SA Canegrowers yesterday ratcheted up its call to Finance Minister Enoch Godongwana to eliminate the sugar levy when he delivers the National Budget on February 2.
This after it issued a statement yesterday, saying data it had compiled showed that the South African sugar industry was set to lose R723 million in 2023 due to load shedding.
Godongwana faces a tough budget. Ratings agency Moody’s Investor Services said last week that gross domestic product in South Africa was now likely to track below their previously downwards growth forecast of 1% in 2023, as a result of severe power cuts which continue to cripple productivity.
SA Canegrowers said load shedding affected 1 135 irrigated growers who employ more than 10 000 workers.
“Growers need a minimum of six hours of continuous energy for proper irrigation. As a result of the intermittency of the power supply disrupting irrigation, irrigated growers will lose up to 40% water capacity. The resulting loss of yield could amount to more than R723 million,” it said.
The organisation said its scenario modelling showed that continuous load shedding at Stage 4 to 6 would cost growers more than R723m in 2023. An escalation to Stage 6 to 8 could cost the industry more than R1.8 billion. Anything beyond Stage 8 could cost the industry more than R2.4bn.
SA Canegrowers CEO, Thomas Funke said: “Load shedding is just the latest hardship the industry is facing after a difficult year marked by devastating floods in April, 2022 with Tongaat Hulett being placed under business rescue in October, and the looming threat of an increase in the Health Promotion Levy (HPL) on April, 1, 2023.”
Funke said of all these catastrophes, the HPL was exclusively within government’s control and provided an effective way in which government could give the industry desperately needed short-term financial relief.
Since the implementation of the HPL in April, 2018 the industry said it had lost revenue of R1.2bn per season. In addition, the industry had lost thousands of jobs and mills have been shut.
“SA Canegrowers, therefore, continues to call on Minister Godongwana to eliminate the levy. This is the right thing to do both because there is no evidence that the levy has been effective in achieving its stated objective, and because vital livelihoods throughout the sugarcane value chain are on the line,” he warned.
In December, the South African Sugar Association said the threat of an increase in the rate of the HPL or lowering of the current threshold was of great concern to the industry and any changes/increase in the HPL would spell disaster for the industry.
Last week the Agricultural Business Chamber of South Africa (Agbiz) said the severe load shedding had increased food security risks in South Africa and financial pressures on farmers, agribusinesses and the value chain role-players, and as a result it was holding continued engagements with Eskom.
Andrew Russell, chairman at SA Canegrowers, yesterday added to this growing agricultural call for government intervention amid this crisis.
“SA Canegrowers is, therefore, appealing to Eskom and the government to help the industry in particular, as well as the broader agricultural sector to find urgent solutions to mitigate the impact of load shedding,” Russell said.
“Some of the short-term measures SA Canegrowers has asked the government to consider include restricting load shedding to Stage 4 in irrigated cane-growing areas during peak watering season; diesel rebates for growers utilising generators; and tax rebates for those investing in alternative energy sources,” he said.
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