If South Africa’s sugar tax sees another increase, Mzansi’s sugar industry could potentially be headed for disaster. To safeguard the livelihoods of farmers and their workers, the industry is calling on government to halt sugar tax increase to pursue diversification opportunities and to ensure the sustainability of the industry.
Introduced in April 2018 to address obesity and non-communicable diseases, the Health Promotion Levy (HPL) or sugar tax has put thousands of livelihoods at risk.
According to Sifiso Mhlaba, national market and international affairs executive at the South African Sugar Association (SASA), another round of job losses could be on the cards if another increase in sugar tax is implemented.
“If the tax is increased, there will be a further decline in the demand for sugar. This will then create job losses.”
According to the South African Canegrowers Association, sugar tax has cost South Africa more than 16 000 jobs and R2.05bn in 2019 alone – a year after its implementation.
Mhlaba, however, states that the industry has lost more jobs since 2019.
Most of the jobs lost during that period were on commercial farms. “But there are small-scale growers who have gone out of business simply because there was a significant reduction in the price they were paid [for sugarcane].”
Some industry interventions cushioned the blow to small-scale growers, Mhlaba pointed out.
Following implementation of the HPL, the industry has shed more than R8 billion in revenue.
Diversification opportunities
Sugarcane farmers and workers recently took take their case to ministers and members of parliament.
During the Taking Parliament to the People (TPTTP) programme held at Ugu Sports and Leisure Centre in KwaZulu-Natal, they aired their frustrations about the challenges they face on the South Coast.
SASA executive director Trix Trikam said while they are appreciative of the opportunity to present the case for the sugar industry to MPs and ministers, their main request is that there should be no sugar tax increases for at least three years.
“And there should be no lowering of the current threshold while we pursue diversification opportunities – through the [Sugarcane Value Chain] master plan process – to ensure the sustainability of the industry.”
Trikam said they were pleased that deputy minister of trade, industry and competition, Fikile Majola, recognised the serious issues facing the sugar industry.
“Especially his agreement with views expressed by farmers and workers that the HPL has had a deleterious impact on the industry since its introduction in April 2018. We are further encouraged by his undertaking that he would engage with the National Treasury and the department of health on the matter,” said Trikam.
He added that they were not looking for direct bailouts, but an opportunity to accomplish a just and fair transition in the sugar sector.
Time is running out
With less than six months to go before the completion of the phase 1 implementation of the all important Sugarcane Value Chain Master Plan to 2030, experts caution that little progress has been made.
Phase 1 of the master plan is expected to be a three-year process, focusing on localisation, job retention, stabilising small-scale growers, a transformation strategy, product diversification plans, and a managed industry restructuring plan.
It also focuses on congruity between policies, particularly with regard to the contribution of the industry in rural economies, and the Health Promotion Levy.
According to Trikam, the progress they have made so far has mainly been in research.
“We haven’t been able to implement any. Research alone has taken us the first three years and we’re still not finished. There’s still some research that needs to be done.”
The only way forward is diversifying and the sugar industry wants government to cut them some slack on sugar tax as they pursue diversification options through the master plan.
“Give us the breathing space to actually do this. Let us complete this process of what are we going to diversify into and in the meantime hold back on the HPL. If you hold back on the HPL, chances are that our sales of sugar will remain at current levels and we will be able to survive,” Trikam said.
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