South African sugarcane growers are facing mounting pressure as local sugar sales fall sharply, with the industry warning that imported sugar is taking market share from domestic producers.
Local sugar sales have fallen to 433,380 tonnes this season, from 626,417 tonnes in 2023/24, despite sufficient locally produced sugar to meet domestic demand, according to SA Canegrowers.
SA Canegrowers chairman Higgins Mdluli said retailers and food and beverage manufacturers are not honouring their commitment under the Sugarcane Value Chain Master Plan to support locally produced sugar.
“When retailers signed the master plan, they didn’t commit to only avoiding deep-sea imports from countries such as India, Brazil and Thailand. They committed to supporting South African sugar, South African jobs and South African transformation,” Mdluli said.
Under the second phase of the Sugarcane Value Chain Master Plan, signed in April, downstream users are expected to source at least 95% of their sugar from South African producers, subject to the availability of locally produced supply.
Imports raise concerns
SA Canegrowers has particularly raised concerns about sugar sourced from neighbouring countries, including Eswatini.
Because South Africa and Eswatini are members of the Southern African Customs Union, sugar produced in Eswatini can enter South Africa without an import tariff.
SA Canegrowers argues that purchases from neighbouring producers still divert demand away from South African growers.
The South African Sugar Association (SASA) said the Phase 2 is a major development towards ensuring the long-term sustainability of the country’s sugar industry.
SASA executive director Sifiso Mhlaba said the social partners involved in the master plan would meet to review progress and address any issues affecting implementation.
“If any issues, which are inimical to the successful execution of the masterplan, are encountered, all stakeholders should be able to rectify the situation so that we all move in the same direction and adhere to our respective commitments,” Mhlaba said.
Tariff protection increased
The concerns over imports come as government has increased protection for the domestic sugar industry.
The International Trade Administration Commission (ITAC) launched a review of the dollar-based reference price (DBRP) used to administer South Africa’s variable sugar import tariff after receiving competing applications from industry stakeholders.
SASA had sought an increase in the DBRP from US$680 to US$905/tonne, while the Beverage Association of South Africa applied for a reduction to between US$552 and US$650/ tonne. ITAC ultimately increased the reference price to US$785/tonne.
The government said the intervention was intended to provide support to domestic sugar producers while considering downstream industries and consumers.
The adjustment also increased the import duty from R4.83 to R6.97 per kilogram, according to the Department of Trade, Industry and Competition.
Growers face wider pressures
At a sugarcane growers’ dialogue hosted by Deputy Trade, Industry and Competition Minister Zuko Godlimpi in uMzinto, KwaZulu-Natal, on September 18, farmers raised concerns about the rising cost of fertiliser, petrol and diesel, access to finance and shortages of tractors.
They also called for stronger import tariffs and raised issues including unplanned fires, herbicide costs, loading facilities and support for contractors.
Growers also told Godlimpi that a recent strike had caused significant quantities of sugarcane to spoil because it could not be delivered to mills, resulting in further financial losses.
Godlimpi said government wanted to help affected growers recover and increase production.
“We would like to help growers that were affected to recover. We want to help you to increase your production and be in a position to create more job opportunities,” he said.
He also pledged to bring state and commercial banks and development finance institutions into a workshop with growers to discuss financing opportunities.
Rural economies at stake
Godlimpi said the government cannot allow the industry to deteriorate.
“We cannot afford to allow it to degenerate because the impact in small towns like uMzinto will be devastating, hence the tariffs which we have imposed on imported sugar,” he said.
Further engagements between the government, growers and other stakeholders are expected as the industry works on implementing the second phase of the master plan.
For SA Canegrowers, however, the immediate concern remains whether commitments to buy locally will translate into actual demand for South African sugar.
Mdluli said communities dependent on the industry did not benefit simply because imported sugar came from a neighbouring country rather than a more distant market.
“The local communities who depend on this industry don’t experience the difference, the money still leaves South Africa, and local livelihoods still suffer,” he said.
