The South African Sugar Association (SASA) plans to diversify into alternative new revenue streams such as aviation fuel and food additives to reduce its focus on the traditional refined sugar it says is under threat from taxes.
The industry has asked the minister of finance to give it time to diversify before imposing changes to the health promotion levy (HPL), known as the “sugar tax”.
SASA warned 6,000 jobs could be lost and the survival of 3,000 small-scale farmers threatened because of a drop in demand for sugar.
The minister will table his budget in parliament next week.
SASA executive director Trix Trikam said on Monday the industry needs three to five years to research and pursue product diversification.
“We are asking the government to hang on to HPL, give us time to come up with new products.”
A postponement of changes to the HPL would be the “fairest way of achieving a just transition of the sector into new activities and industries such as bioethanol and biogas, sustainable aviation fuel”.
Trikam said diversification had socioeconomic benefits for communities in sugar areas in KwaZulu-Natal through job creation and opening markets for new black entrants through manufacturing of new products.
Sugar content above 4g per 100ml is taxed. The sugar tax is 2.21c/g.
The sugar industry's annual turnover is more than R18bn, with R10bn coming from the sugar cane value chain and about R8bn from the milling sector.
According to SASA, over the past 20 years annual sugar production has declined by nearly 25%, from 2.75-million to 2.1-million tonnes a year. The number of sugar cane farmers has declined by 60% during this period and industry-related jobs are estimated to have dropped by 45%.
The introduction of the HPL in April 2018 worsened the situation, with the industry losing revenue of about R1.2bn per season.
To compound matters, two mills closed in KwaZulu-Natal and thousands lost their jobs.
The industry provides 65,000 direct and 27,.000 indirect jobs. There are more than 20,203 small-scale farmers and 1,309 commercial growers.
SASA considers the proposed regulatory measures “too blunt and will derail diversification efforts and send the sector into further decline”.
It said the industry needs a recovery period from the devastating civil unrest, the 2022 floods and increased cost of living before HPL taxes are increased.
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Sugar growers urge a temporary hold on potentially devastating 'sugar tax' increases
Image: Emil von Maltitz
The South African Sugar Association (SASA) plans to diversify into alternative new revenue streams such as aviation fuel and food additives to reduce its focus on the traditional refined sugar it says is under threat from taxes.
The industry has asked the minister of finance to give it time to diversify before imposing changes to the health promotion levy (HPL), known as the “sugar tax”.
SASA warned 6,000 jobs could be lost and the survival of 3,000 small-scale farmers threatened because of a drop in demand for sugar.
The minister will table his budget in parliament next week.
SASA executive director Trix Trikam said on Monday the industry needs three to five years to research and pursue product diversification.
“We are asking the government to hang on to HPL, give us time to come up with new products.”
A postponement of changes to the HPL would be the “fairest way of achieving a just transition of the sector into new activities and industries such as bioethanol and biogas, sustainable aviation fuel”.
Trikam said diversification had socioeconomic benefits for communities in sugar areas in KwaZulu-Natal through job creation and opening markets for new black entrants through manufacturing of new products.
Sugar content above 4g per 100ml is taxed. The sugar tax is 2.21c/g.
The sugar industry's annual turnover is more than R18bn, with R10bn coming from the sugar cane value chain and about R8bn from the milling sector.
According to SASA, over the past 20 years annual sugar production has declined by nearly 25%, from 2.75-million to 2.1-million tonnes a year. The number of sugar cane farmers has declined by 60% during this period and industry-related jobs are estimated to have dropped by 45%.
The introduction of the HPL in April 2018 worsened the situation, with the industry losing revenue of about R1.2bn per season.
To compound matters, two mills closed in KwaZulu-Natal and thousands lost their jobs.
The industry provides 65,000 direct and 27,.000 indirect jobs. There are more than 20,203 small-scale farmers and 1,309 commercial growers.
SASA considers the proposed regulatory measures “too blunt and will derail diversification efforts and send the sector into further decline”.
It said the industry needs a recovery period from the devastating civil unrest, the 2022 floods and increased cost of living before HPL taxes are increased.
TimesLIVE
Support independent journalism by subscribing to the Sunday Times. Just R20 for the first month.
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