Cut up: Many sugar farmers in KwaZulu-Natal are in trouble after the mill at Tongaat Hulett, which is in business rescue, failed to pay them for their produce. (Delwyn Veasamy/M&G)
Citing a crisis in the milling sector, SA Canegrowers has called for stakeholders to commit to finding a path forward on the sugar masterplan.
In a statement, the association’s chair, Andrew Russell, said members of the executive oversight committee would meet on Wednesday to discuss the conclusion of the first phase of the plan.
Stakeholders signed the masterplan in 2020 to pull the industry from the brink of collapse. As part of the masterplan, industrial users and retailers agreed to a minimum offtake of sugar for a period of three years. It entailed that at least 80% of sugar consumption would come from South African farms and millers during the first year, increasing to 95% by 2023. The sugar industry in turn agreed to price restraint.
Wednesday’s committee meeting and the conclusion of the masterplan come amid a crisis in the milling sector, Russell noted. Sugar refiner Tongaat Hulett entered into voluntary business rescue in October last year because it was struggling to pay its creditors. Five months later, in March, Gledhow mill followed suit.
South Africa’s sugar industry has suffered amid tanking prices, the result of overproduction in some major sugar-producing countries.
By 2021, annual sugar production in South Africa had declined by nearly 25%, from 2.75 million tonnes per annum 20 years prior to just 2.1 million tonnes. Moreover, the number of sugarcane farmers has declined by 60% since the early 2000s. Sugar industry-related jobs are estimated to have contracted by 45%
“Critically,” Russell noted, “the business rescue practitioners at these companies have announced defaults on financial obligations amounting to R1.5 billion to the industry that have left growers and industry partners in a highly precarious financial position and facing an uncertain future.”
Last week, the Mail & Guardian reported on a warning by sugarcane farmers that they too will face collapse if they are not paid for the produce they supply to mills.
To safeguard the future of growers and the sector as a whole, SA Canegrowers believes it is critical that the government and all industry stakeholders commit to ensuring that the good work achieved under the masterplan continues, Russell said.
“This includes a commitment to continue protecting the industry against cheap sugar imports and restoring demand for local sugar,” he added.
The masterplan was developed prior to the current milling crisis, Russell noted, adding that ensuring the continued operation of the mills was of critical importance to the short, medium and long-term sustainability of the industry.