The South African sugar industry is facing a crisis of historic proportions following the news that Tongaat Hulett Limited (THL) has filed for provisional liquidation.
The collapse of the Vision Group rescue deal has forced Tongaat Hulett into provisional liquidation, sparking fears of a total industry shutdown that could leave millions of livelihoods and thousands of small-scale farmers in financial ruin.
This move comes after the lapse of sale agreements with the Vision consortium and a failure to secure vital funding from the Industrial Development Corporation (IDC).
The South African Farmers Development Association (Safda) has expressed serious concern over the collapse of the business rescue process. Safda said of the roughly 25 653 small-scale farmers in the country, 60% are located within the Tongaat Hulett catchment area. These 15 446 farmers, who supply the Maidstone, Amatigulu, and Felixton mills, are now facing a future of total uncertainty.
The cost of a crumbling industry
The infrastructure crisis within the sugar belt has only intensified these fears. Thandokwakhe Sibiya, chief operating officer at Safda, warned that the remaining operational mills lack the capacity to process the surplus cane left behind by Tongaat Hulett.
With the company currently supplying over a quarter of the local market, Sibiya predicts a ripple effect of disaster that will hollow out rural livelihoods, local economies, and the national fiscus.
“Our major concern is that this will open the floodgates for more imported sugar to flood South Africa. We are working tirelessly day and night to make sure there is a solution,” Sibiya said.
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Compounding this internal crisis is a perceived lack of support from the state. KwaZulu-Natal farmer Brad O’Neill echoed these concerns, arguing that unfavourable policy decisions are crushing the industry.
He pointed specifically to the government’s failure to shield local producers from international competition, noting that the “dumping” of cheap foreign sugar into the local market has driven prices down, leaving the entire industry vulnerable.
Farmers face financial collapse
SA Canegrowers chief executive officer, Thomas Funke, emphasised that the true value of the company lies in its functional, operating assets. He warned that if operational continuity is not secured, the entire value chain, from workers to transporters, will be severely destabilised.
SA Canegrowers stated that if the liquidation proceeds, the growers supplying Tongaat’s three mills and the entire industry will face immediate non-payment for cane, levies and other legislated funding requirements.
For individual farmers, the crisis is a threat to their very survival. KZN sugarcane grower Pratish Sharma warned that a mill closure would trigger an immediate financial collapse for local farming businesses.
Sharma explained that because the industry is currently in the “off-crop” cycle, growers have already exhausted their cash reserves on essential maintenance, such as planting, fertilising, and weed control.
“While farmers have received the bulk of their seasonal pay, the remaining 10%, known as the ‘retention’, is held by Tongaat Hulett to account for price fluctuations. In a low-margin industry like sugar, this final payment represents the farmer’s total profit. Without it, many growers will lack the liquidity to survive until the next season begins in April.
“As much as it is only 10%, you have to bear in mind that producing sugarcane is a low-margin business, so that 10% represents the profit that one would earn from any farming activities. There’s not really much prospect of any farmer making it to April without being paid their retention in March,” Sharma said.
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