World’s Top Competitive Producers of High Quality Sugar
South Africa continues to be one of the world’s most cost competitive producers of high quality sugar. According to independent surveys of the costs of production of more than 100 global sugar industries, the South African sugar industry consistently ranks among the top 15. Its excellent export infrastructure, world-renowned agricultural and industrial research platforms and efficient industry organisation are key drivers of excellence.
Despite its comparative production efficiencies, the South African sugar industry finds it difficult at times to export profitably to the world market, as the global sugar price is severely eroded by subsidy-induced overproduction in some major sugar-producing countries. Access to the major markets for raw and refined sugar is furthermore restricted by high tariffs and preferential trade arrangements in the form of tariff rate quotas. These same global market distortions also threaten the maintenance of a profitable and sustainable sugar price on the domestic market.
Government’s strategic support for the South African sugar industry recognises the distorted nature of the world market for sugar, and the severe impact of producer support measures on price determination on the global market. Based on these considerations, government support includes intervention in the following three areas: tariff protection against disruptively low world sugar prices; provision for the establishment of equitable export obligations for millers and growers; and the Sugar Cooperation Agreement between the members of the Southern African Development Community.
The South African government’s support in these areas is endorsed in the Department of Trade and Industry and the South African Sugar Industry’s Joint Strategy for the Optimal Development of the Sugar Industry within a South African Customs Union and SADC Context.