SA Canegrowers looks to new government for rescue plan

14 Jun 2019

SA Canegrowers looks to new government for rescue plan
Politics Web, 12 June 2019
by Kathy Hurly

Newly elected SA Canegrowers Chairman, Rex Talmage has welcomed the appointment of new government ministers to the critical departments of Trade and Industry and Agriculture and Rural Development saying the change in leadership offered the hope of a rescue plan for an "industry on its knees". Talmage was speaking at the SA Canegrowers 92nd Annual General Meeting held at the industry headquarters today. In the year under review, demand for refined sugar in the Southern African Customs Union countries was at its lowest in 35 seasons due mainly to the introduction of the Health Promotion levy (HPL) or sugar tax on soft drinks by the South African government in 2018. Industry experts estimate that over 400 000 tons were displaced as a direct result of the levy over the 2018/19 season resulting in at least 600 000 tons being exported at record low prices on an over-supplied world market.

The quality of the South African crop during the 2018/19 season was the third highest in 19 seasons while the area harvested decreased from 252 049ha to 247 385ha. Despite intense lobbying with the Department of Trade and Industry and the International Trade Administration Commission in 2018 for an increase in the Dollar-Based Reference Price (DBRP) import tariff from 6 to 6 per ton of sugar, the industry was granted a tariff of just 0 per ton. The new tariff has proven ineffective in stemming the tide of cheap imported sugar into the country.

The year under review also saw a deluge of sugar dumped on the South African market from neighbouring Eswatini. Eswatini is expected to produce about 743 000 tons of sugar in the 2019/20 season of which most will make its way onto the South African market free of any import tariff in line with the free trade agreements in the Southern African Customs Union (SACU) region. Eswatini does not impose an HPL on soft drinks as is the case in South Africa. The final Recoverable Value (RV) price per ton at the close of the 2018/19 season was R3 574.41 per ton, down from R4 187.11 a ton in the 2017/18 season resulting in the growers’ net share of the industry proceeds plummeting from R9 142 billion in the 2017/18 season to R8 594 billion in the 2018/19 season.

While commercial growers have been hard hit, the worst affected are the over 20 000 small-scale growers who rely solely on the crop for their livelihoods. While SA Canegrowers began a process of talks with the Department of Trade & Industry last year on the sugar crisis which included the threat to the over 10 000 people employed in the sector, Talmage said he was looking forward to the development of a rescue plan which included diversification of downstream production opportunities. He said the recent appointment of Minister Ebrahim Patel as head of the Department of Trade and Industry who brought extensive experience from his previous portfolios - which included economic development – offered hope. “South Africa’s sugar industry is on its knees, but we are confident that Minister Patel will hit the ground running,” said Talmage.

“Our aim is to develop a sustainable rescue plan and we are looking forward to working with the Minister to ensure there is a future for our sector based on sustainable diversification into renewable energy and other opportunities,” he said. On the appointment of Thoko Didiza as Minister of Agriculture following the provincial and national elections last month, Talmage said: “Minister Didiza is an experienced hand whose calm and wise demeanour will promote mutual trust and respect among all the parties interested in moving the agriculture sector forward.” He said SA Canegrowers provided support for over 323 land reform growers and, as a whole, the South African sugar sector had already redistributed 29 896ha and 46 896ha had been restituted in line with the government's land ownership transformation targets in agriculture.

“Minister Didiza’s appointment is an opportunity for us to build on our proud transformation record. We also believe she will bring clarity to the country's proposed land expropriation without compensation legislation,” he said. Finally, Talmage congratulated Dipuo Ntuli and Andrew Russell on their election to the two Vice Chairperson positions, and called on the newly-elected Board to join him in the fight to save the sugar industry. “We are proud of our 93-year record of promoting and protecting the interests of our members. But we have never faced a crisis quite like this. The time has come to ramp up our efforts to rescue the sugar industry. We dare not fail,” he said.