Durban — South African Canegrowers said it is disappointed by the 8% drop in the final price growers receive for the cane processed for the 2022/2023 season.
CEO Andrew Russell said this was mainly the result of the failure of Tongaat Hulett (THL) to pay more than R900 million due to the South African Sugar Association (Sasa) at the end of March 2023, and a further default by the Gledhow mill, which is also in business rescue.
Russell said these defaults were in violation of the Sugar Act and Sugar Industry Agreement and had lowered growers’ revenue, placing thousands of small-scale and commercial growers in danger of losing their businesses.
In total, the defaults will cost the industry R1.5 billion, of which R1bn is 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, said Russell.
“The resulting decline in revenue now threatens the livelihoods of thousands of small-scale growers and the workers they employ,” said Russell.
He added that the BRPs 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 believes that the industrial obligations set out in the Sugar Act and Sugar Industry Agreement are mandatory and apply to all members of the sector, including growers, millers and refiners,” he said.
Russell said the payments in question were levies and money collected on behalf of the grower associations, Sasa, and the other millers. The grower associations and Sasa levies are critical income sources for them, while the millers’ redistribution is also important to all millers’ sustainability.
Every section of the industry is therefore suffering immense hardship owing to the decision taken by the business rescue practitioners.
Russell said they had written to Trade and Industry 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, he said urgent action was 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 the South Africa’s sugar industry is not fatally affected. We will explore all options available to us to ensure that we protect the 1 million livelihoods the industry supports,” said Russell.
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