Gledhow Sugar Mill has become the latest sugar mill to enter into voluntary business rescue, piling pressure on the industry after a similar move by Tongaat Hulett in October.
(Delwyn Verasamy/M&G)
KwaZulu-Natal’s sugar industry is enduring a long, long winter. As the biggest employer in the most populous province in the country — one already burdened with an unemployment rate above 35% — its decline has fuelled social disintegration.
The corruption-caused collapse in the fortunes of Tongaat Hulett has only heightened temperatures.
The unravelling of the sugar industry has played out over decades. The cane-growing region has experienced severe droughts that have reduced yields and upped production costs. A changing climate has altered overall rainfall patterns and temperature levels. These are what economists call exogenous factors, things no executive or policymaker can control. Urbanisation has seen the workforce in the rural hinterlands decline. Transport and electricity costs have soared.
It’s been a deluge of bad news for sugar, whose image often suffers in the eyes of a health-conscious public. The resultant oversupply and low demand has served to lower the international price of sugar.
For the small-scale farmers the Mail & Guardian visited this past week, life can only be described as hell.
The industry supports about one million livelihoods, employing 65 000 people directly and 270 000 indirectly.
For emergent black farmers, who were beneficiaries of land compensation deals in the northern part of the province, it’s a desperate situation. Some are tied to 10-year deals to supply Tongaat, which is now defaulting on payments.
Diversification isn’t as easy to undertake for these farmers. For descendants of indentured Indian labourers, who are now landowners, there’s more room to diversify away from sugarcane, but it is difficult and expensive to switch to other crops.
This is a tale about sugar, first milled in this country 175 years ago.
Other industries such as steel and textiles have faced not too dissimilar questions about their future since the opening of South Africa to international trade.
They’ve faced changes to their economic environment that they’ve found near impossible to adapt to, no matter the tariff protection afforded by the state. It’s all-consuming and the costs are steep. The economic roadmaps, such as the National Development Plan, aren’t changing conditions or are working too slowly. We are in the throes of deep deindustrialisation and the evidence is in our bad politics.
In KwaZulu-Natal, the risks are just that much higher because of the historical volatility of the region, which is underpinned by the battle for political relevance by a proud monarch and urban class in its big, but declining economic centres of Durban and Pietermaritzburg. There’s also a sulking former president, stewing about his falling status in his home province that fuels factionalism in the ANC.