SA Canegrowers’ board Chairman, Andrew Russell is calling for a concerted and united effort to maintain a sense of urgency and shared vision around the implementation of the second phase of the South Africa government’s Sugar Cane Value Chain Masterplan to 2030.
June marked one and a half years since the first phase of the Sugar Cane Value Chain Masterplan was signed in November 2020, which means we have reached the halfway mark when it comes to its implementation.
The South African sugar industry, government, and social partners who were all signatories to the plan have much to be proud of when it comes to the successes achieved so far.
Sense of urgency
However, as we move into the second half of the plan’s execution, it is critical that all stakeholders maintain a sense of urgency and a shared vision for what needs to be achieved in order to ensure the future sustainability of the industry, which supports over one million livelihoods in South Africa.
SA Canegrowers remains committed to the implementation of the seven commitments in the plan namely: increasing demand for locally grown and manufactured sugar; industry price restraint; improving import protection; strengthening Small-Scale Grower support; increasing transformation in the industry; creating a diversified sugarcane-based industry; and the potential restructuring of the industry.
The events of the past year, particularly in KwaZulu-Natal, have only added more urgency to the work we must do to ensure that the Masterplan succeeds. The unrest in July 2021 and the floods in April 2022 have exacerbated the hardships growers were already experiencing owing to the threats including the influx of cheap sugar imports and the impact of the Health Promotion Levy on the industry.
The successful implementation of the Masterplan represents the industry’s best hope for recovery; we cannot afford to fail.
One of our main focus areas over the past year and a half as has been fulfilling our commitment, together with the rest of the sugar industry, to encourage consumers to buy locally produced sugar. To this end, SA Canegrowers launched the Home Sweet Home campaign in December 2020.
Significant partners have backed and joined the campaign including Proudly South African and the Shoprite Group. South Africans have also rallied to our call, resulting in the attainment of the target of increasing local demand for South African sugar by 150,000 tons in the first year of the Masterplan’s implementation.
Industry must pull together
While this is to be welcomed, the plan includes another target of increasing local demand by 300,000 tons by year three. While SA Canegrowers will continue to expand the Home Sweet Home campaign, it is critical that the rest of the industry pulls together to take us over the finish line, and government has a part to play as well.
Under the terms of the Masterplan, government undertook to promote the use of locally produced sugar by all government departments and state-owned entities, and to investigate appropriate ways of designating sugar and sugar-containing products under the Preferential Procurement Policy Framework Act.
This is action that can be taken immediately.
The industry has also taken steps to honour the Masterplan’s commitment to supporting Small-Scale Growers and promoting transformation within the sector. In January 2022, the industry paid out R60 million as an additional premium price to qualifying Small-Scale Growers.
This figure was over and above the R165 million paid out to Small-Scale Growers as part of a commitment to invest R1 billion in the industry’s transformation over five years.
But all of the industry’s support for Small-Scale Growers will be for nought if we continue to hobble their progress with unsubstantiated policies like the Health Promotion Levy (or sugar tax). It remains the case that no evidence has been produced to show that the tax has decreased obesity levels in the country.
What has been shown is that it cost the country 16,621 jobs and R2.04 billion in 2019 alone. This is just one example of a hurdle that is within government’s power to remove.
Milling infrastructure decline
Perhaps the most difficult of the challenges we must address is the state of the industry’s milling infrastructure and capacity. in 2021 alone Tongaat Hulett and lllovo announced the suspension of operations at two mills in KwaZulu-Natal, the heart of South Africa’s cane industry. This has left only 12 mills to service the canegrower sector.
Sadly, many of these are not operating optimally, which has had a significant impact on the millers’ capacity to crush the cane tonnage produced by growers. The 2021 carryover of more than 2 million tons is expected to remain at a similar level in 2022, costing growers more than a R1.28 billion loss in revenue and threatening thousands of jobs.
One of the ways growers are trying to become more sustainable and less reliant on the mills is to diversify into other crops or other cane products. A number of local canegrowers have begun exploring alternative crops including cotton, timber and macadamias.
This work is continuing and indeed bearing fruit.
The more difficult but promising prospect lies in alternative cane products, especially the production of sustainable aviation fuels. A study commissioned by SA Canegrowers in partnership with the Roundtable on Sustainable Biomaterials (RSB) found that by diverting 50% of the cane produced by growers each year towards ethanol production, South Africa could produce approximately 700 million litres of low-carbon ethanol annually, producing 433 million litres of sustainable aviation fuel (SAF) for the aviation industry.
The announcement of these findings generated significant public interest, but we now need to move towards concrete plans and action. Even as a dedicated Masterplan task team works to secure the necessary funding for further feasibility studies, government can begin to put in place the necessary regulatory framework to enable the industry to move faster in the development of this new industry.
With the due diligence and regulatory work completed within the remaining Masterplan period, the country could see this industry rise within the next decade – an incredible prospect for the industry if we can achieve it.
Despite the headwinds facing the industry over the past few years, the Masterplan represents our shared commitment to building a better tomorrow for a new generation of growers. However, its success rests on every signatory’s continued support for the plan over the next year and half, and on our dogged determination to deliver on our commitments.
This is the only way we can ensure the long-term sustainability of the industry and safeguard the one million livelihoods it supports.