SA sugar industry remains fragile despite progress, says Mhlaba

Launched in 2020 to rescue South Africa’s sugar industry, the Sugarcane Value Chain Master Plan has made key gains. The industry, battered by sugar imports, weak tariffs, and the sugar tax (HPL), suffered billions in losses, job cuts, and mill closures.

Phase one of the master plan, which ended in March 2023, boosted local sales and supported small-scale growers. Now, industry leaders and the government are negotiating the second phase, prioritising market stability, trade protection, grower support, diversification, and food policy certainty to secure the sector’s future.

Food For Mzansi sat down with Sifiso Mhlaba, the CEO of the Sugar Association of South Africa (Sasa), to discuss the state of the country’s sugar industry. Mhlaba stepped into the role four months ago.

Duncan Masiwa: Despite phase one’s progress, the sugar industry remains fragile. What urgent steps are needed to prevent more mill closures and job losses?

Sifiso Mhlaba: Phase one of the master plan has been completed and there have been some improvements. Phase one has dragged us from the point of collapse, but we remain fragile. What needs to be done now is the finalisation of phase two of the master plan and for us to continue with all the work that we began in phase one.

I must acknowledge that phase one and the master plan broadly was a social compact by all the value chain players including our government. It is that collaboration that enabled us to deliver on some of the objectives of phase one.

Also, phase one looked at the long-term future of the industry, which looks at us transitioning from a sugar industry to a sugarcane-based industry. It is those things that need to be continued and unfortunately, they take time. You need to be thorough and that all the variables are understood before you can move to implementation.

For now, it is a continued collaboration with all our partners, stakeholders and government to ensure that we all understand the vision of the industry and implement what will save us as the sugarcane industry.

The industry is pushing for a sugar tax moratorium until 2030. If denied, what impact will this have on small-scale farmers, millers, and downstream industries?

We are calling for a moratorium on the HPL (health promotion levy), and the reason we’re doing so is because we have the Sugarcane Value Chain Master Plan Vision 2030 that we’ve been implementing for the last five years, and we’ve made significant progress on that.

On the other hand, we have this possible risk around the HPL that has the potential to derail all the work we’ve put in for the last five years. And we feel that policy incoherence there. Therefore, if there is an adjustment in the HPL, we’re likely to see the farmers, both small-scale and large-scale, go back into financial distress.

We saw this in the introduction of the HPL in 2018, with a significant number of jobs being lost in the industry, and that then contributed to two mills closing in KwaZulu-Natal. So it’s not that we haven’t seen this movie playing out before – we have seen it, and we’re very worried that if there is an adjustment, we’ll go back again.

This would really derail the five years of work that we’ve done collectively as an industry and with the government, as well as our downstream players.

We’re worried but remain hopeful that our listening government will heed our call and give us that moratorium.

Many farmers are struggling. What’s your message to small-scale growers and millers facing policy uncertainty?

It’s farmers, but it’s also farmworkers, and it’s also community members who provide a service to the industry. So there’s a community that supports the sugarcane industry, and they would all be very worried if the sustainability of the industry is under threat.

Farmers generally are a resilient bunch and we need to continue that resilience. We understand as farmers that we’re in it for the long run, and we need to ensure that the policy space is created to be supportive of that.

My message to them is, as Sasa, and as the industry leadership and principals, we are working hard to create a long-term view, and we are working hard with our stakeholders to create a conducive environment.

Ultimately, farmers, farmworkers, and millers need to believe the industry has a long-term future, and this is critical for investment decisions. That is what we want to be able to come out of firstly, the announcement in the Budget Speech, but also as an industry, we want to communicate that message and inspire confidence that the industry will remain. And of course, we’ll continue to look at opportunities, such as bioethanol and other products that can be produced from the sugar cane stock.

So we’re really working hard to look at sustainability, and we want to re-imagine the sugarcane industry so that there can be excitement from the ground up.

Sign up for Mzansi Today: Your daily take on the news and happenings from the agriculture value chain.