The plan has had notable successes, and yet the industry still finds itself at a dangerous inflection point, with the businesses of growers and the livelihoods of
1-million South Africans on the line.
It is clear that the work to safeguard the future of the industry is far from done. Rather, it is incumbent on us to maintain momentum and build on the successes achieved under the plan to ensure that the industry — and the rural economies it supports — survive.
The master plan was born of necessity. The industry faced a myriad threats, including the rise of cheap sugar imports, climate-related catastrophes and the effect of the health promotion levy (sugar tax). Recognising the centrality of the industry to rural communities in KwaZulu-Natal and Mpumalanga, industry stakeholders came together to craft a realistic assessment of the industry, devise a plan to tackle its challenges, and create a new vision for the SA sugar cane value chain.
Despite the industry’s present hardships we should not lose sight of the successes of the plan. Even with the interdependence of the industry and the existence of the SA Sugar Association as a forum for collaboration, the master plan opened new doors for partnership, bringing in stakeholders such as in the government and also the retail and manufacturing sectors.
The relationships built within the government in particular have proven invaluable in times of crisis, such as the July 2021 unrest and the floods of April 2022. After these devastating events the industry was able to work with the government to mobilise much-needed relief. There has also been good progress in the effort to cultivate a sustainable aviation fuels industry in the country.
The master plan also saw fruitful efforts to tackle the existential threat posed by cheap sugar imports. Not only did the government enact the necessary tariff protections, but we also saw stakeholders such as Proudly SA and retail giant Shoprite come on board the SA Canegrowers’ Home Sweet Home campaign to encourage consumers to purchase locally produced sugar.
A third phase of this campaign has been relaunched with a digital pledge where South Africans commit to purchasing only local sugar to help save the industry. The response so far has been encouraging for our hard-hit grower members.
Most importantly, the master plan provided critical support to small-scale growers. This support, rolled out alongside an additional transformation programme (funded 64% by growers) that invested R1bn to support small-scale and black growers, has been a large part of how small-scale growers have survived a tumultuous time over the past few years.
But now a new wave of tumult is rocking the industry, and it threatens the feasibility of not only the support the industry has been able to provide until now, but also of the operations of large and small growers alike.
Rising cost of sugar poses new threat to food inflation
Some of the causes of the current crisis are attributable to the unfinished work of the master plan. For example, the failure to revisit the financial effects of the sugar tax as weighed against its effectiveness, is a serious oversight. The stakeholders have repeatedly warned of the toll the sugar tax was taking on the industry, and now that toll is being seen in the precarious position the country’s millers find themselves in.
Thankfully, the government has responded to the industry’s call for a reprieve, at least in relation to an increase in the levy. However, that it remains in place means it continues to pose a major threat to the sector.
But there are also miller-specific issues that have contributed to the recent entry of two millers into business rescue. The milling companies in distress must own that part of the current situation for which they are responsible. Yet now is not the time for assessing blame; it’s time to triage this situation and deal with the urgent and important matters facing the industry. The first of these is saving the millers, but it is not the only priority.
Now more than ever there must be an urgency to our efforts to restructure the industry. We need to harness the collaborative spirit of the master plan phase one. The best way to ensure the growth of the industry into the future is to progress the effort to diversify the sugar cane value chain towards new, more profitable and environmentally sustainable products.
While sugar will remain a part of the industry, our current troubles provide overwhelming evidence that growers cannot continue to rely on this product alone. In diversifying the value chain, growers can also diversify their revenue, mitigating the policy and industry risks that have characterised the sugar industry in recent years.
Under the master plan the industry has made significant progress in this regard, conducting market studies that are due to be completed shortly to demonstrate the feasibility of the alternative products that are being explored. But even while more advanced studies are pursued, it is vital that the government comes alongside the industry to begin to create the policy and regulatory framework within which the new value chain products can be developed.
That the diversification project in particular has advanced as far as it has amid the industry’s challenges is a testament to the commitment of all stakeholders to our shared future. But we dare not rest on our laurels. Throughout KwaZulu-Natal and Mpumalanga, 1-million people rely on this industry for their livelihoods. Leaving the work of the master plan unfinished is therefore not an option.
From small-scale grower support to value chain diversification, we must accelerate our efforts to reposition the industry as a fit-for-purpose vehicle for future economic growth in the increasingly competitive industries of the future. Whether this happens under the auspices of a master plan phase two or not is less important than our absolute commitment to the continuation of this work.
Russell chairs SA Canegrowers.
