Cheap sugar imports have put the South African sugar industry under huge pressure, leading to major job losses and fears that the industry is collapsing completely. There has been a major impact on small-scale and land reform farmers, many of whom started the current season in debt.
The sector has been experiencing dire changes for the past 19 years and last year 500 000 tonnes of imported sugar made its way onto our shores, plunging the industry into crisis. The imports from Brazil, Thailand and the United Arab Emirates (UAE) have left a bitter aftertaste in the mouths of many local sugar cane growers, emerging farmers and agriworkers.
“A worrying number of small-scale and land reform farmers have started the new season highly in debt, owing the millers money from the previous season,” says SAFDA (South African Farmers Development Association) spokesperson, Ronda Naidu. This means that rural households and economies are adversely affected, not to mention the negative impact this will have on informal and formal businesses that rely on these value chains.
The local sugar industry contributes about R14 billion towards Mzansi’s economy and employs about 85 000 locals.
A lot of cane farming takes place in communities that are steeped in poverty and sugarcane farming is a means to uplift people living in these communities. By working in the industry, they are able to sustain themselves and their families financially. Job losses would leave them unable to do so.
Managing director of Illovo Sugar South Africa, Mamongae Mahlare, says small-scale growers, who lack economies of scale and are unable to diversify, will be hit the hardest. “They currently operate with the tightest margins,” he says.
According to Naidu, the main concerns small-scale and land reform farmers have are high input costs (fertilisers and transport), lack of access to finance and decreasing revenue. The sugar tax that was instituted in April 2018 was also bad news for farmers.
“It is estimated that about 200 000 tonnes of sugar has been displaced by the implementation of the health promotion levy or sugar tax,” Naidu says.
Another major concern is the drop in numbers of small-scale sugar cane farmers, from around 50 000 in the early 2000’s to about 20 000 today.
Naido adds that this means that a number of rural households no longer have that income and tracts of land are lying fallow.
“If imports continue unabated, against the backdrop of a recent two-year drought, farmers who have the ability to cultivate alternative crops will switch to other crops, while those that cannot will simply go out of business,” Mahlare warns.
The South African Cane Growers Association (SACGA) recently called on government to help the industry out of the crisis. They are calling for tariff protection and tightened restrictions to prohibit sugar imports.
SACGA chairperson Greame Steinbank has urged government to invest in industry-led innovations and to be more responsive to fluctuations in world sugar prices. In recent talks between SACGA and the Department of Trade and Industry it was agreed that solutions to the challenges facing the sugar industry had to be found swiftly.
A number of farmers don’t have access to finance. This resulted in them starting the new season (April 1, 2019) in debt. This means that they do not have the funds to manage their fields or replant.
“Farmers also have to make tough decisions on how to replant, if they can afford to,” Naidu says.
Mahlare says it is imperative to implement medium- and long-term interventions which make the industry sustainable beyond the benefit of just increasing the import duty.
Fortunately, SAFDA recently entered into a service-level agreement with the Department of Rural Development and Land Reform, in order to assist farmers with ratoon management. A ratoon is a sprout or shoot from the root of a plant, especially a sugarcane plant, after it has been harvested.
This will ensure that inputs are applied timeously, ideally resulting in a better-quality crop and at a lower cost thanks to the bulk buying programme that SAFDA is actively pursuing.
