SUGAR INDUSTRY NEEDS MORE TIME TO DIVERSIFY

Cedric Mboyisa

The sugar industry’s intensive research on product diversification opportunities has shown that two years is not enough to reach commercialisation phase.

SASA Executive Director Trix Trikam unpacking the state of the sugar industry during an interview with the national broadcaster, SABC, in Cape Town.

This was revealed by the South African Sugar Association (SASA) during its engagement with agricultural and finance journalists in Cape Town at the end of September. In his February 2023 Budget Speech, Finance Minister Enoch Godongwana announced a two-year moratorium on any increases in the sugar tax (the Health Promotion Levy – HPL) in order to allow the industry space to diversify and restructure. However, empirical evidence has revealed that the two-year timeframe is insufficient. As such, SASA – speaking on behalf of the industry – is now appealing to government to extend the moratorium to be aligned to the lifespan of the all-important Sugarcane Value Chain Master Plan to 2030, which was signed in November 2020, and implemented in a phased approach.

Since then the industry has been robustly pursuing identified product diversification opportunities, which include sustainable aviation fuel, polylactic acid, bioethanol, bio polyethylene and cogeneration. Most of these investigations are still at scoping and prefeasibility stages. However, any increase to the HPL or lowering threshold would decimate the industry, thereby undoing the great foundational work that has been done in the phase one of the master plan. As such, the industry is requesting that:

• Government keep the current moratorium in place until diversification takes place and align it with the master plan 2030; 

• Ensure comprehensive consultation before any changes are made;

• Any changes to the HPL must consider the outcomes of the SEIAS being currently undertaken by the Presidency and the pending results of the dietary intake study.

• The master plan processes around product certainty must be allowed to reach finalisation. Increases in the HPL will undo the strides achieved through phase 1. Product diversification is crucial for the industry’s sustainability.

SASA asserts that increases to the HPL are detrimental to transformation, and that there continue to be no credible studies linking the tax to positive public health outcomes. HPL has had a devastating impact on the industry, resulting in multi-billion revenue loss, permanent closure of two sugar mills in KwaZulu-Natal and substantial job losses. The industry is the bedrock of the economies of the provinces of KwaZulu-Natal and Mpumalanga – where it operates in deeply rural and job-starved cane growing and milling regions. The industry has a direct employment of 65 000 while it employs 270 000 people indirectly. At least one million livelihoods are dependent on the industry.