Management at the Gledhow Sugar Company said it is making good progress in securing the financial future of the company after it went into voluntary business rescue earlier this year. In the meantime, the over 245 growers supplying the company still face an uncertain future.
According to Gledhow CEO Andrew Francis, Gledhow has settled into the business rescue process and is making progress towards putting a business plan together that aims to create a sustainable future for the business.
“We are making good progress in securing new investment and loan funding for the business,” Francis told Food For Mzansi.
The company’s board of directors announced that it has passed a resolution to voluntarily commence business rescue proceedings. The decision was made at a meeting held on Friday, 10 March 2023.
Several challenges over the years
Gledhow, which comprises Ushukela Milling, Illovo Sugar and Sappi Southern Africa Limited, has been facing significant challenges in recent years.
While thousands of livelihoods hang in the balance, Francis said no permanent staff members of Gledhow have lost their jobs.
“We are very hopeful that, once the business plan is approved and implemented, there will be no need for any permanent job losses at Gledhow.”
Francis said so far production at the mill has not been affected. Gledhow commenced its crushing season on Wednesday, 8 March. “So we were already in production prior to going into business rescue. Production has continued and has not been materially affected by the business rescue process to date.”
Tied to the hip
In the meantime, the South African Farmers Development Association (Safda) remains concerned about the impact on farmers who supply sugarcane to Gledhow Mill, which services more than 245 sugarcane growers.
According to Safda CEO Siyabonga Madlala, the possible failure of this business would be a double blow for small-scale farmers as farmers in the district will have nowhere to take their sugarcane.
This is as another sugar mill nearby – the Darnall Mill owned by Tongaat Hulett – closed down two seasons ago, creating a sugar milling capacity shortage on the KwaZulu-Natal north coast.
“The painful part, though, is that the sugar industry is tied at the hip. What happens to your neighbour affects you too because we share proceeds. If someone does not contribute to our pot, then we all suffer. If Gledhow and Tongaat are under challenges, we also suffer a lot,” said Madlala.
He remains concerned about the small-scale farmers who commonly farm on communal land and must drive long distances to transport their produce.
“This is a challenge for small-scale farmers because fuel is expensive, especially when it comes to transporting raw sugar cane. They depend on contractors and contractors are not cheap because diesel is expensive,” he said.
“The problem is that two big milling companies have gone under business rescue and that makes us unsure of the milling capacity in the future. One of them is Tongaat Hullet and they run three mills. This is a challenge to the sugar industry. It is a bit messy right now. There is a lot of movement, and we don’t know where it will end.”
Sugar cane farmers share concerns
KwaZulu-Natal sugarcane farmer Lee Hlubi said her challenge lies in not knowing whether her miller will pay when payments are due.
“As a farmer, you’re notified last that payments won’t happen when expected. This has led to negative credit status with banks and other supporting service providers,” she said.
“The worst is labour. They don’t always trust us black farmers because we don’t have reserves to go to. We’re starting to harvest but we’re not sure whether payments will be honoured in time,” she said.
Bright future ahead
SA Canegrowers CEO Dr Thomas Funke said there is a bright future for the industry in a new generation of products like sustainable aviation fuels, but the industry has significant challenges to overcome to reposition itself for future growth.
“What is clear is that the crisis has been coming for a long time, which is why SA Canegrowers has argued against policies like the health promotion levy, which only exacerbated the millers’ crisis,“ he said pointing to the sugar tax.
Growers have lost out on revenue every year with a growing amount of sugarcane being carried over every season, Funke told Food For Mzansi.
“This crisis has reached its climax with the entry of two millers into business rescue over the past six months.”
Grower’s challenges in the province have been exacerbated by arson attacks during the July 2021 unrest, and devastating floods in 2022 and 2023.
In addition, the Russia-Ukraine War has resulted in significant increases in essential supply costs such as coal and other operational inputs.
El Niño adds to the pressure
“Swinging to the opposite extreme, we now expect the El Niño system to bring record heat and drought at a time when load shedding has made irrigation that much more difficult for growers. South Africa’s canegrowers are therefore facing challenges on many fronts,” Funke said.
It’s not all doom and gloom, said the executive director of the South Africa Sugar Association, Trix Trikam. According to him, diversified solutions defined in the Sugarcane Value Chain Master Plan are what the industry should be focusing on.
Trikam explained the master plan process had identified ten product diversification opportunities. The industry can be one of the top contributors to advancing the goals outlined in the region’s National Bio-economy Strategy.
“Government must ensure there is a conducive policy and legislative framework to enable the realisation of the objective of implementation (with regards to diversification).
“Also importantly, is for the government to see to it that there are sufficient subsidies in place to get the project(s) off the ground and incentives to reward capital investment,” said Trikam.
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