Africa’s largest supermarket retailer has partnered with SA Canegrowers to not only boost local sugarcane growers, but to ensure that Mzansi will only find locally produced sugar products on its shelves.
Experts believe this bold move by the Shoprite Group is a lifeline for the local sugar industry that has faced serious challenges in the past decade. This includes droughts, rising production costs, lower world sugar prices, and the introduction of a sugar tax in South Africa. A further threat is weak trade protection against increasing sugar imports, which cost the local industry more than R2.2 billion in 2019 alone.
Dr Thomas Funke, chief executive of SA Canegrowers, said these challenges have threatened the livelihoods of approximately 21 000 small-scale growers, 65 000 direct jobs, 270 000 indirect jobs, and a further one million people supported by the industry.
Zolani Sinxo: Sugarcane growers are quite relieved about the new partnership between the Shoprite Group and SA Canegrowers. From what we understand, locally produced sugar will be prioritised in Shoprite, Checkers, Checkers Hyper as well as Usave stores across South Africa.
Dr Thomas Funke: The partnership between SA Canegrowers and the Shoprite Group grew out of the work that is happening [as part of the development of] the Sugar Industry Value Chain Masterplan. The masterplan was created to help stabilise the industry and restructure it for future growth.
SA Canegrowers launched its Home Sweet Home campaign in fulfilment of the masterplan’s commitment to restore the market for locally produced sugar. Both cane growers and retailers are participants in the masterplan process, and SA Canegrowers is proud to have the Shoprite Group as a partner to ensure the success of the plan.
How will it benefit small-scale farmers and local sugar producers?
The influx of cheap sugar imports undercuts the price of locally produced sugar. Small-scale growers are hurt worst in these conditions because while large-scale farmers can better secure funding to help them survive the hard times, small-scale growers often do not have the same access to capital. But such conditions also hurt large-scale farmers who incur costs for accessing capital, and it hurts their workers who are at risk of losing their livelihoods when larger farms come under severe price pressure.
Will this, ultimately, mean the end of imported sugar products in stores owned by the Shoprite Group?
[They have] undertaken to prioritise locally produced sugar. If the local industry does not produce enough sugar to meet the market’s demand, Shoprite may still sell imported sugar. The South African consumer market for sugar is quite substantial, so consumers may still find imported sugar on the shelves.
This is why the Home Sweet Home campaign urges consumers to check sugar packaging for either the Proudly South African logo, or look for the country of production as the package will indicate where the sugar was produced.
So, what’s the criteria to select local sugar growers to have their products on shelves owned by the Shoprite Group?
Growers will not be individually selected to produce sugar for Shoprite. All growers deliver their cane to millers who process it and produce sugar. This sugar is not delineated by which grower it comes from. That is a good thing in this case because it means that all growers have the opportunity to benefit from the partnership with Shoprite. The individual growers’ earnings will be determined by the quantity and quality of the cane they deliver to the mills.
What are some of the other current challenges faced by the industry, particularly small-scale growers? Do you see further opportunities for them in the market?
Growers are currently dealing with the effects of the Health Promotion Levy, also known as the sugar tax. Over and above that, the costs of inputs like fertiliser have increased significantly; in some cases prices have more than doubled.
These factors, together with the fact that the industry is still recovering from a difficult decade with problems including cheap sugar imports, drought and plunging world sugar prices, means that growers desperately need allies like Shoprite to assist in the industry’s recovery.
There are also other signs of hope. SA Canegrowers has been working with international partners and within the Masterplan structures to help advance the industry’s diversification.
This applies both to the diversification of crops, and to the diversification of the value chain, that is, what we use sugarcane for. The most exciting of these projects is the work happening to determine the feasibility of using sugarcane to produce sustainable aviation fuels. We look forward to making more announcements in the future as this project comes to fruition.
How do you see the industry performing over the next few years?
The rains have been good for the sugar industry, and canegrowers are expecting a good crop in 2022. Unfortunately, the reduced milling capacity as a result of the closure of the Darnall and Umzimkulu mills will put the existing milling infrastructure under pressure.
Growers will likely face a situation where a large tonnage of cane is not crushed. This has a major impact on growers’ cash flow. SA Canegrowers will work with the broader industry to find a solution on this matter.
In the medium term, we see the industry diversifying away from sugar and molasses only. SA Canegrowers has been working with international partners to complete a viability study that was publicised in 2021 on sustainable aviation fuels. Cane is well suited for such a product, and we believe that this will become a reality in the near future.
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