The government has published new guidelines to boost the struggling sugar industry, including measures to ensure it is designated a priority supplier in SA.
The local sugar industry generates an income of about R14bn a year and is responsible for at least 350,000 jobs. However, it has been on the brink of collapse in recent times due to several headwinds, including a drop in sales volumes, partly due to the sugar tax, falling prices and stiff competition from cheap imports mainly from Brazil.
On Tuesday, trade & industry minister Ebrahim Patel published a proposed sugar master plan in the government gazette that requires a set of collaborative actions by stakeholders in the industry. The plan will require an appropriate exemption from certain provisions of the Competition Act, given that collaboration between competitors is not ordinarily allowed in terms of the Act, Patel said.
During a parliamentary question-and-answer session on Tuesday, Patel said the industry master plan will give effect to some of the proposed measures to stabilise the sector, including prioritising it in terms of local procurement.
These changes represent a significant transformation moment in the institutional arrangements in the sector, with the black, small-scale farmer organisation now fully incorporated in the South African Sugar Association, which represents the interests of the industry, Patel said.
Patel said the government and key industry stakeholders, including local food and beverage producers, have agreed to prioritise local sugar players, which has been formalised in the gazette.
“We sat down with key role players and bigger users of sugar, such as beverage makers, and we have an in-principle agreement for them to buy more local sugar, as well as give an opportunity for the deeper restructuring of the sector,” Patel said.
According to the gazette, during phase 1 of the master plan, which will run for three years, industrial users and retailers of sugar have committed to minimum levels of SA-grown and produced sugar, equal to no less than 80% of need, increasing to 95% by the third year. To support this undertaking, sugar producers have equally committed to price restraint during this period.
Over the three-year phase 1 period, the sugar industry will commence a stabilisation and restructuring plan that will include, among other things, development of diversified revenue sources for the industry, small-scale grower retention, support and transformation.
Generally, the sugar industry master plan focuses on growing and transforming the sector.
“We have looked at the opportunities and other uses for sugar, such as biofuels and bio-plastics. We want to encourage greater industrial diversification on sugar farms, such as planting of nuts and [creating] bio-oils,” Patel told MPs.
Patel said the crises in the sector started before Covid-19. “There is no question that if we don’t address the crises, they will affect the small players, many of which are black.”
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