Patel sets regulation in place for implementation of Sugar Industry Master Plan
He also further designated the industry in terms of the Competition Act for an exemption, which will allow industry stakeholders to begin working together to implement a master plan for the industry.
The master plan has been created to enable growth in the sugar industry, given the crisis within the industry that is threatening tens of thousands of jobs.
Agriculture, Land Reform and Rural Development Minister Thoko Didiza in a statement explained that the sugar industry had gone through enormous strain in recent years, in part owing to a flood of imports.
Yearly sugar production in South Africa has declined by nearly 25% over the past 20 years, from 2.75-million tons a year to 2.1-million tons a year.
Additionally, the number of sugarcane farmers has declined by 60% over the past 20 years and sugar industry-related jobs are estimated to have reduced by 45% over the period.
The Department of Trade, Industry and Competition says declining profitability in the local industry has accelerated as a result of a “perfect storm” of developments in global and local markets that has now reached a critical point.
The average sugarcane farmer and sugar milling company have been incurring losses that are no longer sustainable. This has created a set of conditions where there is a real risk of unmanaged decline in the industry with devastating consequences for rural unemployment and poverty, the department notes.
The Sugar Master Plan sets out action to protect jobs, rural livelihoods and businesses, while creating a bold new ambition for the future – that seeks to create diversified revenue streams for sugar producers and deliver new job opportunities.
"The master plan aims to diversify the value chain based on sugarcane away from one that is today almost solely focused on the production of raw and refined sugar, into one that in future produces a wider range of globally competitive sugarcane-based products.
“The master plan for the South African sugarcane value chain is the result of extensive engagement and consultation among sugar industry stakeholders and social partners. It represents a new social compact based on dialogue, shared ownership and wide support," Patel notes.
He adds that agility and responsiveness to the needs of the sugar industry is key to the master plan and it has a phased approach to planning and implementation.
The first phase includes immediate action to prevent the collapse of the industry and to urgently start a restructuring programme.
For this, the industry needs exemption from certain provisions in the Competition Act, given that the legislation currently prohibits coordination between competitors. Patel has therefore permitted specified exemptions for the industry.
Once the Competition Commission grants an exemption, the master plan will be signed and its implementation can start.
Further, the amendments to the Sugar Industry Agreement and the South African
Sugar Association’s Constitution, which has also been agreed in consultation with the industry, will further support the objectives of the master plan, by formalising the governance arrangements of the industry.