Sugar tax holding back investment in the transformation of rural livelihoods

5 June 2024  

The sugar industry is still battling with the long-term implications of two sugar mills being in financial distress and needs to plan for the ramifications in case the business rescue processes fail. This precarious financial position reaffirms that the Health Promotion Levy (or so called ‘sugar tax’) undermines the sustainability of the industry and the million jobs and rural livelihoods that it supports.  

This was the message at the annual general meeting of SA Canegrowers, held on the North Coast, KwaZulu-Natal this week. Both Tongaat Hulett and Gledhow sugar mills are currently in business rescue.

Higgins Mdluli, the newly elected Board Chair of SA Canegrowers at the meeting, said that with the sugar tax due to increase next year, SA Canegrowers is once again going to stress to government that it needs to support the industry to safeguard the jobs it sustains. 

The sugar tax was supposed to be reviewed under phase one of the Sugarcane Value Chain Masterplan, but this promise was not kept and to date no meaningful engagement has been undertaken with the industry. The sugar tax has suppressed the market for locally produced sugar and cost the industry more than 16,000 jobs. 

The sugar tax is also a barrier to investment in the industry’s transformation. Studies done by the Bureau for Food and Agricultural Policy (BFAP) have shown that an increase in the Health Promotion Levy will lead to less land under sugarcane cultivation and less sugarcane being delivered to mills. BFAP found that the most significant job losses will occur under small-scale farmers. 

“We need the industry to do more than survive; we need it to thrive. The more we grow and expand, the more we can invest into supporting small-scale growers. To advance transformation, we need to recognise the barriers to sustainability and growth. We need to eliminate the Health Promotion Levy,” said Mdluli.  

SA Canegrowers has also called on government to fast-track the value chain diversification project through the second phase of the Masterplan, with support for diversification into strategic aviation fuels, for example. The industry Masterplan, a contract between cane growers, retailers, millers and the government, is the best mechanism to address the various threats and opportunities to the sugar industry in a coherent and collaborative manner. 

The new Board of SA Canegrowers is Higgins Mdluli (chair), Kiki Mzoneli (vice-chair), Andrew Russell (vice-chair), Heinrich (Ricks) Eggers, David Littley, Tim Murray, Thobani Lubisi, Dieter Lutge, Suresh Naidoo, Mark Schulz, Graeme Stainbank, Kurt Stock, Pratish Sharma and Rex Talmage. 

“SA Canegrowers is honoured to support South Africa’s hardworking growers. Their indomitable spirit is emblematic of the South African will to survive and thrive against the odds,” said Mdluli. 

Issued by Gerhard Mulder on behalf of SA Canegrowers, 5 June 2024