The South African Canegrowers Association (SA Canegrowers) is directly calling on President Cyril Ramaphosa to help save the country’s approximately 25 000 sugarcane growers and six sugar milling companies from a very real risk of collapse of their industry.
By Lloyd Phillips, senior journalist at African Farming and Landbouweekblad
The latest major challenge to the sugarcane industry’s efforts to become more financially sustainable and diversify is the looming possibility that sugar milling giant Tongaat Hulett could go into provisional liquidation.
SA Canegrowers says it has formally written to Ramaphosa, the Minister of Finance, the Minister of Trade, Industry and Competition, the Minister of Agriculture and the Minister of Public Works and Infrastructure to call “for urgent, coordinated intervention to help stabilise the South African sugar industry”.
The association says considering the urgency and time-sensitive nature of the crisis in the sugarcane value chain, it appreciates Minister of Agriculture John Steenhuisen’s recent engagement with the sugar industry. However, there are still no real solutions to Tongaat Hulett’s dire situation, the ongoing dumping of hundreds of thousands of tonnes of sugar onto the South African market, and the continued and significant financial impact of the almost eight-year-old health promotion levy (sugar tax).
Also watch: Sugar industry in crisis – KZN’s premier pushing to save Tongaat Hulett
Saving Tongaat Hulett is the Less Costly Option
Higgins Mdluli, chairperson of SA Canegrowers, points out that the immediate priority must be preventing Tongaat Hulett’s potential collapse.
“The costs of stabilising and preserving [Tongaat Hulett’s] operations is materially lower than the long-term social, fiscal and industrial cost of rebuilding a collapsed [sugarcane] value chain, if rebuilding proves possible at all.
“For this reason, Tongaat Hulett’s operational continuity has become a matter of systemic economic stability. Urgent, coordinated government intervention is required to prevent a failure whose consequences would extend far beyond a single company. We call on the president to coordinate a response to save rural jobs and livelihoods.”
SA Canegrowers’ more specific calls to Ramaphosa and other leaders in government are:
- that the Department of Trade, Industry and Competition (DTIC) and the Industrial Development Corporation (IDC) do everything within their power to ensure that Tongaat Hulett’s mills and refinery remain operational;
- that the DTIC and the International Trade Administration Commission of South Africa (ITAC) review and amend the dollar-based reference price for tariffs on sugar imports, to bring it in line with global economic realities;
- that the National Treasury scraps the health promotion levy that is “a tax that has cost the industry 16 000 jobs and R2 billion in revenue in 2018 alone, with no direct evidence of health impacts in the eight years since”; and
- a recommitment to achieving the outcomes of the Sugarcane Value Chain Master Plan to 2030, including a commitment to procure locally produced sugar, harmonising sugar supply with the Southern African Development Community (SADC) and a commitment to policies that would enable green industrialisation projects such as sustainable aviation fuels based on ethanol manufactured from sugarcane.
Also read:
Steenhuisen ‘seriously concerned’ about provisional liquidation application for Tongaat Hulett
Sugar industry faces devastating crisis: Tongaat Hulett heads for liquidation as Vision Deal collapses
