The South African government has reaffirmed its commitment to supporting and diversifying the sugar industry to preserve jobs and stimulate economic development. The announcement was made during a meeting in Durban, KwaZulu-Natal, attended by key stakeholders in the sugar sector.
Deputy minister of trade, industry and competition, Zuko Godlimpi, and deputy minister of agriculture, Zoleka Capa, led the government’s representation at the meeting.
Discussions centred on the industry’s critical role as an economic catalyst, particularly in rural regions of KwaZulu-Natal and Mpumalanga, where sugar production remains a vital source of employment.
Impact of sugar tax
Godlimpi highlighted the government’s intention to engage various departments to assess the economic impact of the health promotion levy (HPL) on sugary beverages, commonly referred to as the sugar tax.
“Restructuring and rebalancing the industry’s capacity to cut costs, boost competitiveness, lessen dependency on tariff protection, and laying the groundwork for diversification is crucial.
“The industry also needs to look at a diversification strategy that will enable it to tap into alternative energy sources and renewables such as biofuel that will revive and sustain the sector,” he said.
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He emphasised the risks associated with a single-product focus, irrespective of potential changes to the sugar tax, and urged industry leaders to pursue dialogue with sectors such as aviation, energy, and environmental organisations to forge future partnerships.
Advocate Fay Mukaddam, the chairperson of the South African Sugar Association, expressed concern about the negative effects of the sugar tax on the sector.
“Any increases to it or lowering of the threshold would decimate the industry. Since its introduction in April 2018, the sugar tax has led to multi-billion-rand revenue loss, thousands of job losses and permanent closure of two mills in KwaZulu-Natal, with Darnall becoming a ghost town and crime levels skyrocketing due to the closure of the sugar factory in the area,” Mukaddam said.
Progress of sugar master plan
She urged the government to extend the current moratorium on the sugar tax to 2030. Aligning this with the Sugar Value Chain Master Plan, she said, would provide the industry with enough time to fully explore and commercialise diversification opportunities.
“Our intensive research has shown that a two-year moratorium to diversify is grossly insufficient. We need more time to reach the commercialisation phase when it comes to identified product diversification opportunities,” she added.
According to the sugar industry, despite the challenges posed by the sugar tax, significant progress has been achieved since the signing of the Sugar Value Chain Master Plan.
This includes the introduction of a premium pricing structure to support small-scale growers and various industry transformation initiatives. To date, the sector has invested more than R1.2 billion in these transformative efforts.
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