By Sfiso Mnguni, Grower Support Services Manager, South African Farmers Development Association (Safda)

The South African sugar industry is on the verge of collapse as a result of cheap sugar imports, unless some drastic protection measures are implemented in the form of effective protection tariff by the International Trade Administration of South Africa (ITAC).

Earlier this year the sugar industry submitted a proposal to ITAC, seeking an increase in the dollar based reference price, which would afford the local industry some level of protection. The current $566 reference price has pushed the Industry to the verge of near collapse.

In order to emerge from this situation, the industry is seeking an increase of $290 on the dollar based reference price, which will take the tariff to $856 per ton of imported sugar. ITAC has recently indicated that it will consider the industry’s application and provide response by end July 2018, meanwhile farmers are struggling to make ends meet as many are reporting negative cash balances on their cane proceeds.

This literally means that after a long season of investing and hard work, farmers walk away indebted to the mill for crushing their cane. Unless something drastic happens urgently to raise the import tariff, sugarcane currently remains a worthless crop. The situation is affecting small and large farmers and sugar millers alike as the industry has had to take a 13.5% decrease on the notional price.

While ITAC remains key in implementing a favourable tariff, it is also critical for the industry to comprehensively support the country’s transformation agenda.

Safda has put forward its reciprocity proposal as a contribution to the industry proposal, in terms of which, the sugar industry needs to address, among other issues, the following:

  • Create a transformation fund for industry’s transformation initiatives.
  • Implement a local market price for all black growers
  • Ensure farm gate price determination for all black growers
  • Address problems relating to burn-to-crush delays by reviewing the current daily rateable deliveries (DRD) and change it to provide preferential access to the mill in favour of black growers.
  • Industry funding of Safda in recognition of it being the industry’s transformation vehicle.

While this would certainly assist black growers in enhancing profitability and the industry in pursuing its transformation agenda, Safda believes that more can – and must be done – by the industry.