A recently signed off-take agreement between the South African sugar industry and industrial and retail sugar customers promises to resuscitate the industry that has been in ICU for a number of years.
Local users of sugar have committed to sourcing at least 80% of all sugar from local farms and millers for a period of three years, starting in 2021. This could increase to a 95% procurement by 2023.
The lifesaving decision follows the recent signing of the Sugar Industry Master Plan for 2030, which takes a phased approach.
The plan was signed by trade, industry and competition minister, Ebrahim Patel, and the minister of agriculture, land reform and rural development, Thoko Didiza.
This was done alongside industry stakeholders and social partners, particularly small and large cane growers, millers, refiners and workers.
Industry already showing signs of improvement
According to a joint statement by the two departments, levels of local sugar procurement have already begun to improve since the framework of the master plan was agreed earlier this year.
Between January and September 2020 volumes of imported sugar declined by 10% versus the prior year, with imports from outside the continent declining by 20%.
Sindi Mabaso-Koyana, independent chairperson of the South African Sugar Association (SASA), stated in a media release that the substantial increase in local sales in the current financial year, is proof that all stakeholders are already fully on board.
“Sales to both the direct and industrial markets have performed very well and exceed estimates. Relative to the previous season, sales to the direct market are ahead by more than 50 000 tonnes,” she says.
SASA, which represents the country’s sugar industry, has deemed the signing of the master plan as “an extremely momentous occasion” for the industry and South Africa.
They are happy that the industry will be revived following serious challenges like the incursion of sugar imports, insufficient tariffs, sugar tax, dwindling local revenues and other damaging external factors, which tortured the industry.
“We wish to express our heartfelt gratitude to the president, ministers and deputy ministers for listening to our cries and leading a process to resuscitate the industry,” Mabaso-Koyana said.
The South African sugar industry, currently concentrated in the rural areas of KwaZulu-Natal and southern Mpumalanga, is made up of an estimated 20 200 growers. The industry currently employs about 65,000 people directly and creates a further 270 000 indirect jobs.
Getting SA to globally competitive status
According to minister Didiza, the sugar industry is a critical employer of workers and a source of livelihood for large numbers of rural communities. She adds that the master plans seeks to take urgent action to protect these thousands of jobs, rural livelihoods, and businesses.
“The sector has gone through enormous strain in recent years, including from a flood of imports. Our vision as government is that the industry can grow and that a partnership is needed to unlock the opportunities. Government brought together key stakeholders so that we can focus precisely on that objective,” Didiza said.
According to minister Patel, the master plan for the South African sugarcane value chain represents a new social compact based on dialogue, shared ownership and wide support.
“The sugar master plan aims to significantly diversify the value chain based on sugarcane away from one that is today almost solely focused on the production of raw and refined sugar, into one that in future produces a wide range of globally competitive sugarcane-based products,” Patel stated.
Opening the third South Africa Investment Conference in Johannesburg last week, President Cyril Ramaphosa mentioned in his speech that the plan provides a framework for a competitive industry that is still Africa’s largest sugar producer.
“We are now working to finalise masterplans in the digital economy, forestry, agriculture and agro-processing, creative industries, aerospace and defence, renewable energy, steel and metal fabrication and furniture,” Ramaphosa announced.