17 August 2020
As SA starts to focus on recovering from the Covid-19 pandemic, it is critical that agricultural sectors are supported in their efforts to ensure food security and provide critical rural jobs during these unprecedented times.
Over the past year sugar industry stakeholders, the government and social partners have participated in an extensive engagement and consultation process to devise a sugar industry master plan to respond to the many threats facing the industry and put the sector back on the path to growth.
It is crucial that this groundbreaking work is not undone by the pandemic, particularly for the 18,770 emerging small-scale growers, most of whom are black, as well as the 1-million households whose livelihoods depend on the sugar industry.
The future of the industry has been in question in recent years due to a confluence of simultaneous challenges. Plunging world sugar prices, weak protection against cheap imports and a big drop in local demand for sugar due to the introduction of the sugar tax (also known as the health promotion levy) in 2018 have all taken their toll. The sugar tax has cost the industry R1.5bn, with 9,000 jobs being lost in the cane-growing sector alone.
SA Canegrowers has been a consistent and constructive participant in the development of phase one of the master plan, which will see the government, the sugar industry, manufacturers, retailers and labour unions focus on seven short-term action commitments over the next three years. These are increasing demand in the local market by committing manufacturers to prioritise locally grown and manufactured sugar in their product ranges; industry price restraint; improved import protection; SA Customs Union trade harmonisation; the development of a differential pricing system for small-scale growers and increasing transformation in all sectors of the industry; production diversification support; and the potential restructuring of the industry.
We welcome the fact that one of the main strategic objectives of the master plan is ensuring that the foundational role of small-scale growers in the sugar cane value chain is safeguarded and expanded and that the inclusion of this sector is guaranteed in a diversified sugar industry in the future. More than half of our 20,217 members are emerging small-scale black farmers, and we have continually prioritised the provision of programmes that focus on supporting and developing these growers.
In this regard R766m has been allocated to small-scale grower development projects since 2000 through the sugar industry’s Grower Development Account (GDA), banking (Umthombo Agricultural Fund) and Supplementary Payment Fund (SPF). SA Canegrowers, through its members alone, has contributed R493m, more than two-thirds of this total investment. Over and above this, all growers have also contributed to a Sugar Industry Transformation Fund, bringing their total commitment to R732m. The industry investment will be augmented by another R1bn over the five-year period 2019/2020 to 2023/2024.
We look forward to working with the national government and our partners within the industry to build on these programmes and come up with a comprehensive joint plan of action to further support small-scale growers. This will include a proposal on a preferential pricing and support package that is linked to the value of products sold and supports the financial sustainability of small-scale growers.
While it is unfortunate that the Covid-19 pandemic has delayed the finalisation and implementation of the master plan, we welcome trade, industry & competition minister Ebrahim Patel’s recent designation of the industry in terms of the Competition Act for exemption. This will allow industry stakeholders to collaborate on the implementation of the master plan.
It is also clear that the pandemic has had a severe impact on our already weakened economic landscape and could potentially threaten the ability of some stakeholders to meet their commitments in terms of the master plan. SA Canegrowers recognises its commitments under phase one of the master plan yet remains fully cognisant that it is a “package deal” with reciprocal commitments from all social compact participants to enable the master plan’s objectives to be realised.
We now look ahead to our participation in the joint task teams directly linked to the action commitments in the master plan, and which will also focus on delivering the longer-term diversification plan for the industry.
Importantly, the master plan also envisages a task team being established to focus on the health promotion levy, including an investigation into the socioeconomic impact of the tax to date. We maintain our position that the only way to ensure the long-term sustainability of the industry and protect the 1-million livelihoods it supports is for the sugar tax to be eradicated.
During a recent meeting of the parliamentary portfolio committee on trade & industry, Patel, when providing an update on the sugar and steel industry master plans, made the important point that a master plan is only as good as our ability to implement, and implementation is much tougher than coming up with the plans themselves.
SA Canegrowers remains committed to working with the government and other industry stakeholders to ensure the Covid-19 pandemic does not undo the progress achieved over the past year. We look forward to continuing to play our part in creating a more diversified, sustainable industry that ensures the meaningful and lasting participation of commercial and small growers in the sector.