Small-scale sugarcane farmers have big smiles on their faces following a huge payout into their bank accounts. According to the South African Farmers Development Association (SAFDA) small-scale farmers received premium price payments totalling around R60 million. This as agreed by the small-scale grower masterplan task team within the sugar masterplan process and endorsed by the board of the South African Sugar Association (SASA) in June 2021.
The payment is said to be in line with the sugarcane-based value chain master plan’s purpose of ensuring the long-term success and retention of small-scale growers. Farmers will benefit from the premium price since it will align their prices with the local market, compensate them for losses on international markets, and erase the disadvantages related to their economies of scale and remote locations far from sugar mills that drastically increase costs of production.
For sugar, international markets are distorted, loss making and residual. Therefore, this intervention was needed to protect the revenue of small-scale farmers and cushion them from international market distortions, SAFDA said in a press release.
“SAFDA will continue to fight for a better life for all farmers, especially the small-scale farmers,” said Dr Siyabonga Madlala, executive chairman of SAFDA. The premium price intervention came just in time to provide much-needed relief. The 2021 year was marked by civil unrests as well as recent floods that caused damage to most farmers’ fields. This intervention money will assist farmers in recovering from these challenges whilst they wait on the government for relief,” added Dr. Madlala.
According to SAFDA, farmers are paid using a recoverable value which recognises investments made in the production process to achieve sugarcane of good quality. Because of poor economies of scale, long distances to sugar mills, and the inability to own farming equipment, small-scale farmers struggle to produce good quality cane.
The recoverable value price is made up of proceeds derived from the sale of sugar and molasses the industry sells in the local and international markets.
Small-scale farmer Roseline Makwakwa, of KaHoyi, Mpumalanga, told SAFDA she is happy to have received her payout. “The first time I saw this money this morning, I could not believe my eyes,” she said. “This money will go a long way. We have never seen such before.”
This premium price payment comes on top of the SASA transformation Initiatives that were approved on 29 November 2018 to a tune of R 1 billion over a period of five years.
In terms of this transformation fund, SAFDA said R200 million is disbursed to farmers on an annual basis according to eight original interventions that the industry adjusted a bit to accommodate other needs, like toping up the bursary fund of the industry and supporting a study to map out the impact of transformation in the sugar industry.
These interventions combined will assist our struggling farmers to be sustainable, especially during off-crop seasons.
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