This value chain comprises 29 459 smaller-scale and 1 153 larger-scale sugarcane growers spread across approximately 350 000ha in KwaZulu-Natal and Mpumalanga. They collectively produce almost 17 million tonnes of sugarcane annually, which is delivered for crushing to 12 sugar mills owned by six milling companies. Three of these mills, namely Felixton, Amatikulu and Maidstone along the KwaZulu-Natal North Coast, are owned by Tongaat Hulett, and can collectively crush approximately 4.8 million tonnes of sugarcane – 28% of South Africa’s total production – annually.
In the 2024-’25 sugarcane milling and sugar marketing season, South Africa’s primary sugarcane value chain generated R24.3 billion in revenue. This income supports 65 000 direct jobs, 270 000 indirect jobs and hundreds of thousands of other livelihoods in predominantly rural areas.
It has been suggested by various interested parties that, given the significant socioeconomic contributions of this value chain to South Africa and the potential for even greater impact if the diversification goals of the Sugarcane Value Chain Master Plan to 2030 (Masterplan) are achieved, one would hope that the powers that be, particularly those in government, consider it “too big to fail”.
Unfortunately, though, sections of the South African government and state have long hindered the country’s sugarcane value chain from taking timely advantage of potentially diversified income opportunities beyond the volatile prices of sugar and molasses.
Unfulfilled Diversification Dreams
In the 2000s and 2010s, the sugarcane value chain was already eager to become involved in cogenerating renewable electricity for South Africa’s ailing national grid and in manufacturing renewable bioethanol for blending with petrol manufactured from non-renewable crude oil.
Brazil’s sugarcane value chain has been cogenerating electricity for the national grid since the 1980s, India and Mauritius since the 1990s, and Thailand since the early 2000s. Brazil has also been producing bioethanol for blending with petrol since the 1930s, and India and Thailand since the early 2000s.
For unknown reasons, sections of the South African government have to date been unwilling or unable to create an enabling policy environment that would encourage the country’s sugarcane value chain to invest the many billions of rands in the infrastructure required to cogenerate electricity and to manufacture bioethanol at large, commercial scales.
According to industry reports, this value chain has, to date, transferred 21% of its formerly white-owned land to black ownership and invested more than R1 billion in transformation initiatives, and it allocates R60 million to R70 million annually as premium price payments to qualifying small-scale sugarcane growers.
Starting in the 2024-’25 sugarcane milling and sugar marketing season, there was a sudden surge in South Africa’s imports of cheap sugar produced by countries whose sugarcane value chains are heavily subsidised by their respective governments. The approximately 100 000 tonnes of this sugar – 400% more than during the 2023-’24 season – resulted in an almost equivalent volume of South African sugar, which receives no government subsidies, having to be displaced onto the world sugar market, where prices are, by and large, well below the cost of production. These imports lost the South African sugarcane value chain approximately R600 million in potential income.
African Farming has previously reported that this surge in dumped sugar from outside the Southern African Customs Union (SACU) prompted the South African Sugar Association (SASA) to submit an application to the International Trade Administration Commission of South Africa (ITAC) in October 2024. SASA requested ITAC to urgently increase the US$680 per tonne dollar-based reference price (DBRP) that was first set in 2018 to US$905/tonne. The DBRP is intended as a price mechanism that triggers deterrent trade protection tariffs on subsidised foreign sugar otherwise intended for dumping on the South African market.
While ITAC was subsequently reportedly assessing and deliberating on SASA’s application, in the first nine months (1 April to 31 December) of the 2025-’26 season, a further approximately 163 000 tonnes of cheap, subsidised sugar flooded into South Africa from outside SACU. As a result, displaced South African sugar has reportedly cost the local sugar industry about R1.3 billion in just this nine-month period.
Estimates are that by the end of the current season, namely 31 March, as much as 200 000 tonnes of sugar from outside SACU may have been dumped in South Africa. This surge has been described by industry commentators as “unprecedented” and “record-breaking”.
Sentiments Not Shared
Meanwhile, approximately 12 months after SASA’s application to ITAC for the DBRP to be increased, the Beverage Association of South Africa (BevSA), representing the interests of the non-alcoholic beverage industry, submitted an application to ITAC for the DBRP to be lowered to between US$552/tonne and US$650/tonne. The beverage industry is the single largest consumer of sugar in the country.
ITAC states that because of BevSA’s subsequent application, which is contrary to SASA’s application, ITAC has invited comments on these applications from all interested and affected parties. The window for these comments is from 22 January up to and including 5 March. Thereafter, and in conjunction with SASA’s and BevSA’s applications, ITAC will also assess and deliberate on these comments before coming to a final decision on what the DBRP should be. ITAC has not indicated when this decision can be expected. In the meantime, the DBRP will remain at US$680/tonne.
Sifiso Mhlaba, executive director of SASA, says sugarcane growers and millers need one another, are partners and must continue being resilient in the headwinds threatening to derail the progress with, and goals of, the “all-important” masterplan.
“We’re working with the government and with downstream partners to have these headwinds addressed. It’s important that we see some movement from them now.
“We’re not exaggerating when we say that jobs have been lost and that they may continue being lost. While we are a resilient industry, there is a breaking point.”
According to reporting by Willem Phungula of IOL, Thamsanqa Ntuli, the premier of KwaZulu-Natal, told media during a Cabinet Lekgotla in Durban on Thursday, that the Cabinet and other stakeholders are to discuss plans to help hopefully save Tongaat Hulett from potential liquidation.
Ntuli reportedly said both the KwaZulu-Natal Cabinet and national government are concerned about Tongaat Hulett’s current situation and that both sections of government are seeking solutions.
Also read:
Sugar industry faces devastating crisis: Tongaat Hulett heads for liquidation as Vision Deal collapses
ITAC to investigate dissent on tariff on imported sugar
Sugarcane growers unite against ‘outdated’ tariff protection mechanism
