2 July 2020
A sugar master-plan which places black farmers at the head table of the sugar industry and promises a future with more diversification, has been announced by government.
In the light of a crisis brought about by low sugar prices, disruptive imports and a sugar tax which has reduced the content of sugar in foodstuffs, the plan is aimed at saving the tens of thousands of jobs dependent on the industry.
Annual sugar production in South Africa has declined by nearly 25%, from 2.75 million to 2.1 million tons per annum, over the past 20 years.
The number of sugarcane farmers has declined by 60% during this period, and sugar industry related jobs are estimated to have reduced by 45%.
Declining profitability in the local industry has accelerated as a result of a “perfect storm” of developments in global and local markets that have now reached a critical point.
Trade, Industry and Competition minister Ebrahim Patel has gazetted amendments to the Sugar Industry Agreement and South African Sugar Association Constitution which, among other things, makes the black SA Farmers’ Development Association (Safda) a full member of the board of SASA alongside the established growers and millers.
The masterplan’s vision statement sets a long-term direction that has the potential to significantly diversify the value chain based on the production of raw and refined sugar into a range of products, including bio-fuels, bio-ethanol (alcohol), bio-plastics and electricity for the national grid.
At present the industry is concentrated in KwaZulu-Natal and southern Mpumalanga and consists of about 20 200 growers.
These are 19 300 black growers producing 24% of the 19 million tons of cane produced each year, 850 white growers producing 69% of the 19 million tons, and 50 estates owned by the milers, producing 7% of the total.
There are 14 sugar crushing mills, three independently owned and the rest by Tongaat-Hulett, Illovo and RCL Sugar and Foods.
The industry employs about 65 000 people directly and a further 270 000 indirect jobs and probably provides an income for about 1million people.
Announcing Safda’s membership of SASA at a press conference at SASA headquarters in Mt Edgecombe last week, Safda chairman Dr Siyabonga Madlala welcomed the development.
“This will mean that we can participate freely in industry decisions and represent the voice of black and small-scale farmers in matters which affect our future.”
Dr Madlala also announced a government grant of R52 million to black growers, which will be distributed by addition to cane payments at the mills at R17.20 per ton. This will bring to R200 million a number of similar interventions to paid to emerging farmers in recent years. Madlala said the industry should be looking to emulate the actions of the world’s largest sugar producers, India and Brazil, which had diversified to producing bio-fuels, animal feeds, alcohol and electricity production.
Industry experts, however, have warned of strong headwinds against bio-fuel production in South Africa from the established oil, fuel industries and motor industries.
They also warned that much work was needed, particularly at national government level, to allow alternative producers of electricity to operate.
Immediate plans include the increase of local sugar production by 300 000 tons over three years and to block foreign imports through protective tariffs.
Government wants to see increased transfer of ownership of growing milling and downstream production into the hands of emerging growers.
Source: North Coast Courier