South African sugar producer associations are seeking government intervention as part of a larger strategy to develop a sustainable rescue plan for an industry in crisis. “We dare not fail,” said Rex Talmage, South African Cane Growers’ Association chairman, pointing out that the interventions and government promises made last year had simply not been enough to stem the “crisis”. This crisis had been further compounded by the introduction of the sugar tax (or Health Promotion Levy) and an influx of duty-free imports from Swaziland, he added. “Industry experts estimate that over 400 000 tons were displaced as a direct result of the Health Promotion Levy (HPL) over the 2018/19 season resulting in at least 600 000 tons being exported at record low prices to an oversupplied world market,” said Talmage. The 600 000 tons had been exported at a R5 000 a ton loss, added managing director of Illovo Sugar, Mamongae Mahlare. She said that the real impact of the HPL on sugary drinks was only just becoming evident. “It has now become clear that the HPL is no small thing,” she said, and further pressure has come from South Africa’s landlocked neighbour, Eswatini (formerly Swaziland), which is expected to produce about 743 000 tons of sugar this season. “When Eswatini lost its preferential access to the European Union, as any business would, it started looking around for profitable markets – and South Africa was the natural target” said Mahlare. Eswatini does not impose an HPL on soft drinks as is the case in South Africa, nor does it have an import tariff – and according to Mahlare, the price per ton it receives in SA is the highest compared with surplus export market prices. Agreements reached at the National Economic Development and Labour Council (Nedlac) last year to mitigate the impact of the levy have also never materialised. Despite “staggering under this tsunami” Mahlare is confident that “there are glimmers of hope, which could see the start of a turnaround within 18 months”. Following discussions with the new ministers and other key government stakeholders – including Minister of Trade and Industry, Ebrahim Patel – both Mahlare and Talmage are hopeful the sector will start seeing fasterpaced policy development and support from the government. “I am really comfortable that we have been engaging with the right people who can help us to precipitate even higher levels of engagement with senior leaders within the next 18 months,” Mahlare said. According to the South African Sugar Association (SASA), the R14-billion South African sugar industry ranks in the top 15 out of approximately 120 sugar-producing countries worldwide.
There are glimmers of hope, which could see the start of a turnaround within 18 months. – Jacques Viljoen
