The SA sugar industry is a significant contributor to the country's economy, and employs thousands of people. It has however been battered by many challenges in recent years — including drought, sugar tax, unrest, floods, financial crises, declining production, job losses, and aging infrastructure.
Business Day caught up with Higgins Mdluli, the newly elected chair of SA Canegrowers — which represents 21,000 small-scale growers and large commercial outfits.
Can you walk us through the current state of the sugar industry?
The industry has been in a precarious position with three mills [that crush sugar cane] in business rescue. However, things are looking a bit more positive, with us being spared the disastrous effects of the drought in parts of SA earlier this year.
The world market is experiencing relatively stable sugar prices, driven largely by the drier weather in other sugar-producing countries, including Thailand and India.
Our industry is extremely labour-intensive, especially in the rural areas of KwaZulu-Natal and Mpumalanga, where there are high poverty rates. In many instances, no other economic activities exist.
The industry consists of 21,000 small-scale growers, as well as about 1,000 large-scale commercial farmers. Growers are a significant employer in rural areas and in many parts of the country the only major employer.
The entire sugar industry sustains the livelihoods of one-million people.
What are some of the biggest challenges facing the industry?
We have been under severe pressure since the implementation of the sugar tax.
Other challenges faced include the increasing costs of inputs such as fertilizer, fuel, chemicals, and electricity, as well as load-shedding. Power cuts are a challenge, especially in areas where we use power to irrigate cane.
In Mpumalanga, we need electricity for irrigation but because of load-shedding, we have not been able to irrigate on schedule. As a result, our yields have dropped over the past two years.
Tell us more about how the sugar tax affected the industry.
As farmers, we are always planning for different scenarios such as drought. But the sugar tax was unexpected. It created lower demand for sugar from beverage manufacturers, which meant a drop in farmers’ income, and job losses. Small-scale growers were severely affected.
If you lose some of the income you earn on a small farm, there is an increasing likelihood that farming will not be viable.
According to the government the sugar tax was introduced for health reasons. In your view, how can the risks associated with sugar be mitigated in a way that will not harm the sugar-producing parties?
Whatever the reason for the tax, it came with a lot of unintended and dire consequences. People who lose their income don’t just lose access to food, but the ability to support others. People don’t just buy goods with the money they earn from sugar cane. They pay school fees.
Sugar cane paid for my education.
The sugar tax has created more problems than it was meant to solve.
How have the business rescue processes of Tongaat Hulett and Gledhow mills affected the industry?
Local economies will be severely affected if those mills are not saved. Sugar cane is a high-bulk, low-value product, so if the mills are too far away from farms, it is not viable to transport cane to them. If the mills fail, the communities depending on them will fail. Farms around the mill will have nowhere for their sugarcane to be processed.
More people will abandon farming and more jobs will be lost. I hope the business rescue processes at both mills is finalised successfully.
What can be done to help?
We want policymakers to consider scrapping the sugar tax because it has also resulted in lower demand for sugar locally.
If the tax continues at this level, or even worse is increased in 2025 as suggested by the finance minister, it will threaten the sustainability of the whole industry.
What is your outlook on the industry?
To address challenges facing the industry, a social compact, referred to as the Master Plan, was agreed upon between the department of trade, industry and competition, the department of agriculture, land reform and rural development, as well as the cane growers, millers and retailers in November 2020. But the agreement ended in April 2023.
We need a new commitment from the incoming government, under Master Plan Phase Two, to keep the industry and the million livelihoods it supports viable.
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