“SUGAR TAX” PUTTING SMALL-SCALE GROWERS OUT OF BUSINESS


Ronda Naidu


The Health Promotion Levy (HPL) is wreaking havoc in the sugar industry.


This is according to the South African Farmers Development Association (SAFDA). When this levy was introduced, SAFDA was still fighting for its recognition in the industry and did not get an opportunity to engage the facts and highlight its impact on the sugar industry and black small-scale and land reform farmers. 



When SAFDA joined the industry, it immediately became involved in the fight against sugar imports that was eroding revenue and threatening farmer livelihoods. While SAFDA was focusing on transformation of the sugar industry, the unintended consequences of the HPL began to have an effect, resulting in revenue loss, a decrease in local market demand for sugar and consequent job losses.


In the past season alone sugar sales have dropped substantially, largely due to reformulation by sugary beverages manufacturers, resulting in loss of industry revenue – to the detriment of rural livelihoods and farm level jobs. Land reform and small-scale farmers have been operating at a loss. At the start of the new season, in April 2019, land reform and small-scale farmers will be starting with negative balances. Many small-scale farmers will not be able to afford to buy the necessary inputs for their farming operations and will likely abandon sugarcane farming. 


In addition to the mitigation measures discussed during the Nedlac process, SAFDA advocates for diversification to ethanol production. SAFDA also believes that the following support for land reform and small-scale growers is a necessity:


  • Development of a finance facility for cane development and ratoon management for land reform, communal, cooperative and small scale growers;
  • Allocation of funding to support loss of income, fire and drought insurance facility for small scale growers; and
  • Subsidisation of electricity and water costs on land reform and small-scale grower irrigation projects.



Ronda Naidu

Ronda Naidu is Communications Manager at South African Farmers Development Association




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