The Sugarcane Value Chain Master Plan aims to reverse the decline of small-scale growers by preserving and extending their foundational role in the industry, says industry body South African Farmers Development Association (Safda) executive chairperson Dr Siyabonga Madlala.

However, the ongoing crisis at sugar producer Tongaat Hullett Limited (THL) – comprising about 15 466 of South Africa’s 25 653 small-scale sugarcane farmers – directly undermines this objective, with its filing for provisional liquidation after a failed business rescue plan.

Consequently, growers are uncertain about their livelihoods as their income is tied to cane supply to the company’s mills, which process about 27% of national sugar production.

THL problems may persist despite government’s efforts to oppose liquidation and stabilise the company through interventions by the Department of Trade, Industry and Competition, and the Industrial Development Corporation.

“The industry could face systematic failure, including disruptions in supplying the local sugar market, which contradicts the Master Plan’s core commitments to job retention, transformation for black farmers and encouraging downstream companies to procure locally produced sugar to reduce import dependence and support economic stability,” Madlala explains.

The closure of THL would have devastating consequences for not only growers, farm workers and rural communities but also the broader economy, as it is the country’s primary producer and only refiner of white sugar.

“This would exacerbate rural poverty, force surplus local production onto volatile export markets at a loss, and increase long-term dependence on sugar imports,” Madlala adds.

Product Diversification

In principle, Safda agrees with Trade and Industry Deputy Minister Zuko Godlimpi that a single-product industry is inherently risky. As such, product diversification is paramount to ensuring the long-term sustainability of the broader industry and its farmers.

Additionally, Madlala notes that diversification creates opportunities for South Africa’s farmers to expand their produce.

Diversification initiatives, such as bioethanol production, bio-based plastics and sustainable aviation fuels, also hold substantial potential to provide alternative revenue streams and stabilise South African sugarcane growers facing financial pressure from volatile global sugar prices, import surges, the contentious Health Promotion Levy, or sugar tax, and rising production costs.

However, sugarcane growers’ effectiveness hinges on significant investments, policy reforms and infrastructure development.

“The viability of alternative productions will largely be dependent on favourable and enabling policies and incentives. We will need government to be decisive about supporting energy transition that also involves the potential within the sugar sector,” he adds.

Meanwhile, tariff reform is an extremely urgent matter, as the current rate at which the country is receiving cheap sugar imports has become a “serious concern” for the local industry’s sustainability.

Madlala adds that government must intentionally act to protect local production, as any delay in strengthening trade protections significantly undermines the viability of the sector.

“If not addressed promptly, the continued influx of low-priced imports has the potential to cripple the industry to a point from which it may be very difficult to recover.”

Additionally, the combined effects of the sugar tax, rising input costs and US tariffs have placed significant pressure on all domestic sugar growers. The tax, in particular, has led to declining sugar demand, which, in turn, led to mill closures and job losses, as farmers were forced to scale down, he elaborates.

Simultaneously, farmers are facing sharply rising production costs, including those for fertilisers, diesel and electricity.

“. . . these factors create a severe cost-price squeeze where growers are paying more to produce sugarcane, but receiving less income from it, undermining farm profitability and threatening the long-term sustainability of the sector, particularly for small-scale growers who operate with limited financial buffers,” Madlala explains.

Consequently, Safda is continuing to engage with key stakeholders to ensure that small-scale farmers and rural communities are protected.

One of the key engagement areas with government is the sugar tax, which Safda is fundamentally opposed to, as a result of the negative effects it has had on the industry.

“Government intervention to prevent the liquidation of THL is of paramount importance, not only for the protection of the industry but also for safeguarding rural livelihoods and the broader economy of KwaZulu-Natal,” Madlala concludes.