South Africa - Durban - 28 February 2019 - SA Farmers Development Association Chairman Siya Madlala in his sugar cane farm at KwaMaphumulo, Stanger. Picture: Motshwari Mofokeng/African News Agency(ANA)

JOHANNESBURG - The sugar crop estimate for the embattled industry surged to 2.18 million tons for the 2018/2019 season, up from the 2.16m tons forecast in September.

The SA Sugar Association (Sasa) released the figures yesterday as the industry embarked on an all-out war, following Finance Minister Tito Mboweni decision to hike sugar tax by 5.2 percent. The association said sugarcane crush was estimated at 19m tons compared to the 19.3m tons forecast previously.

Sasa has argued that an increase in the Health Promotion Levy (HPL), commonly known as sugar tax would shrink the sugar industry, which contributes about R14 billion to the local economy. Sasa chairperson Hans Hackman said it was estimated that the impact of sugar tax represented a decline in local demand for sugar of about 200 000 tons per annum, which reduced industry revenue by about R1bn per annum.

“The industry is currently facing a number of serious challenges threatening its sustainability and survival. The need for the industry to pursue diversification has become even more urgent,” said Hackman. He said the impact of the HPL on the sustainability of the industry needed to be addressed urgently. 

Mitigation measures, said Hackman, included the raising of the import duty on dumped sugar to a more appropriate level via the Dollar Based Reference Price formula. “Past experience shows that when Parliament, government and the industry work together, more can be achieved.” 

Since the sugar tax came into effect in 2018, volumes of refined sugar sales have declined, reducing the industry's revenue by R1 billion. The Food and Allied Workers Union (Fawu) general secretary Katishi Masemola reportedly said that the union was concerned about job cuts.  

“From our side, we do see job losses beginning to happen in the plantation and some jobs in the milling and refining sectors. What is worrisome is the fact that 10,000 jobs are to be lost if the sugar tax remains,” he said.  Masemola said Fawu had been notified about looming job cuts. 

“As we speak, Coca Cola which uses sugar has proposed to retrench over 1,000 workers and they say this is a direct link to sugar tax. Other small manufacturing beverages are also laying off workers,” he said.  

“The government should place a moratorium on sugar tax until we engage on obesity issues.”  

Masemola has said should the company proceed with retrenchments they would take legal action, adding: “But also use our collective power to go on strike or to do anything possible within the laws of the country to make sure those retrenchments do not happen.”

The South African Canegrowers' Association has called on Trade and Industry Minister Rob Davies to place a moratorium on the country's sugar tax until its true impact was known. 

The association’s Rex Talmage said the lobby group was encouraged that the Trade and Industry Portfolio Committee had agreed on the scale of the crisis in the sugar industry.

"We are particularly pleased that Minister Rob Davies has been requested by Parliament to consult with the Ministers of Finance and Health on the socio-economic impact of the sugar tax,” said Talmage.

“However, there is no time to waste. We call on government to place a moratorium on the ill-conceived sugar tax until the true impact of it is known,” he said. 

However, the Healthy Living Alliance (Heala) said it was alarmed by the political opportunism of the sugar industry in blaming its economic woes on sugar tax. “We urge the Members of Parliament in the Trade and Industry, Health and Finance committees not to be manipulated by powerful organised business to the detriment of our health,” Heala said in a statement.