The sugar industry needs to change to include the production of biofuels, where sugar is turned into energy used in petrol, power or aviation fuel, as is done in Brazil and Zimbabwe, farmers say, adding that government support is needed for this.
Two KwaZulu-Natal sugar producers, Tongaat Hulett and Gledhow Mill, are both in business rescue, showing the strain the local industry has been under.
Sugar farmers and millers faced floods in 2022, riots and burnt cane in 2021, sugar dumping in 2017 and the sugar tax in 2018, which led to drinks makers reformulating beverages to include less sugar.
Both Tongaat and Gledhow have potential buyers to turn their businesses around, but lenders must still vote to accept any such deals.
Though the producers seem likely to emerge with new owners and finance a few months down the line, the sugar market remains highly fragile, or as trade, industry and competition minister Ebrahim Patel put it in recent court papers, is a “highly distorted market”. Brazil and India subsidise their farmers and that has kept the global sugar price artificially low until recently.
Gledhow and Tongaat have used their business rescue plans to argue that the SA sugar system, to which they pay levies, needs to change and be less regulated.
SA Canegrowers believes it is time to allow alternative products to sugar and molasses into the industry structure. This requires that the industry legislation be amended
— Thomas Funke, SA Canegrowers
The sugar levy is part of a legal agreement and is a redistributive mechanism in a highly regulated industry that ensures all farmers get paid the same price per tonne of sugar, and mills that produce more subsidise the smaller players and those who export at a loss.
Farmers are in favour of the levy as it helps small-scale farmers. Instead of scrapping it, they say legislation needs to be changed to introduce standards and demand for alternate fuel produced from sugar cane.
“SA Canegrowers believes it is time to allow alternative products to sugar and molasses into the industry structure. This requires that the industry legislation be amended,” the organisation’s Thomas Funke said. “The shift from sugar to biofuels has been made successfully in many countries. Brazil is one example. In the 1970s they decided to start their ethanol programme,” he said.
Brazil is the world’s second-largest producer of ethanol fuel and it is used by industry and mixed with petrol to make a more environmentally friendly petrol for cars.
“For years, Brazil enjoyed the support of their government to get the programme off the ground. Today they have one of the most advanced sugar industries in the world,” Funke said. “For SA to achieve similar success we too will need support from the government.”
Growers say a subsidy that would amount to a few cents per litre of petrol would be needed to help them produce ethanol, which can be added to petrol as is done in Zimbabwe. Ultimately, locally-produced ethanol can lower the cost of fuel and its carbon emissions.
“Another opportunity is that of sustainable aviation fuels. If our government would legislate a requirement that every airline flying into SA purchase a certain percentage of sustainable fuel in order to reduce their emissions, this would help to create demand for the product and generate revenue from it,” Funke said.
SA Canegrowers’ research on aviation fuels shows some interesting results, he said, and indicates sugar cane can be a sustainable feedstock for this sector.
“Governments around the world are embracing this new trend and we encourage our leaders to look ahead and do the same. One million livelihoods depend on the survival and success of our sugar industry.”
The SA Sugar Association (SASA), which manages the sector, is reviewing the legislation and the sugar industry agreement signed 23 years ago. It too says the levy system is important to keep smaller farmers paid the same price for cane and allow small players to survive.
SASA chair Fay Mukaddam said regulation and government involvement would be needed if sugar is to be turned into airline fuel.
“For any airlines to take it up it needs to be commercially viable. It’s got to be a certain standard grade of fuel, so that’s also going to go through a whole standardising quality-verification process.”
SASA was undertaking a review of the entire sugar industry ecosystem and legislation, she said.
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