The R14 Billion South African Sugar Industry
The R14 billion South African sugar industry is cost-competitive, consistently ranking in the top 15 out of approximately 120 sugar producing countries worldwide. Stretching across two provinces of South Africa, namely Mpumalanga and KwaZulu-Natal, the sugar industry makes a positive difference to the lives of more than a million people and is a catalyst to economic growth and development. The South African sugar industry is a significant contributor to the national fiscus, and operates in rural areas of the country. The economic impact of the industry has proven over decades to be so significant that entire towns, for example, Tongaat in KwaZulu-Natal and Malelane in Mpumalanga among many other rural towns and regional centres, have been established based on the business of growing sugarcane and supplying sugar.
The sugar industry provides employment in job starved regions often in deep rural areas where there is little other economic activity or employment opportunity. The industry provides education and training, contributes to excellence in research, science and technology, supporting enterprises, and ensuring the sustainable use of natural resources. Opportunities for this industry to contribute further to South Africa lie ahead and include renewable energy.
The South African sugar industry has transferred 21% of freehold land under cane from white to black owners since 1994 off a base of 5%.
This industry’s proactive stance on land reform, which commenced in 1996, has been the foundation for the achievement to date.
The multi-layered approach to land reform is one of the reasons that the sugar industry land transfer statics are substantially higher than the national average. The industry has worked closely with the government on numerous land reform projects which have contributed to the success of land reform in the industry.
Growing the Economy
Based on revenue generated through sugar sales in the SACU region as well as world market exports, the South African sugar industry generates an annual estimated average direct income of over R14 billion. The South African sugar industry makes an important contribution to employment and sustainable socio-economic development, particularly in rural areas. This is built on its agricultural and industrial investments, foreign exchange earnings, labour intensity, and linkages with major suppliers, support industries and customers.
It is a diverse industry, combining the agricultural activities of sugarcane cultivation with the manufacture of raw and refined sugar, syrups, specialised sugars by-products and co-products. In line with developments in the global sugar sector, it has the potential to be a producer of renewable energy, bio-fuels and bio-plastics.
An important feature of the industry is that there is employment in rural and deep rural areas in job starved regions where there is often little other economic opportunity.
Direct employment occurs in both in the sugarcane field and the sugar mills and cuts across a diverse array of skills from farm labourer to agricultural scientist.
There is also direct and indirect employment through numerous support industries in the provinces where sugarcane is grown and processed. The sugar industry creates approximately 85 000 direct jobs, which represents over 11% of the total agricultural workforce in South Africa. In addition, there are the registered cane growers supplying cane for processing to sugar mills. Indirect employment is estimated at 350 000 jobs. Approximately one million people or 2% of South Africa’s population depend on the sugar industry for a living.
Sugarcane is grown by 22 949 registered sugarcane growers farming predominantly in KwaZulu-Natal with substantial operations in Mpumalanga. Sugar is manufactured by six milling companies with 14 sugar mills operating in the cane growing regions. The industry produces an average of 2,2 million tons of sugar per season. About 75% of this sugar on average is marketed in the Southern African Customs Union (SACU). The remainder is exported to markets in Africa, Asia and the USA. Sugarcane is a strategic crop for KwaZulu-Natal and Mpumalanga, where sugarcane production is located, comprising nearly 50% of field crop gross farming income across the two provinces.
Stability of Rural Areas
A unique relationship exists between sugarcane and sugar production, in that cane is a bulky, non-tradable commodity which requires rapid post-harvest processing in order to preserve the sucrose in the cane stalk. As a result, sugar mills are always located as close as possible to cane supply. The financial viability of these significant capital investments is entirely dependent on a sustainable supply of sugarcane in each mill supply area.
This in turn means the sheer size of economic activity generated in rural areas through the activities of sugarcane cultivation and sugar production generates a vast number of jobs in support industries and commerce. In most cases, the sugar mill and accompanying cane farms form the backbone of the nearest rural town and are major contributors to the development of secondary economic activity, services and infrastructure that otherwise would be absent.