MEDIA STATEMENT BY HIGGINS MDLULI, CHAIRMAN OF THE SA CANEGROWERS
February 13, 2025
The Health Promotion Levy (or sugar tax) has been a job wrecking-ball in rural economies in South Africa.
SA Canegrowers, an industry body representing 24,000 small-scale and 1,200 large-scale sugarcane growers, has as a result written to Finance Minister Enoch Godongwana asking him to scrap the sugar tax. SA Canegrowers has also invited Minister Godongwana to KwaZulu-Natal and Mpumalanga to engage with the sugar industry to understand how the Treasury’s policies are not supporting economic growth and rural employment.
Since the introduction of the sugar tax in 2018, the sugar industry has repeatedly sought to engage with Treasury about how the tax is harming the economy and about the ways the sugar industry is seeking to find a path forward.
According to an independent study by Nedlac, the sugar tax destroyed more than 16,000 jobs and R2 billion in income in its first year alone. Minister Godongwana, in a welcome move, put a moratorium on increases on the tax until this year citing the inflationary and environmental pressure the industry faces. But activists are currently seeking increases in this job-killing tax, even though there is no conclusive evidence that the tax has had any positive effect on health outcomes or reduced diabetes or obesity.
Moreover, the tax was based on a single academic modelling study – with no real-world evidence to support it. The government also promised to commission an economic impact study of the tax, which is still outstanding. The only concrete evidence we have about the tax is that it led to job losses, yet foreign-funded activists demand an increase based on conjecture without any concern for the rural economies it could destroy.
By asking for the scrapping of the tax, the sugar industry is not asking for a handout, far from it. Since 2020, industry associations representing farmers, millers and retailers and food producers have worked closely with the Department of Trade, Industry and Competition to encourage transformation in the industry and find new markets for sugarcane products.
The work, encapsulated in the Sugar Value Chain Master Plan 2030, has achieved much in planning for a stable future for the industry, including identifying promising new markets such as Sustainable Aviation Fuels (SAFs). Such new initiatives can safeguard existing jobs at farm level but can also create new jobs and economic opportunities on farms and in new industries.
Realising these new markets for sugarcane is understandably taking time. To speed this up, Government policy and legislation need to foster an enabling growth environment to encourage private investments in the biofuel production facilities that will be needed.
The sugar tax puts excessive pressure on sugarcane growers, in an already challenging environment. Should sugarcane growers leave the industry, the viability of alternative projects such as biofuels and sustainable aviation fuel are threatened as these projects rely on a stable supply of sugarcane as a feedstock.
Small-scale and large-scale sugarcane growers are often the only employers in rural communities where there are few other options for jobs. The economic stability they bring to families in Mpumalanga and KwaZulu-Natal should not be underestimated.
Minister Godongwana, your decision will have a direct impact on the livelihoods of rural workers and the future economic stability of rural KwaZulu-Natal and Mpumalanga. We ask that you prioritise jobs and economic growth and scrap the sugar tax.
ENDS
For media enquiries:
Gerhard Mulder
gerhard@resolvecommunications.co.za
083 305 9361