Sugar Crisis: Mboweni must stop the sugar tax to save jobs

29 October 2019

Ahead of his Medium Term Budget Policy Statement (MTBPS) on Wednesday 30 October 2019, the SA Canegrowers Association (SACG) and the South African Farmers’ Development Association (SAFDA) call on Minister Tito Mboweni to halt the sugar tax, pending a full socio-economic impact assessment of it.

The sugar tax, also known as the ‘health promotion levy’, has already cost the sugar industry in the region of R1,5 billion since its implementation in April 2018 amounting to jobs losses in the region of 9 000. The financial and human costs are escalating, and rapidly: in February 2019 industry costs were nearing R1 billion, and consequent job losses were expected to be in the region 6 500. 

The sugar industry is currently on its knees. Weak protection against cheap imports, drought and plunging sugar prices are already hurting the sugar sector. The sugar tax, if not reconsidered by Treasury, will be the kiss of death for an industry that supports one million livelihoods.

The most vulnerable in the sector, being small-scale sugarcane farmers and farmworkers, will be the most affected in this scenario. This is because they have few, if any options, meaning that any decrease in local demand for sugar will ensure the demise of their businesses. The resultant decay and degradation of our deep rural areas in KwaZulu-Natal and Mpumalanga could prove catastrophic to these communities.

The government has acknowledged that the sugar industry is in crisis, and we – as the Growers section of the South African Sugar Association – are working with the Ministers of Trade & Industry and Agriculture, Land Reform & Rural Development on a ‘masterplan’ to rescue the situation. While sugarcane growers welcome the masterplan process, we realise that the sugar industry cannot be rescued with the current sugar tax in place.

Minister Mboweni recently released an impressive economic policy document that aims to create one million jobs over the next decade. If this target is to be achieved, government must ensure that unnecessary and job-killing taxes like the health promotion levy are abandoned.

We hope that Minister Mboweni acknowledges the impact of the sugar tax on the economy in his speech on Wednesday, and takes steps to do something about it. Generating revenue from a tax does not make sense if that tax destroys industries and take away people’s livelihoods.

Issued by Rex Talmage, Chairperson of the SA Canegrowers Association, 29 October 2019