Thousands of jobs in the sugar sector were at risk, warned the SA Canegrowers yesterday as it noted the recently published Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which included an increase in the Health Promotion Levy (HPL), due to take effect in April 2025.
The association’s CEO Thomas Funke said in a statement, “The publication of the increase in the absence of such consultation is, therefore, a bad faith move by the National Treasury that will have far-reaching negative implications for the already struggling industry, its stakeholders, and workers throughout the value chain.”
He said the increase in the HPL, first announced in February last year, was intended to be implemented, but subsequently postponed to allow for further engagement with all relevant stakeholders.
In his Budget Speech in February 2023, Minister of Finance, Enoch Godongwana, then announced that the increase would be further delayed for a period of two years, recognising the difficult environment within which growers operate. However, since this announcement, SA Canegrowers said there had been no consultation with the industry.
Funke said the value of any future engagement with Parliament or government was called into question by the recently published Bill, as the publication suggests a predetermined outcome – an increase of the sugar tax.
Funke said the publication of the increase in the absence of any consultation with the industry was troubling since National Treasury has also failed to respond to a Promotion of Access to Information Act (PAIA) request by SA Canegrowers on the information relied upon by government when it came to introducing the sugar tax as well as subsequent decisions to increase the tax.
He said the uncertain future faced by South Africa’s sugarcane growers was evident, especially considering that two mills were currently in business rescue.
“This hardship has been exacerbated by a hike in input costs even as irrigated growers continue to struggle with load shedding and the implications of a potentially drier, hotter summer over the coming months,” Funke said.
The association said the negative impact of the tax on the sugar industry was plain to see, causing tens of thousands of job losses in the first year of its implementation alone and cost the country more than R2 billion.
SA Canegrowers said it would make a submission on the Bill calling on Godongwana to remove the increase from the legislation until a fair, open-minded engagement process had been concluded with the industry and its stakeholders.
“We will also be calling on the Minister to comply with SA Canegrowers’ PAIA request so that industry engagements can be carried out with full information, and will be writing to the portfolio committee on Trade, Industry and Competition to request that the sugar tax colloquium be re-scheduled as a matter of urgency,” it said.
Chris Engelbrecht, the CEO of Association of SA Sugar Importers (Asasi), said if this increase had been postponed in February 2023 for two years because of the economic situation the sugar industry was in at that time, it should be postponed for another 10 years as the situation had worsened.
“Although the world price on sugar is the highest in years, the sugar price in South Africa is extremely high and keeps on increasing further to try and save the South African sugar industry,” Engelbrecht said.
He said by increasing the sugar tax now or in the near future, would definitely be the last straw to kill the industry.
“Almost all the mills have financial trouble with a few already in business rescue. According to the Sugar Master Plan, the price of sugar can be increased even more as the agreement has been breached by increasing sugar tax. Where do they want this to end, by collapsing the sugar industry or by a super increased sugar price that will open the doors for imports again?” Engelbrecht said.
Dr Siyabonga Madlala, the South African Farmers Development Association executive chairman, said, “The sugar tax needs to be looked at closely. The opportunity to comment on this Bill will allow for a sensible approach to be presented. One of the things that needs to happen is to consider the scientific bases and some unintended consequences of implementing the Sugar Tax.”
BUSINESS REPORT