Sugar sector eyes master plan to protect its turf from big imports
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DURBAN - THE SOUTH African sugar industry is looking to the recently signed Sugarcane Master Plan to stabilise the sector in 2021 after a flood of sugar imports devastated it
South African Sugar Association (Sasa) executive director Trix Trikam said last week, “We are particularly concerned about high volumes of sugar imports from Eswatini. India and Brazil have continued to be the main non-African countries importing sugar into South Africa. These issues are being addressed through the recently signed Sugarcane Value Chain Master Plan to 2030.”
Sasa said, however, the current sugar tariff remained inadequate and needed to be addressed properly. “We are involved in ongoing engagements with government and relevant entities to address the issue,” said Trikam.
South Africa last month signed the plan, which was delayed by eight months because of Covid-19, with industrial users and retailers agreeing to a minimum offtake of sugar for three years, with roughly 80 percent of consumption coming from local farms and millers in the first 12 months, which would be hiked to 95 percent by 2023.
Last week the SA Canegrowers’ Association launched its Home Sweet Home campaign, aimed at encouraging South Africans consumers to buy local sugar products in order to help safeguard the one million livelihoods the industry supports.
Rex Talmage, the chairperson of the SA Canegrowers’ Association, said in a statement that weak trade protection has seen a major increase in cheap sugar imports flooding South Africa from Brazil and the United Arab Emirates as well as the Southern African Customs Union (Sacu).
“For every ton of imported sugar that floods our shores, our local South African industry loses R4 000. These cheap, low quality imports have caused the local industry to lose just over R2.2 billion in the last year alone,” he said.
Talmage said that a record level of sugar (715 000 tons) was expected to pour in from Eswatini this year.
“It is important to note that Eswatini sugar enters South Africa free of any import tariff, meaning billions more stand to be lost during the 2020/2021 season,” he said.
Talmage said the local industry has been forced to export domestic surplus onto a “dumped” or over-supplied world market at a significant loss, which had left South African growers with an eroded RV price (the price which growers are paid for their sugarcane). This was devastating as at times the revenue was lower than the cost of producing a crop, he said.
This was said to have put the future of the South African sugarcane industry under serious threat, including the futures of 21 000 black small-scale growers, 65 000 farmworkers as well as the 270 000 indirect jobs and the one million livelihoods the industry supports.
The Association of South African Sugar Importers (Asasi) chairperson Chris Engelbrecht said the sugar industry was suffering from many issues, including draught, management, poor sustainability, cheap imports for a few months, most of local sugar fields not being in the right climate, the industry not being efficient and corruption in the industry.
Asasi said in the past five years, the local sugar industry had suffered a drought and made wrong commitments on export quotas and could not meet local demand.
Engelbrecht said this had triggered an unjustified local price increase of almost 20 percent in one year.
He said that then an incorrect zero duty was gazetted for a few months, causing big international suppliers to jump in and flood the South African market.
“The sudden oversupply and the snowball effect afterwards were devastating for the whole industry including the long-term importers. It took more than two years for the market to correct itself. In the last year imports were at a minimum.”
Engelbrecht said Asasi does not agree with the proposed Master Plan as they thought that it was not realistic.
“It’s one sided and trying to protect a market that is impossible to save with such low efficiency and with such a high artificial local price. However, Asasi will support the buy local idea as far as possible,” Engelbrecht said.
“But the SA sugar industry needs to be able to compete on the world market. Stop saying the world market is subsidised as it is not, and it is not the excuse for low yields, under production and extremely high costs.”