Sugar industry jobs buckling under weight of government’s health tax

South Africa’s sugar industry, which employs at least 350 000 people, says it is in a state of near collapse due to taxes imposed on it by government.

The sector which generates an annual income of around R14 billion has 10 mills in KwaZulu-Natal (KZN) and two in Mpumalanga.

The mills are in based in semi-rural and deep rural areas where sugarcane is cut by hand.

Approximately one million people depend on the sector which has 65 000 direct job opportunities.

16 000 jobs already lost

Speaking to The Citizen, executive director for the South African Sugar Association (SASA) Trix Trikam said the possibility of the sugar industry shrinking cannot be ruled out.

“We can’t continue exporting because we’re doing so at a loss and in order for us to be sustainable producing the amount of sugar cane that we are, we have to do something else with that sugarcane and not necessarily produce sugar,” he said.

The introduction of a sugar tax meant that sugar content in beverages had to be reduced, which, according to Trikam, also led to revenue loss.

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“16 000 jobs were lost as a result in 2019, and two mills have already been closed.

“Any further increases to the Health Promotion Levy (HPL) will be disastrous and it is for this reason we propose that the industry be diversified to keep it going,” said Trikam.

Master plan to save the industry

The implementation of phase 1 of the all-important Sugarcane Value Chain Master Plan to 2030 is expected to be completed soon.

The phase in question also focuses on the immediate actions and commitments focused on addressing the short-term crisis, stabilising the industry and creating a window of two to three years during which the industry will undergo restructuring to set the foundations for the future and accelerated planning through joint task teams to set the detailed strategies and plans that will deliver on the long-term vision.

The master plan includes initiatives, product diversification, as well as sustainable aviation fuel and bioethanol for fuel blending.

Trikam said while consultations with all relevant role players, including government, have already taken place, that has not led them anywhere.

“The concern in the industry is that if tax is increased, then there will be a further decline in the demand for sugar.

“Industry diversifications have socioeconomic benefits for surrounding communities through job creation and by opening markets for new black entrants though the local manufacturing of products… we are not even asking for any subsidies,” Trikam said.

Tongaat Hulett Limited (THL) also took a decision to go into voluntary business rescue, putting more than 14 000 jobs on the line.

ALSO READ: Thousands of jobs at risk as sugarcane growers wait for millions

July 2021 protests added to industry woes

Meanwhile, just like other industries, the sugar industry was also impacted by last year’s civil unrest.

Ten mills were forced to cease production for a period of a week, with over R100 million lost in revenue in the process.

Two warehouses were also looted, with 2 580 tons of sugar stolen.

Over 500 000 tons of cane was burnt by arsonists and 53 towns in the sugarcane belt were impacted.

The Department of Trade and Industry did not want to comment on the issues raised by the sugar industry and instead referred The Citizen to National Treasury.

National Treasury was not immediately available for comment at the time of publishing this article.

Contribution to economy

The sugar industry currently has a million dependent rural livelihoods, 270 000 of which are through indirect employment.

Cane production stands at 18 million tons, with 20 203 small scale growers and 1 309 commercial growers.