Transformation Funding Achievement

SA Cane growers in January announce that, with the disbursement of transformation funding that month, the sugar industry has met its objective of investing more than R1 billion in transformation funding over five years. As the industry has endured waves of crises over the past five years, the funding has been critical in sustaining the livelihoods of more than 21,000 small-scale growers and their farm workers.

Support for Small Cane Growers

In January 2024, the South African Sugar Association distributed nearly R176 million in dedicated transformation funding alone. This brings the total paid out to small-scale and black growers as well as land reform beneficiaries between 2019/2020 and 2023/2024 to more than R1 billion. These payments, to which growers contribute 64%, have been distributed biannually over the five-year period.

Absorbing Shocks

Through these payments, the industry has been able to help the most vulnerable to absorb the shocks caused by drought and floods, cheap sugar imports, the Health Promotion Levy, Covid-19, and the ongoing crisis in parts of the milling industry.

Contribution to Masterplan

The funding commitment also supported the objectives of the Sugarcane Value Chain Masterplan, the first three-year phase of which concluded in 2023. Since the conclusion of that phase, industry stakeholders have worked together to conceptualise a framework for a second phase of the Masterplan. This new phase would help to continue the work of the first phase, protecting vital jobs within the industry and restructuring it for a sustainable, diversified future.

Government Support

As Parliament reopened, it is essential that government supports the efforts of the industry by reaffirming its commitment to prioritise procurement of locally produced sugar, and by halting all plans to increase the ‘sugar tax’ that has contributed to the hardships faced by the industry.

Building Sustainable Livelihoods with SA Cane growers

SA Cane growers is committed to preserving and expanding opportunities in the industry for young, black and women growers among others. But to achieve this, they must overcome the challenges the industry faces and work together with all industry stakeholders – especially government – to create a policy environment within which new growers can find a foothold and build sustainable livelihoods.

Urgent Measures Needed

Before the State of the Nation Address as well as the Budget Speech, SA Cane growers urged President Ramaphosa and Minister of Finance, Enoch Godongwana, to announce critical measures to help us protect the one million livelihoods the industry supports, including the suspension of the Health Promotion Levy.

SA Cane growers called on National Treasury to prioritise measures to aid economic recovery and job retention. After what has been a trying five-year period for the sugar industry, an increase in the Health Promotion Levy will be destructive and unjustifiable.

Impact of Economic Pressures

The sugar industry is suffering under the combined effects of loadshedding, high input cost inflation, natural disasters and deteriorating logistics infrastructure, much like other sectors of the economy. It also continues to face the challenge posed by the ongoing business rescue proceedings at Tongaat Hulett and Gledhow sugar mills.

Call for Caution on Health Promotion Levy

Over the past six years, the SA Cane growers have been monitoring the impact of the Health Promotion Levy (or sugar tax) closely. Independent research and modelling by the Bureau for Food and Agricultural Policy (BFAP) shows that an increase or expansion of the Health Promotion Levy would cost the sugar industry thousands of jobs and jeopardise businesses of nearly 3,000 small-scale growers. This would be over and above the thousands jobs and billions of rands in lost revenue already caused by the sugar tax since 2018.

Few sugarcane growers can keep absorbing such extra costs and still stay in business. This is over and above a skyrocketing of the costs ordinarily involved in cane growing including the input costs like fuel and fertiliser as well as increases in the national minimum wage.

Challenges for Small-Scale Growers

The brunt of these pressures is felt by small-scale local growers who are the first to close shop as costs spiral out of control. But the implications also extend to the one million South Africans who rely on the industry as millers, large-scale growers and other industry stakeholders struggle with the same issues.

Conclusion

SA Cane growers therefore urged the National Treasury to carefully consider this economic context when making decisions regarding taxes such as the Health Promotions Levy. Too many livelihoods depend on the industry in an exceedingly difficult economic climate. By: Kabelo Kgobisa, SA Cane Growers