SA Canegrowers chairperson Andrew Russell said Tongaat Hulett and Gledhow mills’ payment defaults would cost the sugar industry R1.5 billion.
Tongaat Hulett was unable to pay more than R900 million due to the South African Sugar Association (Sasa) at the end of March, while a further default by the Gledhow mill – which is also in business rescue – had resulted in an 8% drop in the final RV price (the price that growers receive for the cane processed) for the 2022/2023 season.
Russell said these defaults which would cost the industry R1.5bn of which R1bn was deducted from the growers’ proceeds (the RV price).
“More than 20 000 small-scale growers will have to carry their share of the cost of these decisions, with the RV price (the final revenue determined for growers) dropping by R424 per ton at the end of the season. The resulting decline in revenue now threatens the livelihoods of thousands of small-scale growers, and the workers they employ,” Russell said.
SA Canegrowers added that these defaults were in violation of the Sugar Act and Sugar Industry Agreement, and have lowered growers’ revenue, placing thousands of small-scale and commercial growers in danger of losing their businesses.
In declining to meet their industry obligations, the business rescue practitioners at these companies were withholding funds generated from the work of the mills’ supplying growers to the detriment of these growers’ operations, workers and suppliers.
SA Canegrowers said it believed that the industrial obligations set out in the Sugar Act and Sugar Industry Agreement were mandatory and applied to all members of the sector, including growers, millers and refiners.
The payments in question were levies and monies collected on behalf of the Grower Associations, Sasa, and the other millers. The Grower Association and Sasa levies were critical income sources for Sasa and the Grower Associations in particular, while the millers’ redistribution was also important to all millers’ sustainability. Every section of the industry was said to be suffering immense hardship owing to the decision taken by the business rescue practitioners.
Russell said SA Canegrowers had, therefore, written to Trade, Industry and Competition (Dtic) Minister Ebrahim Patel to request the government’s intervention in light of the business rescue practitioners’ decision not to pay the amounts owing to the industry.
“Even as the industry explores possible legal action, urgent action is needed to protect the industry’s small-scale growers, workers, and value chain partners from financial ruin.
“Urgent and decisive action is needed from all role-players to ensure that South Africa’s sugar industry is not fatally impacted. We will explore all options available to us to ensure that we protect the one million livelihoods the industry supports,” Russell said.
SUGAR OVERVIEW
On its website, Sasa said the South African sugar industry was one of the world’s leading cost-competitive producers of high quality sugar and made an important contribution to employment, particularly in rural areas, to sustainable development and the economy. It was a diverse industry combining the agricultural activities of sugarcane cultivation with the manufacture of raw and refined sugar, syrups, specialised sugars, and a range of by-products.
The cane-growing sector is said to comprise 23 000 registered cane-growers farming in KwaZulu-Natal and Mpumalanga. Sugar was manufactured by six milling companies with 12 sugar mills operating in these cane-growing regions.
The industry produces an estimated average of 2.2 million tons of sugar per season. About 60% of this sugar was marketed in the Southern African Customs Union (Sacu). The remainder was exported to markets in Africa, Asia, and the Middle East.
BUSINESS REPORT