South Africa : Mid-term budget brings little comfort for sugar cane farmers
South Africa’s 2024 budget focuses on debt reduction, with debt expected to reach R6.05 trillion by 2025/26, costing 22 cents per revenue rand in debt-service fees. Agbiz’s Wandile Sihlobo and SA Canegrowers both welcomed commitments to infrastructure investment and stable sugar tax rates, seeing benefits for agriculture and rural jobs. However, some industry leaders, like Dr. Siyabonga Madlala, expressed concerns, noting that the sugar tax has harmed smallholder sugar cane farmers, especially in KwaZulu-Natal and Mpumalanga, due to limited alternatives and challenging market conditions.
Wandile Sihlobo, chief economist of Agbiz, welcomed the statement, saying the budget showed that government was still committed to debt-stabilising primary budget surpluses.
Gondogwana said in his speech that government would have to manage debt better to achieve the fiscal strategy goals, as “debt has risen too fast and is too high”, with government debt expected to reach R6,05 trillion, or 75,5% of gross domestic product in 2025/26.
Debt-service costs are expected to reach R388,9 billion in the current financial year, which means that for every one rand of revenue that government raises this year, 22c is paid in debt-service costs.
Sihlobo also said that the emphasis on growth, infrastructure and fiscal reforms was appropriate and essential for long-term agricultural growth. “To thrive, the agriculture sector requires better functioning infrastructure, roads, rail, water, and electricity.”
The minister also touched on the importance of better functioning and well-funded municipalities, which would also benefit the agriculture sector.
“We look forward to the economic policy document that will provide details of the Government of National Unity’s focus, and the Treasury’s budget next year,” Sihlobo said.
The South African Cane Growers’ Association (SA Canegrowers) welcomed that the minister did not announce an increase in the healthy promotion levy, also known as the sugar tax, despite growing calls for this from foreign-funded health NGOs. The Healthy Living Alliance, for instance, has called for the sugar tax to increase from 11% to 20%.
SA Canegrowers said in a statement that the sugar cane industry had lost 16 000 jobs in the first year after the sugar tax was implemented in April 2018.
According to the statement, Godongwana promised more consultation with industry on the ongoing impact of the levy when he announced a two-year moratorium on increases in the sugar tax in 2023.
Higgins Mdluli, chairman of SA Canegrowers said: “We look forward to the promised consultation and working with government to ensure that evidence-based policies that protect jobs and support rural communities are implemented. The sugar tax is not supported by evidence. Since its introduction, it has not promoted health outcomes in South Africa, but to the contrary, destroyed jobs in areas that could ill afford it.”
Dr Siyabonga Madlala, CEO of the South African Farmers’ Development Association, however said that he was disappointed that the sugar tax was not scrapped altogether.
He pointed out that the tax has had a devastating impact on emerging and smallholder sugar cane farmers in KwaZulu-Natal and Mpumalanga, who had no alternative crop to sugar cane because of the high input costs associated with other crops, the absence of irrigation, and poor access to markets.
“An estimated 1 500 small-scale farmers have exited the industry since the introduction of the sugar tax. Its continuation will result in the further shrinking of the sugar industry, lead to more job losses and negatively impact the economy, especially in rural areas where there are few other income-generation opportunities,” he said.
Source Link : https://www.farmersweekly.co.za/agri-news/south-africa/mid-term-budget-brings-little-comfort-for-sugar-cane-farmers/
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