Trade, Industry and Competition Minister Ebrahim Patel, Minister of Agriculture, Land Reform and Rural Development Thoko Didiza, and industry stakeholders, have signed a ‘Sugar Industry Master Plan’.
Its objective is to protect and deliver thousands of jobs, rural livelihoods and businesses and create diversified revenue streams for sugar producers.
The process was co-chaired by Minister Patel and Minister Didiza.
“As part of the master plan, industrial users and retailers have agreed to minimum offtake of sugar for a period of three years with at least 80% of sugar consumption to come from South African farms and millers during the first year, increasing to 95% by 2023.
“During this period, the sugar industry has agreed to price restraint, and to begin a process of managed restructuring for the industry to help diversify revenue sources,” according to a joint statement released on Monday.
The plan was developed by government and industry stakeholders, including producers.
Minister Didiza said the sugar industry was a critical employer.
“The sector has gone through enormous strain in recent years, including from a flood of imports. Our vision as government is that the industry can grow and that a partnership is needed to unlock the opportunities. Government brought together key stakeholders so that we can focus precisely on that objective,” she said at Monday’s signing.
The master plan for the South African sugarcane value chain follows extensive consultation among sugar industry stakeholders and social partners, particularly small and large cane growers, millers and refiners, retailers and industrial users of sugar and sugar-derived products, as well as workers and government.
“The master plan aims to significantly diversify the value chain based on sugarcane away from one that is today almost solely focused on the production of raw and refined sugar, into one that in future produces a wide range of globally competitive sugarcane-based products," said Patel.
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%.
Phase 1 of the master plan includes a localisation commitment.
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.
The master plan seeks to address these critical challenges and create a diversified and globally competitive, sustainable and transformed sugarcane-based value chain that actively contributes to South Africa’s economic and social development.
In order for the master plan to be implemented, the sugar industry has been granted an exemption from the Competition Act by the Competition Commission.
This follows the gazetting of a designation by Minister Patel in June of the sugar industry for exemption from the act.
The levels of local sugar procurement have already begun to improve since the framework of the master plan was agreed to earlier this year, according to the statement.
In the period from January to September, volumes of imported sugar have declined by 10% compared to 2019, with deep-sea imports (i.e. imports from outside the continent) declining by 20%.