The profitability of the sugar industry is dangling by a thread with more than 16,000 jobs lost in the past seven years as the sector grapples with the long-term implications of the sugar tax.
The tax was introduced in 2018 by the government to curb obesity and the associated risk of diabetes, heart disease and cancer. The tax has reportedly slashed the beverage sector’s use of sugar by a third.
Two key sugar mills, Tongaat Hulett and Gledhow, have been placed in business rescue and cane growers are worried by the precarious financial position of both mills.
“The sugar tax was supposed to be reviewed under phase one of the Sugarcane Value Chain Master Plan, but this promise was not kept and to date no meaningful engagement has been undertaken with the industry,” a statement released by the SA Canegrowers Association said. “The sugar tax has suppressed the market for locally produced sugar and cost the industry more than 16,000 jobs.”
The association, a grouping of cane growers, held its AGM in KwaZulu-Natal this week.
Higgins Mdluli, the newly elected SA Canegrowers chair, said that with the sugar tax due to increase next year, more jobs could be lost. He said the government needs to support the industry to safeguard the jobs.
Mdluli also called for the elimination of the tax, otherwise known as the health promotion levy. He said it hindered transformation and presented a barrier to the sustainability and growth of the industry.
“We need the industry to do more than survive; we need it to thrive. The more we grow and expand, the more we can invest into supporting small-scale growers,” Mdluli added.
SA Canegrowers has also called on the government to fast-track the second phase of the master plan, with support for diversification into strategic aviation fuels, for example.
According to SA Canegrowers, the brunt of the pressure is felt by small-scale local growers who are the first to close up shop as costs inflate. However, the implications also extend to the 1-million South Africans who rely on the industry as millers, large-scale growers and other industry stakeholders struggle with the same issues.
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