The South African Sugar Association (SASA) has presented its case to the Portfolio Committee on Trade and Industry as to why the new $680 reference price is inadequate to cushion the country’s sugar industry against imports from subsidised countries such as Brazil.
“The objective of providing sustainable support to the local industry has not been achieved. The new import duty will be ineffective in protecting the industry over the next three years – a shrinkage of the industry is most likely. There is an urgent need to review the basis on which protection from world sugar imports is afforded to the local industry,” SASA Chairperson, Hans Hackmann, told Members of Parliament (MPs).
Hackmann also called for the scrapping for the Real Effective Exchange Rate (REER) factor, especially in the next three years during which period the efficacy of the new tariff will be monitored and tested. The stated purpose of the REER is to “ensure that windfall profits or unnecessary additional protection to producers due to exchange rate fluctuations do not accrue to producers at the cost of food affordability”.
SASA had applied for an increase in the Dollar Based Reference Price (DBRP) from $566 to $856, which is the cost of production. But ITAC granted the industry a reference price of $680. “The sustainability of the sugar industry remains in the balance,” said Hackmann. In their response, MPs from the African National Congress (ANC) and the Democratic Alliance (DA) appreciated SASA’s presentation on the tariff, especially with regards to unpacking the technical aspect of the reference price in a simplified manner.
DA MP Dean Macpherson said the new tariff was a disaster for the industry. ANC MP Priscilla Mantashe said that she did not want to be or sound like the US President Donald Trump, but she called for the protection of the local industry against imports from subsidised countries. Committee Chairperson Joanmariae Fubbs did not mince her words, stating unambiguously that it was mainly Brazil, which is a member of BRICS, responsible for sugar dumping in South Africa. “I won’t shift from that comment. It is a reality,” she said emphatically.
Hackmann said SASA would continue to engage ITAC and other relevant stakeholders regarding finding an appropriate solution.