With Tongaat Hulett's future at stake, over 18,000 South African sugarcane growers await a court decision that could threaten their livelihoods.
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The impending KwaZulu-Natal High Court hearing on Tongaat Hulett Limited's possible liquidation could signal a crossroads for nearly two-thirds of South Africa's sugarcane growers. The stakes are exceptionally high, as more than 18,000 growers, predominantly small-scale farmers, rely heavily on Tongaat Hulett's mills to process their sugarcane. An unfunded liquidation would not only jeopardise these operations but also threaten thousands of rural jobs, casting a long shadow over the industry's future.
As the milling season commences in other regions, Tongaat Hulett's suppliers remain in limbo, awaiting news on when the company's mills will reopen. Following the company entering business rescue in October 2022, it has managed to remain operational despite facing significant financial hurdles. Earlier this year, however, the situation took a dramatic turn when the company's business rescue practitioners filed for provisional liquidation after a proposed sale to the Vision consortium collapsed.
The timeline for the future of Tongaat Hulett has led to fierce opposition against the provisional liquidation from various stakeholders. This includes SA Canegrowers, representing almost 30,000 cane growers, the Industrial Development Corporation (IDC), which has provided over R2.3 billion in funding during the business rescue process, and Trade, Industry, and Competition Minister Parks Tau. These parties argue that allowing Tongaat Hulett to collapse would have dire consequences for the entire sugar industry and rural communities, where livelihoods depend on sugar production.
"The liquidation of Tongaat Hulett affects the entire sugar industry, and it is a direct threat to tens of thousands of rural jobs and livelihoods. For SA Canegrowers, safeguarding these communities must come first," stated Higgins Mdluli, chairman of SA Canegrowers. He emphasised that the costs associated with preserving these operations are considerably lower than the potential long-term economic and social repercussions of an operational collapse.
Tongaat Hulett does not just serve as a processing facility; it is a pivotal player in South Africa’s economy and rural stability. Operating three sugar mills, it stands as the only standalone refiner of white sugar in the nation. This white sugar is crucial for various products including beverages, biscuits, and confectionery, playing a significant role in the national sugar value chain that supports over one million livelihoods — ranging from small and large-scale growers to mill workers and transporters.
Should the company enter unfunded liquidation, the impact would ripple through the agricultural sector. Large commercial beverage and snack manufacturers could be forced to rely solely on imported sugar, leaving the local economy vulnerable to volatile global sugar prices, said SA Canegrowers. This scenario presents a severe threat to the sustainability of South Africa's entire sugar industry.
Tongaat Hulett has not yet undergone formal liquidation. Stakeholders, including SA Canegrowers, are currently engaged in critical discussions exploring avenues to avert this possibility. If these discussions collapse and liquidation appears inevitable, SA Canegrowers advocates for a negotiated funded liquidation that would ensure operational continuity of the mills, mitigating the risk of vandalism and further damage to the industry.
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