Moneyweb reports that the sugar industry has been grappling with the long-term implications of financial distress at two major sugar mills, Tongaat Hulett and Gledhow, and must plan for the potential consequences if their business rescue processes fail. At the annual general meeting of SA Canegrowers held on the North Coast of KwaZulu-Natal this week, it was emphasised that the precarious financial position of these sugar mills underscores how the Health Promotion Levy (sugar tax) undermines the sustainability of the industry, as well as the million jobs and rural livelihoods it supports.
Newly elected SA Canegrowers chair Higgins Mdluli said that with the sugar tax scheduled to rise next year, the organisation will once again urge the government to support the industry to protect the jobs it maintains. In a statement, the organisation noted that the sugar tax was intended to be reviewed under phase one of the Sugarcane Value Chain Masterplan; however, this promise has not been fulfilled, and no meaningful engagement has occurred with the industry to date.
The sugar tax has depressed the market for locally produced sugar and has cost the industry over 16 000 jobs. Studies conducted by the Bureau for Food and Agricultural Policy indicate that the increase in the sugar tax will result in reduced land allocated to sugarcane cultivation and decreased deliveries of sugarcane to mills. The research highlights that the most substantial job cuts will affect small-scale farmers. The organisation has also urged government to accelerate the value chain diversification project in the second phase of the Masterplan, providing support for diversifying into strategic aviation fuels, among other areas.
According to SA Canegrowers, the Masterplan – a collaborative agreement between cane growers, retailers, millers and government – represents the most effective mechanism for addressing the diverse challenges facing the industry in a unified and cooperative approach. “The more we grow and expand, the more we can invest into supporting small-scale growers. To advance transformation, we need to recognise the barriers to sustainability and growth. We need to eliminate the Health Promotion Levy.”
by Terri-Ann Brouwers