South Africa: Sugarcane farmers appeal for sugar tax repeal or moratorium on increases until 2030
Two South African sugarcane farming associations, SA Canegrowers and Safda, expressed concern over potential increases to the Health Promotion Levy (sugar tax), fearing further harm to 25,000 farmers. They urged President Cyril Ramaphosa to scrap the tax or extend the moratorium until 2030, aligning with the Sugarcane Value Chain Masterplan aimed at improving industry sustainability.
Two South African sugarcane farming associations, the South African Cane Growers Association (SA Canegrowers) and the South African Farmers Development Association (Safda), have said they are concerned that any increase to the “already devastating” Health Promotion Levy (HPL), or sugar tax, will further harm the 25 000 sugarcane farmers in the country.
The organisations called on President Cyril Ramaphosa and his administration to either scrap the sugar tax entirely or, at the very least, extend the HPL moratorium until 2030, which is in line with the Sugarcane Value Chain Masterplan to 2030.
The Sugar Value Chain Masterplan to 2030 is a social compact between the government and industry in which they jointly work to improve the sustainability of the sector, and address threats to and opportunities for the sector.
The masterplan processes around the sugar tax issue must be allowed to run their course without the ever-present threat of uncertainty pertaining to the HPL, say Safda executive chairperson Dr Siyabonga Madlala and SA Canegrowers chairperson Higgins Mdluli.
“Any increase to the HPL or lowering of the threshold would undo the work and progress achieved under the masterplan. We cannot allow the destructive sugar tax to kill the industry, which has been in recovery mode owing to phase one of the masterplan,” they say.
The sector was afforded a two-year reprieve on any sugar tax increases in February 2023 to accord it space to diversify the industry and restructure.
“However, our research indicates that a period of two years is inadequate for the realisation of product diversification.
“We need sufficient time to pursue identified product diversification opportunities as we move from being a sugar industry to a sugarcane-based industry. As our research has shown, we should have finalised our diversification endeavours by 2030,” say Madlala and Mdluli.
Further, there continue to be no credible studies showing that the HPL has led to the intended decrease in obesity and diabetes. There is also no credible research in South Africa and worldwide to show that sugar taxes have the intended effect, they add.
Since the introduction of the sugar tax in April 2018, two mills have been permanently closed in KwaZulu-Natal and the industry lost 250 000 t of sugar cane sales during the first year of implementation.
The industry has experienced multibillion-rand revenue losses and substantial job losses owing to the impact of the sugar tax.
A study commissioned by the National Economic Development and Labour Council on the socioeconomic impact of the HPL found that the industry, including the sugarcane farming and sugar milling sectors, had lost a cumulative 13 536 jobs, including 12 860 farm jobs, by 2019.
“Why punish cane farmers who make a major economic contribution to deeply rural and job-starved areas of KwaZulu-Natal and Mpumalanga?
“We plead with our government to ensure the encumbered success of the masterplan by ensuring policy alignment among departments centred on the masterplan,” say Madlala and Mdluli.
Additionally, a recent study by agricultural consultancy BFAP has shown that a decrease in the threshold of the sugar tax levy would result in a reduced demand for locally refined sugar by 125 000 t in 2023/24, followed by an additional 35 000 t reduction in 2024/25.
Further, the study estimated that 1 975 permanent jobs and 2 076 seasonal jobs would be lost, and 1 630 small-scale sugarcane growers at risk of going out of business as a direct result of decreasing the HPL threshold.
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