Cedric Mboyisa and Judith Wilson

The “patriotic” sugarcane value chain master plan is close to finalisation and looks promising for the sugar industry which currently finds itself in a precarious situation due to serious challenges such as the insufficient tariff, imports displacing the local market (for South African sugar producers) and the disastrous impact of the sugar tax (the Health Promotion Levy – HPL).

"Industry leaders listen attentively to Trade, Industry and Competition Minister Ebrahim Patel (far right with microphone). Seated alongside him facilitating the process is Harald Harvey, Patel’s sectoral adviser.

The South African Sugar Association (SASA) together with leaders from its member organisations (the South African Cane Growers’ Association - SACGA, the South African Farmers Development Association, SAFDA, and the South African Sugar Millers’ Association, SASMA) has been meeting and engaging with Trade, Industry and Competition Minister Ebrahim Patel, and Agriculture, Land Reform and Rural Development Minister Thoko Didiza and other stakeholders on the development of a master plan for the future sustainability of the industry. The process has been facilitated by Patel’s sectoral adviser, Harald Harvey.

A biofuels programme would lead to a more sustainable industry and reduce the increasing exposure to the loss-making sugar export market.

The process has seen Harvey, Patel and Didiza hold bilateral meetings with all stakeholders in their endeavour to have a final product (master plan) which has the buy-in from all parties. SASA Chairperson Hans Hackmann has described it as a “patriotic master plan”. He said the potential path back to growth, as per proposals made by the industry, include, among others, the optimisation of the local sugar market and diversification into fuel ethanol. He added: “A biofuels programme would lead to a more sustainable industry and reduce the increasing exposure to the loss-making sugar export market. Also, at the centre of the plan is a meaningful transformation of the industry which will see most of the cane being delivered to mills by black sugarcane farmers with increasing participation by them in the entire sugar and diversification value chain.”

Hackmann pointed out that, despite the obvious need for enhanced competitiveness and diversification of its (industry’s) product mix, sugar would remain a significant part of the future plan for the industry, and for as long as the world market for sugar remained distorted, tariff protection would be necessary to sustain the livelihoods of those dependent on the industry.

As per the master plan meeting of 2 December 2019 held in Tshwane, in the short term, the plan hinges on four core principles, namely:

  • The restoration/increase in offtake of local sugar by downstream users, including wholesalers and retailers;
  • Pricing restraint from producers; 
  • Improved tariff protection premised on pricing restraint; and
  • Product tax policy and certainty.

According to Harvey, social partners or stakeholders have agreed to adopt a phased approach towards the implementation of the master plan to ensure that urgent action is taken to address the immediate crisis (facing the industry) while at the same time accelerating the work required to advance planning and implementation towards the long term vision for 2030.

Phase 1 will see the restructuring (of the industry) and setting of deadlines for diversification. This is envisaged to be achieved through eight (8) short-term action commitments, aimed at stabilising the crisis-hit industry, taking it out of ICU (Intensive Care Unit) and placing in the High Care Unit, with the ultimate goal of moving it to a normal ward, well on its way to recovery.

The eight action commitments are:

  • Restore local market and offtake commitments
  • Producer price restraint and certainty
  • Product tax policy certainty
  • Strategic trade protection
  • Employment protection and mitigation
  • Small-scale grower retention and support
  • Transformation
  • Managed industry restructuring plan

The parties are currently in the final stages of fine-tuning details as to the specifics of the master plan commitments and related issues. These include the mechanics and mechanisms which will make the plan work or become a reality. The Minister (Patel) plans the signing ceremony for the sugarcane value chain master plan to be in the first week of February 2020, with the possibility of President Cyril Ramaphosa witnessing the milestone event. “I am enormously encouraged (by progress made so far with regards to the development of the master plan). It just needs a bit of nudging and polishing here and there. You must take (seize) the moment as quickly as possible. Actions are tough because they require all parties to do something. There must be no holding out for the ideal outcome,” said Patel.

 Judith Wilson is Commercial Director at SASA

Cedric Mboyisa   is Communications &  Media Manager at SASA