The South African sugar industry is optimistic of good sugar production this year and that sales of soft commodity will increase in the local market, according to Trix Trikam, executive director at the South African Sugar Association (SASA).
He said the current season (2022/2023) marked the third year of the implementation of the all-important Sugarcane Value Chain Master Plan to 2030.
“One of the targets of the master plan is additional sugar sales to the tune of 300 000 in the local (SACU) market in Year 3. This is in line with one of the apex priorities of the master plan, which is the optimisation of the local market. SASA is hopeful that, with continued commitment of all stakeholders, the target is within reach,” Trikam said.
With regard to challenges the sector faced last year, he said the heavy downpours and floods in April impacted both growers and millers negatively.
This was as the South African Cane Growers’ Association put the total cost of the damage (with regard to its members/constituency) at approximately R223 million. The South African Farmers Development Association (Safda) estimated the total cost of the damage to be R113.59m (with regards to its members/constituency).
With regard to the milling sector, the South African Sugar Millers’ Association reported that out of the 10 of the mills in KwaZulu-Natal, Gledhow Sugar Mill, situated in the KwaDukuza Municipality, had suffered the most disruption/damage. According to Gledhow Sugar Mill, the factory was flooded by the nearby Umvoti River.
Trikam said the so-called sugar tax (the Health Promotion Levy – HPL) continued to have a deleterious impact on the industry, which was currently in recovery mode as the master plan took effect.
He said they were also hopeful that the government would accede to their request regarding no increases in the rate of the HPL and no lowering of the current threshold.
“This will allow the finalisation of the diversification and restructuring efforts initiated during phase 1 of the master plan. This is critical for the long-term sustainability of the industry,” said Trikam.
SASA said the threat of an increase in the rate of the HPL and lowering of the current threshold was of great concern to the industry. It said any changes/increase in the HPL would spell disaster for the industry.
“Hence, SASA is imploring the government to grant the industry a three-to-five-year moratorium on the HPL while it (industry) pursues, through the master plan process, diversification efforts aimed at ensuring a sustainable and viable industry,“ said Trikam.
Since the implementation of the HPL in April 2018, the industry said it had lost revenue of approximately R1.2 billion per season.
In addition, the industry added it had lost close to 10 000 jobs (according to an independent study commissioned by NEDLAC) and has had to close two mills due to the HPL exacerbating the already dire financial state of the sector, which had also faced several other serious challenges over the years.
Trikam said product diversification was one of the apex priorities of the master plan. “Therefore, as part of the master plan process, at least 10 product diversification opportunities have been identified. These include sustainable aviation fuel, bioplastics and food additives.”
BUSINESS REPORT