Urgent call for intervention as South Africa’s sugar industry faces crisis

As South Africa’s sugar industry teeters on the brink of collapse, SA Canegrowers has formally reached out to key governmental figures, including President Cyril Ramaphosa and multiple ministers, urging immediate, co-ordinated intervention to safeguard this vital economic sector. Representing approximately 27,000 small-scale growers and 1,100 large-scale growers, SA Canegrowers has highlighted the incipient threats to the very fabric of the industry, with the impending liquidation of Tongaat Hulett exacerbating an already fragile situation.

In a letter appealing for urgent assistance, SA Canegrowers expressed appreciation for Minister John Steenhuisen's recent engagements with the industry, yet underscored the alarming realities faced by growers amid a dire lack of viable solutions. With the hearing for Tongaat Hulett’s provisional liquidation scheduled for February 27, the stakes could not be higher.

The importance of Tongaat Hulett extends far beyond the survival of a singular entity; it is critical to the operational infrastructure that supports the livelihood of 18,000 growers in South Africa. These growers depend entirely on Tongaat Hulett for milling services, with no economically feasible alternatives available should operations fail. The ramifications of such a collapse are staggering, with an estimated 40,000 workers facing job losses and surrounding rural communities plunging into jeopardy.

Additionally, without Tongaat Hulett’s financial contributions, the existing revenue-sharing agreement between millers and growers would sharply unravel, placing financial strain on all remaining entities within the supply chain. The industry could see an influx of sudden financial burdens as Tongaat Hulett ceases its levy payments, further pushing growers toward economic instability.

Moreover, the situation is compounded by external factors, including a significant rise in sugar imports and the ongoing impact of the Health Promotion Levy — a fiscal policy that has already decimated 16,000 jobs and eroded R2 billion from the industry in 2018 alone. This complex web of challenges could ultimately deepen South Africa’s reliance on volatile international sugar markets, exposing the nation to unpredictable inflationary risks.

Higgins Mdluli, chairman of SA Canegrowers, articulated the urgency of the matter succinctly: "The cost of stabilising and preserving these operations is materially lower than the long-term social, fiscal and industrial cost of rebuilding a collapsed value chain — if rebuilding proves possible at all.”

SA Canegrowers is advocating for a series of urgent government measures that could mitigate disaster:

• The Department of Trade, Industry and Competition (DTIC) and the International Trade Administration Commission (ITAC) should amend the sugar import dollar-based reference price to align with global economic conditions.
• DTIC and the Industrial Development Corporation (IDC) must ensure the operational continuity of Tongaat Hulett’s mills and refinery.
• The National Treasury should consider scrapping the Health Promotion Levy.
• A recommitment to the Sugarcane Value Chain Master Plan by encouraging local procurement and facilitating projects focusing on green industrialisation, such as sustainable aviation fuels derived from sugarcane ethanol.

With the fate of thousands hanging in the balance, SA Canegrowers implores the South African government to act swiftly and cohesively. The call for intervention is not just about saving a company; it is about preserving livelihoods and ensuring economic stability in a sector that serves as a backbone for rural communities across KwaZulu-Natal and Mpumalanga.

IOS