Sasa CEO, Sifiso Mhlaba, speaking to City Press during a media presentation held in Durban, KwaZulu-Natal, emphasised a vision of sustainability for the sugar industry
The SA sugar industry, with its sugarcane growing and milling activities responsible for more than 25 000 sugarcane growers, creating 65 000 direct jobs and 270 000 jobs indirectly, stands as a pillar of economic opportunity in the country’s agricultural landscape and is central to the rural economies of KwaZulu-Natal and Mpumalanga.
This was according to SA Sugar Association (SASA) CEO Sifiso Mhlaba, who shared his concerns about how “without the sugar industry, these communities would face incredibly limited economic prospects.”
The executive director, speaking to City Press during a media presentation held in Durban KwaZulu-Natal, emphasised a vision of sustainability for the sugar industry—a vision that includes improving livelihoods, attracting young talent and making sugarcane farming fashionable through innovation and technology.
Mhlaba said:
It needs to be an industry that continues to provide livelihoods, but also improve livelihoods.
He added that their vision encompasses not only economic resilience but also a transformative journey toward a sugarcane-based value chain as they push for critical policy changes, including a moratorium on the controversial Health Promotion Levy (HPL) or sugar tax as it is known.
Facing critical times—following the introduction of the HPL in 2018—the industry saw a decline in local sales, forcing about 250 000 tonnes of sugar to be redirected to export markets, resulting in an estimated loss of R1.2 billion for the industry, the loss of 16 000 jobs during the 2019/20 season, as well as the closure of the Darnall and Umzimkulu sugar mills in KwaZulu-Natal. It is pleading with government for a stay on the HPL.
Darnall, owned by Tongaat Hulett, as well as Umzimkulu, owned by Illovo Sugar, were mothballed in 2020.
The industry is subsequently advocating for a moratorium on the sugar tax until 2030, aligning with the Sugar Cane Value Chain Master Plan to Vision 2030.
This strategic collaboration between government, industry and value chain partners aims to transform the sugar sector into a diversified and sustainable model, Mhlaba explained.
This comes ahead of the highly anticipated budget speech to be tabled by Finance Minister Enoch Godongwana on Wednesday, 19 February, as the spectre of potential increases in the HPL looms over the industry.
This after, in his budget speech in 2023, Godongwana announced that the sugar tax would remain unchanged until March 2025.
Mhlaba told City Press:
Mhlaba told City Press: It’s a critical budget speech for us and the country’s economy at large. We are in very uncertain times. From an industry perspective, we are clear on our call for a moratorium on the sugar tax until 2030.
Mahlaba added that the call for a moratorium on the HPL, which has been a contentious issue since its introduction, is pivotal for the industry’s sustainability plan.
What sugar where?
The sugar tax is levied on sugar-sweetened beverages with a sugar content of more than 4g of sugar per 100ml.The rate was fixed at 2.1 cents per gram of sugar over the threshold.
The tax is charged on non-alcoholic sugary beverages, except fruit juices, and results in an effective rate of 10% to 11% per litre of the drink.
It’s intended to reduce the consumption of sugar-sweetened beverages.The organisation has argued that the levy, initially introduced as a health measure, has inadvertently placed additional financial strain on growers and millers.
Mhlaba explained that the organisation is looking for a break of at least three to five years to give the industry enough time to diversify production out of sugar and into other products such as sustainable aviation fuel and bioplastics.
He said:
We have learned internationally what has been done in terms of diversification. We now need to do it for the domestic sector, but we need time. We need to understand what can be done and what is viable, what the investment climate is like.
With a two-year sugar tax increase freeze given by the minister in February 2023 for industry diversification and restructuring, Sasa remains vigilant ahead of Wednesday’s speech.
Mhlaba explained that while the scrapping of the sugar tax would be ideal for the industry, they are realistic about the prospects of this unlikely outcome.
He said:
We understand that the Sugar Tax, while we don’t support it, is bringing in revenue for government, and it will be difficult for government to take that source of revenue away. But also we need to be firm in the fact that increasing it would be extremely detrimental to the industry. Hence our call as an industry for a moratorium for the next five years.
“Without policy certainty, long-term investment decisions become nearly impossible. We’ve already seen two mills close due to the financial strain brought about by the HPL.”
Mhlaba explained that Sasa’s proposal is positioned within the context of President Cyril Ramaphosa’s recent state of the nation address, where he highlighted the need for industrial policies focused on diversification and localisation.
“The sugar industry is ready to partner with the government to achieve these objectives,” he stated, noting that collaboration with value chain partners is essential for success.
