More than 1-million livelihoods are supported by the sugar industry, which helps keep the rural economies of Mpumalanga and KwaZulu-Natal stable and financially viable. This means it is a sector that is essential for the new ministers heading the departments of trade, industry & competition, land reform & rural development, and agriculture to pay attention to.
However, while vital to so many, the sugar industry has faced many challenges, from floods, droughts, cheap sugar imports and the Health Promotion Levy — the so-called “sugar tax” instituted by government in 2018, to the detriment of tens of thousands of farmers.
Because of such threats the industry has been actively looking for ways to ensure the long-term sustainability of cane growers, including investigating new markets for products derived from sugar cane and turning sugar into products such as sustainable aviation fuel.
The sugar industry, including growers, millers and retailers, worked with the previous government under a social compact process called the Sugarcane Value Chain Master Plan that aimed to address challenges facing the industry.
It hopes to work with the new government ministers too. Even government previously admitted there are existential challenges that threaten the survival of the sugar industry if there is no plan to save it. The master plan states that “the industry is now in a vicious downward spiral, which if left unchecked will potentially result in the collapse of the industry”.
Instead of allowing the sector to weaken, the sugar industry has been working to find a future use for sugar cane. One of the promising discussions that stemmed from the master plan was how to use sugar to produce environmentally friendly sustainable aviation fuels. Airlines in Japan have expressed interest in these and the industry is trying to understand best how the sector could be developed.
Tax threat
With investment and commitment from industry players aviation fuels could boost continued demand for the sugar cane SA produces even if demand for sugar wanes.
But building alternative industries for sugar will take time and ministers need to be cognisant that the sugar industry is facing many more immediate threats. The proposal by finance minister Enoch Godongwana to increase the sugar tax in the February 2025 budget is one such threat.
A study by agricultural consultancy the Bureau for Food & Agricultural Policy shows that any increases would suppress the demand for sugar, decrease land under sugar cane cultivation, and accelerate job losses in rural KwaZulu-Natal and Mpumalanga.
Health activists can be expected to lobby health minister Aaron Motsoaledi for an increased tax given that the sugar tax was first instituted under his watch in 2018, when he was appointed health minister the first time.
However, SA Canegrowers believes that the government should in fact scrap it, since no study has been publicly shared that shows the tax reduces obesity or improves anyone’s health.
Of course, where the tax pushed small-scale growers out of business it would have damaged their health, as reduced income is correlated with poorer health outcomes.
Destabilising whole provinces with a tax that has no proven positive health effects will in fact only worsen health outcomes as increased poverty demonstrably leads to poorer health.
Stabilise sector
On top of the sugar tax cane growers face other challenges. In the past two years two of the country’s 12 mills that crush and process cane have been placed in business rescue, and remain in the process even as new owners take over. Due to the expense of transporting cane, farms have to be close to mills, and if they shut, farms and areas around them will be left destitute.
The SA sugar industry, including commercial growers & processors of sugar cane have not been resting on their laurels. They have done everything they can to help stabilise the sector and rural economies by paying levies that ensure small-scale growers earn more per ton for their cane than large growers. In addition, all members contributed R232m in transformation funding in the 2023/24 financial year, which will rise to almost R239m in 2024/25.
This shows the sector itself has done what it can to support the smallest and most disadvantaged growers, making sure that sugar farming is an equitable and inclusive industry even as it plans for a sustainable future.
It is hoped that the new ministers will engage with this vital sector, study the impact of the sugar tax and protect it from endless crisis, while rejecting ill-advised policy. SA Canegrowers would welcome plans to scrap the sugar tax and find new markets for sugar cane. The livelihoods of the rural people in two of SA’s largest provinces depend on this.
• Mdluli chairs SA Canegrowers.
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