Farming: Sugar tax, drought bear bitter fruit

22 Mar 2019

The Mercury, 01 March 2019
Network reporter

DURBAN - Severe drought in KwaZulu-Natal, plunging prices and the sugar tax has left sugar cane growers in crisis. This is according to the SA Cane Growers Association, which was expected to hold an urgent meeting with the Trade and Industry Portfolio Committee yesterday to discuss its concerns. The meeting was called after the association sent a letter to committee chairperson Joan Fubbes earlier this month in which it outlined the dire situation that cane growers, including small-scale growers, land reform farmers and farmworkers, find themselves in.

Graeme Stainbank, chairperson of SA Cane Growers Association, said the crisis affected every area of the sugar industry and presented a clear threat to 10 000 jobs in the cane-growing sector alone. Stainbank said there were several reasons for the dire situation, including a three-year drought which led to failed crops and a R2 billion loss to cane growers in just one season. Another factor was the drastic drop in sugar prices due to approximately 500 000 tons of sugar being imported into South Africa in 2018. “This has led to a drop in the demand for South African sugar, which is some of the highest quality in the world. Locally produced sugar was dumped on to the world market at much lower prices and cane growers and other industry members incurred immense losses,” Stainbank said.

He added that there was also little protection against imports and last year, the industry had lobbied the government for months to provide tariff protection against the dumping of cheap imports - mainly from Brazil. The industry asked for an increase from 6 to 6 in the dollar-based reference price (DBRP), which is an import tariff levied on products that come into South Africa. After lengthy deliberations, the International Trade Administration Commission (Itac) finally agreed to raise the DBRP to 0, but it was a far cry from the 6 the industry had applied for.

Additionally the imposition of the sugar tax has led to a significant drop in sales, he said. The loss in revenue amounted to R1.3bn so far in the current 2018/19 season (which runs from April 1 to March 31).  “This revenue loss will no doubt translate into severe job losses which could put up to 10 000 jobs at risk - in the cane-growing sector alone. This does not even include further job losses in the sugar milling and beverage industries.” Stainbank said the association wanted the government to place a temporary moratorium on the sugar tax until its full impact on the economy and jobs has been measured. It also wanted the 6 in DBRP tariff protection it asked for to shield it from cheap imports from countries that are heavily subsidised.

Stainbank said the association wanted government to invest more in industry-led innovations, such as ethanol production and cane-based packaging to support the industry’s efforts to find alternative markets for sugar.
The DA’s chief whip, John Steenhuisen, and MP Dean Macpherson met sugar cane farmers and stakeholders on Monday to discuss the issues affecting the industry.

Steenhuisen said he had submitted a motion to the Speaker of Parliament, requesting an urgent debate on the matter. “It is critical that the Speaker of the National Assembly grants this request so Parliament is able to find solutions to avoid a jobs bloodbath in the sugar sector.”