DTIC budget vote: Small-scale growers need funding to buttress against milling crisis
16 May 2023
In his budget vote on Thursday, 18 May 2023, Minister Ebrahim Patel needs to urgently announce his departments plans to help South Africa’s sugarcane growers survive the current milling crisis, or risk presiding over the collapse of parts of the sector. Nearly seven months after Tongaat Hulett entered its South African operations into business rescue, growers continue to face financial and operational uncertainty. SA Canegrowers is deeply concerned that, unless urgent action is forthcoming, a number of small-scale growers will not survive this season.
The crisis facing growers was exacerbated by the R1,5 billion defaults announced by Tongaat Hulett and Gledhow. This led to a more than R400 drop in the revenue per ton of RV (recoverable value) last season, at the same time as growers have seen exorbitant input costs increases, especially due to escalating loadshedding.
Growers cannot wait for the resolution of the matter of the defaults by Tongaat Hulett and Gledhow to be resolved through the court system. To survive, they require funding urgently to fill the gap caused by the defaults. This is revenue growers relied upon to resume their operations this season and meet their financial obligations to workers, contractors, and suppliers.
The failure to provide relief funding could have catastrophic knock-on effects throughout the sugar industry value chain and for the local, mostly rural, economies that depend on the industry.
The current crisis follows three years of investment into saving and restructuring the industry under the Sugarcane Value Chain Masterplan. In addition to these efforts, the industry has invested a further R800 million over the past four years into transformation funding through the South African Sugar Association. To allow small-scale growers to go out of business – through no fault of their own - after this substantial investment is untenable.
SA Canegrowers is mindful that the South African economy faces numerous challenges and there is great need across all sectors for relief in light of loadshedding, high input costs, and infrastructure challenges. But the sugar industry supports one million livelihoods, overwhelmingly in South Africa’s rural economies with few alternative options for workers. KwaZulu-Natal and Mpumalanga in particular cannot afford the collapse of the sugar industry.
SA Canegrowers therefore urges Minister Patel to take the opportunity of the budget vote to announce measures to help growers survive the milling crisis so we can protect the one million livelihoods the industry supports.
Issued by Kabelo Kgobisa on behalf of SA Canegrowers Association, 16 May 2023
