SOUTH-AFRICA-The South African sugar sector forecasts meeting local sales of 300,000 tonnes as it marked year 3 under the all-important Sugarcane Value Chain Master plan 2030 but the Health Promotion Levy (HPL) may limit its realization.
Trix Trikam, executive director at the South African Sugar Association (SASA), laments the imposed tax on sugar which according to him harms the sector which is trying to recover from losses caused by floods last year.
He added that the so-called sugar tax (HPL) continued to have a deleterious impact on the industry, which was currently in recovery mode as the master plan took effect.
The Sugar Masterplan was implemented to ensure that urgent action is taken to address the crisis faced by the industry, while at the same time accelerating the growth of the sector’s work towards the long-term vision for 2030.
Implemented in June 2019, the plan targeted meeting the supply to the tune of 300 000 tonnes in the local (SACU) market in Year 3(2022).
The industry is therefore optimistic that the 2022/2023 season will gain higher sales of soft sugarcane in the local market than the previous season 2021/2022.
The plan is in line with one of the apex priorities of the master plan, which is the optimization of the local market.
Last year, the sugar sector didn’t meet its target due to challenges incurred especially the April floods in KwaZulu Natal that negatively affected both farmers and the sugar milling sector.
The damage incurred was estimated by the South African Cane Growers’ Association at approximately R223M (US$13.3M)while the South African Farmers Development Association (Safda) estimated the total cost of the damage to be R113.59M (US$6.8M) (with regard to members/constituency)
In the milling sector, the South African Sugar Millers’ Association reported that millers in KwaZulu Municipality suffered the most damage with Gledhow Sugar Mill being the worst hit out of the 10 mills in the area following flooding by the nearby Umvoti River.
The SASA executives are hopeful that the government would accede to their request regarding no increases in the rate of the HPL and no lowering of the current threshold.
“This will allow the finalization of the diversification and restructuring efforts initiated during phase 1 of the master plan. This is critical for the long-term sustainability of the industry,” said Trikam.
According to SASA, Since the HPL was implemented in April 2018, the industry had lost revenue of approximately R1.2 billion (US$71.5M) per season and lost close to 10,000 jobs.
The exacerbating effects of HPL have also led to the closure of two mills causing dire financial status in the sector.
The 2030 sugarcane master plan process seeks to ensure stability, growth, and sustainability of the industry. It also targets at least 10 product diversification opportunities which include sustainable aviation fuel, bioplastics, and food additives.