Johannesburg - South Africa is expected to harvest 1.63 million tonnes of sugar in the 2015/2016 season, the lowest since 1995 and down 22 percent on the previous period as a severe drought hits production, an industry body said.
The worst drought in a century has hurt sugar and maize producing regions, piling pressure on sugar producers who are also grappling with cheap imports, forcing some mills to remain closed and reducing jobs in the sector.
The government has already responded to the lack of rainfall by allocating 1 billion rand for drought disaster relief in 2015/16.
“The South African sugar industry has not escaped the adverse impact which is expected to include loss of income and jobs,” South African Sugar Association Executive Director Trix Trikam said.
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The sugar industry, which has revenue of about R12 billion ($783 million) and employs 79 000 people directly and 350 000 indirectly, is also grappling with low prices and a flood of cheap imports, mainly from Brazil.
Trikam said rainfall had been some 60 percent below what was required in the crucial months between December and March, when the crop is growing and evaporation is high.
In the 2014/15 season farmers reaped about 2.12 million tonnes of sugar, not far from an average of around 2 million tonnes in recent years, Trikam said.
Yet the impact of the drought was already evident in results published in November by southern Africa's top sugar producers Illovo Sugar and Tongaat Hulett, whose earnings were hit by weather conditions as well as low sugar prices.
Tongaat estimated production for the current season to be as much as 23 percent lower than the prior year while Illovo forecast a 10 percent drop.
Food and Allied Workers Union General Secretary Katishi Masemola told Reuters some sugar plantations had said they would need less labour due to lack of rain.
“Our concern is that more people have joined the army of the unemployed even if they are seasonal workers,” Masemola said.
Trikam said the 1993-1994 drought had led to extensive job losses, without elaborating on the current season's jobs impact.
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Trikam said there was enough sugar in the market to supply the home market, but sugar producers were reducing exports to avoid possible shortages.
Smaller sugar and food producer RCL Foods said in a statement: “As a result of an expected decline in sugar availability in the country, the sugar industry reduced its exports in order to ensure sufficient sugar for the domestic market.”