Why South Africa cannot afford to further weaken its sugar industry
Foreign-funded groups are pushing for a higher sugar tax in South Africa’s 2026 Budget, despite no clear health benefits. The levy has cut jobs, hurt local sugar demand, and encouraged subsidised imports. With growers already strained by costs, weather and unfair trade, raising the tax risks accelerating rural job losses.
Foreign-funded activists are urging Finance Minister Enoch Godongwana to increase the sugar tax on soft drinks to 20% in the February 2026 Budget. These groups misleadingly argue that a higher Health Promotion Levy (or sugar tax) is a necessary public health intervention, claiming it will reduce diabetes-related costs and ease pressure on the healthcare system. Yet after almost eight years of such advocacy, there is still no clear evidence that the sugar tax has reduced obesity or diseases associated with excess weight gain. Nor has it been accompanied by meaningful investment in preventative healthcare, screening, or treatment.
What the tax has been proven to do is destroy thousands of jobs, suppress demand for locally produced sugar whilst driving beverage producers to look at buying sugar imports from countries that heavily subsidise their industries instead. Scrapping the sugar tax will not resolve every challenge facing the sector. But continuing to burden the industry with the tax while failing to address unfair imports and weaknesses in trade protection will only accelerate job losses and farm closures.
Any further increase in the sugar tax would therefore be imposed on an industry already under severe strain.
The sugar industry is under sustained pressure from multiple directions. Over the past decade, growers and millers have had to navigate repeated droughts, recent flooding in Mpumalanga, rising input costs, and persistent infrastructure failures. In Mpumalanga, rainfall is insufficient to sustain sugarcane year-round, making irrigation essential. During the severe load shedding of 2024, growers in Mpumalanga and northern KwaZulu-Natal struggled to power irrigation pumps, and today they face sharply higher electricity prices. Poor road conditions further complicate the transport of cane to mills for processing.
More recently, farmers have been hit by a surge in unfairly subsidised imported sugar sold into South Africa at prices below local production costs. These imports have displaced demand for locally produced sugar, despite South Africa being fully capable of meeting domestic needs.
Despite these pressures, the sugar industry remains a critical pillar of rural employment and economic stability. This importance is often overlooked.
In 2018, the government introduced the Health Promotion Levy. Beverage manufacturers responded by reformulating products, and a Nedlac study estimates that 16,000 jobs were lost as a result. Now, foreign-funded lobby group HEALA is calling for the tax to be increased. Policymakers should ask whether the cumulative strain on an industry that supports more than one million livelihoods is being properly considered.
Sugarcane growers and millers are deeply embedded in rural economies, particularly in KwaZulu-Natal and Mpumalanga, where few alternative large-scale employers exist. Weakening this sector has consequences far beyond individual farms.
SA Revenue Service data shows that more than 177,408 tonnes of subsidised imported sugar entered South Africa between January and November in 2025. By comparison, imports over the same period in 2022 amounted to fewer than 2 858 tonnes. Last year’s sugar imports vastly exceeded any amount of sugar imported annually since 2020.
The root of the problem lies in a distorted global sugar market. Major producing countries subsidise production and, in some cases, exports, allowing surplus sugar to be sold internationally at artificially rock-bottom prices. South Africa’s import tariff regime was slow to adjust to depressed world prices this year, creating a window in which unprecedented volumes of cheap sugar flooded the local market. Although this sugar is sold to South African consumers at prices similar to local sugar, the profits accrue to foreign producers and traders, not to South African farmers or millers.
The result is a steady weakening local industry. Reduced local sugar sales linked to rising imports already translated into losses of at least R684 million in 2025 alone. These losses come on top of rising business costs, weather-related shocks, and the dampening effect of the sugar tax on demand. For an industry operating on tight margins, these pressures compound rapidly.
South Africans are beginning to recognise what is at stake. More than 80,000 consumers have pledged to buy locally produced sugar through the Save Our Sugar campaign, reflecting growing awareness that food security, employment and rural stability are closely linked.
Now the government needs to come to the party- by encouraging retailers to buy local and by scrapping the sugar tax which erodes price competitiveness for locally produced sugar and, when global prices are low, creates greater scope for beverage manufacturers to turn to subsidised imported sugar.
Public health and economic policy should not operate in isolation. A balanced approach is needed, one that protects livelihoods, strengthens local production, and recognises that sustainable industries are essential to a healthy society.
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Source : Business Report
