Severe drought conditions, plummeting sugar prices and weak protection against cheap imports have also impacted the industry negatively.
The SA Cane Growers’ Association said on Monday it would brief parliament’s trade and industry portfolio committee on the crisis facing the sugar industry due to these threats.
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“The HPL has already had a significant impact on the volumes of refined sugar sales in the local market and a consequent increase in the exposure of the sugar industry to the loss-making export market.
It is estimated that the impact represents a decline in local demand for sugar of approximately 200 000 tons per annum (reducing industry revenue by approximately R1 billion per annum),” said Sasa chairman, Hans Hackmann.
It is regrettable that the implementation of mitigation measures, as recommended by the Nedlac task team (which was established as per the resolution of parliament’s portfolio committee on finance) comprising all relevant stakeholders, with regards to the HPL has been delayed.
The industry is currently facing a number of serious challenges threatening its sustainability and survival. The need for the industry to pursue diversification has become even more urgent.
“The impact of the HPL on the sustainability of our industry needs to be addressed urgently. We will seek engagement with government and parliament on the way forward to discuss the process of expediting the implementation of mitigation measures,” said Hackmann.
The mitigation measures include the raising of the import duty on dumped sugar to a more appropriate level (via the dollar-based reference price (DBRP) formula, or any other more appropriate mechanism).
Past experience shows that when parliament, government and the industry work together, more can be achieved. Last year, the portfolio committee on trade and industry (which has been guiding and helping the sugar industry on its transformation journey), president Cyril Ramaphosa, trade and industry minister Rob Davies, economic development minister Ebrahim Patel, and agriculture, forestry and fisheries minister Senzeni Zokwana came to the rescue of the industry when it applied to the International Trade Administration Commission of South Africa (ITAC) for an increase in the DBRP from $566 to $856.
Eventually, the International Trade Administration Commission increased the reference price from $566 to $680. Although Sasa did not get the reference price it had applied for, the new tariff did bring much-needed temporary relief for the industry.
“We would have been worse off had it not been for the interventions by the president, the portfolio committee on trade and industry, the departments of trade and industry, economic development, and agriculture, forestry and fisheries.
We hope the same spirit will prevail with the relevant stakeholders when it comes to addressing the exigent issue of the HPL,” said Hackmann.
In the meanwhile, SA Cane Growers’ Association had sent a letter to the trade and industry portfolio committee chairman, Joan Fubbes on February 14 outlining the dire situation faced by cane growers, including small-scale growers, those who have benefited from land reform, and farm workers, said vice-chairman Rex Talmage.
The letter detailed the impact of a severe drought in KwaZulu-Natal, plunging sugar prices, weak protection against cheap imports and a sugar tax implemented last April.
The cane growers’ group said all of these factors taken together were a “clear and present danger to the sustainability of the sugar industry, which provides employment to 350 000 people”.
It said a 5,2 per cent increase on the sugar tax announced by the finance minister could in itself cause up to 10 000 job losses in the industry.
“We are glad that the portfolio committee has agreed to meet with us, and to hear our concerns,” Talmage said of the meeting, due on Tuesday.
“The crisis in the sugar industry was always too important to be left until after the elections,” he added, referring to national elections scheduled for May, reports African News Agency.
The most recent development is that Food and Allied Workers’ Union (Fawu) general secretary, Katishi Masemola has called for a moratorium on the implementation of the sugar tax because it was killing the sector.
The Citizen reports Fawu has called for clear policy from government to prevent imminent job losses in the sugar cane sector, caused mainly by the sugar tax and dumping of sugar from Brazil.
Those in the sector are concerned about the future of the industry after some beverage companies threatened retrenchments due to the high cost of production.
A parliamentary discussion on the matter, called by the DA, was allegedly frustrated by ANC members of parliament, assisted by an abstention by the Economic Freedom Fighters on Tuesday.
The DA called for a joint committee discussion and parliamentary debate after DA chief whip John Steenhuisen and the party’s shadow minister for trade and industry Dean Macpherson met small-scale farmers and sugar cane stakeholders who painted a grim picture in terms of job losses in the sector.
Steenhuisen said they wanted to hear first-hand how a number of government actions and inactions had brought the sugar cane industry to its knees.
Macpherson condemned the ANC MPs on the portfolio committee on trade and industry who voted down the DA’s request for a joint meeting to find solutions to the problem.
“What these MPs have proven today is that they have no interest in the plight of 350 000 people,” Macpherson said. Steenhuisen said at the very heart of this crisis is the ANC’s unwillingness to listen to sugar industry experts.
“When the sugar tax was first mooted, industry experts warned this would lead to job losses. So far, 1 000 jobs have already been lost in the sector and this figure is climbing,” he said.
Yesterday Fawu’s general secretary Katishi Masemola called for a moratorium on the implementation of the sugar tax because it was killing the sector.
The trade union leader said soft drink manufacturer Coca-Cola promised to lay off more than 1 000 employees due to the sugar tax.
A study commissioned by the department of trade and industry prior to the sugar tax warned that between 5 000 and 8 000 jobs would be affected.
Masemola said despite their call for government to stave off the problem, there had been indifference on the part of Pretoria.
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