An upward adjustment of the Dollar-Based Reference Price (DBRP) is urgently needed as South Africa is facing an escalating surge in sugar imports, which have displaced local producers to the tune of more than R1.5 billon in the 2025/2026 season!
The DBRP is a benchmark used by government to determine when imported sugar is priced too low relative to local market conditions. If world sugar prices fall below this reference price, an import duty can be triggered to help protect local producers from unfairly low-priced imports. The idea is not to block imports, but to prevent dumping that can damage local farmers and mills. The problem is that this reference price has not kept up with reality. Over the past few years, the cost of producing sugar in South Africa has risen sharply – fuel, electricity, transport, labour, fertiliser, and finance costs have all gone up. But the reference price has stayed largely unchanged. The last time the reference price was increased was in 2018.
Updating the reference price is not an isolated tariff issue, it is a foundational requirement to allow the master plan to deliver on its promise of a transformed, resilient and diversified industry.
So today, even when imports are priced at levels that are clearly below our actual production costs, the system does not have adequate levels of protection against these highly subsided cheap sugar. This leaves local producers exposed to unfair competition. That is why we, South African Sugar Association (SASA), have applied for an increase in the DBRP. We are asking that the eference price be adjusted upwards so that it reflects real, current costs in the industry. Without this adjustment, locally produced sugar is being pushed out of the market by cheaper imports, even though our producers are operating efficiently. At stake here are jobs, rural livelihoods, and food security. If the price mechanism does not work properly, mills become unviable, farmers leave production, and communities suffer. This is about making sure the system remains fair, balanced, and fit for purpose in today’s economic environment.
Without this adjustment, locally produced sugar is being pushed out of the market by cheaper imports, even though our producers are operating efficiently.
Mainly, there are two major changes that have made the old $680 reference price outdated:
Production costs have risen sharply, both globally and here at home. Over the past few years, fuel, electricity, transport, fertiliser, labour, and finance costs have all increased well above normal inflation. But the reference price has stayed stuck at a level that reflects conditions from nearly a decade ago. Local operating conditions have become tougher. Additionally, producers face infrastructure constraints, logistics bottlenecks and climate pressures. All of this raises the real cost of making and delivering sugar to market. So today, the $680 benchmark no longer represents the true cost of producing sugar in South Africa, or even in many exporting countries. That means imports can enter at prices that look “normal” on paper but are, in fact, below sustainable production levels. The system then fails to respond, and local producers are left exposed. That’s why SASA is saying the benchmark must be adjusted upwards — not to block trade, but to reflect today’s economic reality and keep competition fair.
Global sugar markets have become more volatile. We now see frequent periods where large exporting countries release surplus sugar at very low prices, often supported by subsidies. This creates waves of artificially cheap imports that does not reflect real production costs.
An adequately calibrated Dollar-Based Reference Price is one of the cornerstones when it comes to the stability and sustainability of the sugar industry. If the reference price is set too low and does not reflect real costs, cheap imports will continue to undermine the local market, investment stalls, and the objectives of the Sugarcane Value Chain Master Plan to 2030 simply cannot be achieved. Therefore, updating the reference price is not an isolated tariff issue, it is a foundational requirement to allow the master plan to deliver on its promise of a transformed, resilient and diversified industry. Product diversification is essential to reduce dependence on volatile global markets and create more sustainable income streams.
Article Source: South African Sugar Journal
