Sugar industry under strain
Sugarcane growers in KZN face immense pressure due to investment shortages and Tongaat Hulett’s business rescue. The sugar industry, affected by financial distress and the sugar tax, struggles with sustainability, impacting a million jobs. SA Canegrowers chair Higgins Mdluli urges government support and eliminating the Health Promotion Levy. Tongaat Hulett seeks court approval to suspend obligations during business rescue, aiming to ensure fair treatment of creditors and settle payments.
Sugarcane growers in KZN are under immense pressure and struggling due to a lack of investment, with one major contributor, Tongaat Hulett, under business rescue.
The sugar industry is still grappling with the long-term effects of these sugar mills’ financial distress and needs to prepare for potential failures in the business rescue processes.
Added to this is the concern over the Health Promotion Levy (or “sugar tax”) which, canegrowers said recently at their annual general meeting held on the North Coast, undermines the sustainability of the industry that supports a million jobs and rural livelihoods.
The recently elected board chairperson of SA Canegrowers, Higgins Mdluli, said with the sugar tax set to increase next year, SA Canegrowers will once again urge the government to support the industry to safeguard the jobs it sustains.
Mdluli mentioned that the sugar tax was supposed to be reviewed under phase one of the Sugarcane Value Chain Masterplan, but this promise was not kept, and no meaningful engagement has been undertaken with the industry.
The sugar tax has suppressed the market for locally produced sugar and cost the industry more than 16 000 jobs.
“We need to eliminate the Health Promotion Levy,” said Mdluli.
He said they have called on the government to fast-track the value chain diversification project through the second phase of the master plan, with support for diversification into strategic aviation fuels, for example.
The industry masterplan, a contract between cane growers, retailers, millers, and the government, is the best mechanism to address the various threats and opportunities to the sugar industry in a coherent and collaborative manner.
“SA Canegrowers is honoured to support South Africa’s hardworking growers. Their indomitable spirit is emblematic of the South African will to survive and thrive,” said Mdluli.
Tongaat Hulett spokesperson Heidi Geldenhuys said its business rescue practitioners brought an application to the Durban High Court on April 26, 2023.Geldenhuys mentioned that part of the application asked the court to allow the rescue partners to suspend obligations under the Sugar Industry Agreement, 2000 or any redistribution payment, and related levies and interest that would become due during the business rescue proceedings.“So, it was about being given the time in a business rescue for the company to ‘breathe’, to follow the due process and to treat all creditors fairly. We have worked hard to settle whatever payments to the growers, employees, etc.,” said Geldenhuys.
Source Link: https://witness.co.za/news/2024/06/18/sugar-industry-under-strain/
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