INADEQUATE TARIFF AND DELETERIOUS SUGAR TAX EMERGE AS MAIN CONCERNS IN A MEETING BETWEEN KZN MEC AND INDUSTRY

Cedric Mboyisa

The sugar industry is working together with KwaZulu-Natal’s Economic Development, Tourism and Environmental Affairs MEC, Reverend Musa Zondi, to ensure the sustainability of the sector.

Above: Industry leadership and KwaZulu-Natal’s Economic Development, Tourism and Environmental Affairs MEC, Reverend Musa Zondi, at the recent meeting to ensure the sustainability of the sector.

Industry leadership and the MEC, at a recent meeting, agreed to prioritise exigent matters/challenges such as the ITAC application for an increase in the Dollar Based Reference Price (tariff), the deleterious sugar tax and the US reciprocal tariffs. Due to the debilitating sugar imports, the industry is seeking a reference price increase to $905 to accord it sufficient tariff protection against subsidised imports, mainly from Brazil.

The industry is also calling for a freeze on the devastating sugar tax until 2030, in line with the lifespan of the Sugarcane Value Chain Master Plan to 2030. Since its implementation in April 2018, the sugar tax has led to a multi-billion-rand revenue loss, substantial job losses and permanent closure of two sugar mills in KwaZulu-Natal. There is consensus in the industry that the implementation of sugar tax was not preceded by adequate consultation, including the lack of a proper/thorough socio-economic assessment.

Trix Trikam, Vice-Chairperson of the South African Sugar Association (SASA) explained the rationale behind the call for the extension of the sugar tax moratorium, saying it was in the main to accord the industry adequate time to pursue product diversification opportunities identified through the master plan processes. “The success of these initiatives is dependent on a regulatory framework that is enabling and like successful strategies in India and Brazil. It is important to note that most product diversification opportunities are still at scoping and pre-feasibility stages.”

Trikam added: “This project development process, of no less than five years, necessitates the establishment of partnerships with government entities and potential project investors which requires careful time and resource investment. If our current existence is under threat (from the sugar tax and other serious challenges), focusing on future growth becomes difficult.”