Nearly 15,000 permanent and seasonal farm workers employed by sugar cane growers are at risk of losing their jobs, the SA Canegrowers Association said after beleaguered sugar company Tongaat Hulett missed a payment due on Monday.
The figure excludes contractors, haulier companies, input suppliers, mill workers and other service providers throughout the value chain.
Tongaat Hulett, SA’s biggest sugar producer and land developer whose future is now in the hands of business rescue practitioners, missed a R400m payment for sugar cane deliveries.
The nonpayment threatens the livelihoods of thousands of sugar cane growers and workers delivering cane to a number of Tongaat Hulett mills in KwaZulu-Natal, indicating the extent to which the liquidity crunch gripping the company is beginning to be felt along the value chain.
SA Canegrowers, led by CEO Thomas Funke, is scheduled to meet Tongaat’s business rescue practitioners on Wednesday for an update on when the payments are due to resume.
Apart from representing sugar farmers, SA Canegrowers is also a broader industry body, and the meeting will also address the longer-term effect of the situation, Funke said.
“Growers are extremely concerned regarding the missed deadline for cane payment, with some having been forced to stop delivering due to the uncertainty of receiving an income. As a result, numerous growers have been forced to close their farms and send their workforce home.”
Its 4,300-strong members delivered almost 600,000 tonnes of sugar cane to Felixton, Amatikulu, and Maidstone mills in September, Funke said.
The number of jobs at risk is likely to increase as uncertainty rises about whether growers who delivered cane in October will be paid on time. An estimated R345m will become due for payment at end-November to cover the deliveries.
Tongaat applied to enter business rescue after its creditors pulled the plug on funding for its SA operations, worsening its liquidity crisis.
Limping along
Its operations in Botswana, Mozambique and Zimbabwe are unaffected by the business rescue, a form of bankruptcy protection designed to stabilise a company and save it from liquidation, while keeping creditors at bay.
Tongaat Hulett has been limping along since 2019 when it disclosed corporate fraud, allegedly committed by the previous management led by former long-time CEO Peter Staude. Staude and other former executives have denied any wrongdoing.
The accounting scandal at the time was a second blow to SA’s corporate landscape after the Steinhoff fraud revealed in December 2017.
Tongaat’s debt pile last stood at R6.8bn, dwarfing its market capitalisation of just R545.8m in July during which time its shares were suspended from the JSE. Before the suspension, the share price traded at R4.04, way off the R173 touched in 2014, indicating the scale of capital destruction that shareholders endured over time.
Tongaat produces more than a quarter of the sugar SA consumes, and its refinery produces 50% of the refined sweetener for the country, which is home to big corporate consumers such as Tiger Brands and Pioneer Foods.
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