DTIC budget vote: Government must honour its commitments under the Sugarcane Masterplan

Press Release – May 19, 2022

SA Canegrowers calls on Department of Trade, Industry and Competition Minister Ebrahim Patel to honour his commitments to the growth of the sugarcane industry through the actions outlined in the Sugarcane Masterplan to 2030 when he delivers his annual budget tomorrow.

When Minister Patel delivers the budget for the Department of Trade, Industry and Competition on Friday 20 May 2022, SA Canegrowers hopes he will use it as an opportunity to provide an update on government’s action to implement its commitments under the Sugarcane Value Chain Masterplan, which was developed to address a number of serious challenges facing the industry and to ensure its long-term sustainability and profitability.

Half-way mark

The first three-year phase of the Masterplan was signed by Ministers Ebrahim Patel, Thoko Didiza, sugar industry stakeholders, retailers and social partners on 17 November 2020, which means the budget will be delivered at the half-way mark of the plan’s implementation.

The signatories to the plan committed to taking action on the following priorities:

• Increasing demand for locally grown and manufactured sugar;
• Industry price restraint;
• Improving import protection;
• Strengthening small-scale growers support;
• Increasing transformation in the industry;
• Creating a diversified sugarcane-based industry; and;
• The potential restructuring of the industry.

Promoting locally produced sugar

As part of the commitment to increasing demand for locally produced sugar, a number of stakeholders agreed to varying offtake levels. Under this commitment, government undertook to promote the use of locally produced sugar by all government departments and state-owned entities. The DTIC also undertook to investigate appropriate ways of designating sugar and sugar-containing products under the Preferential Procurement Policy Framework Act. SA Canegrowers therefore calls on Minister Patel to provide an update on progress made on both these commitments. 

In fulfilment of its commitment to encourage consumers to purchase locally produced sugar, SA Canegrowers launched its Home Sweet Home campaign in December 2020. Since its launch a number of partners have come on board to support the campaign, including Proudly South African and  retail giant Shoprite Checkers. Yet, this effort must be complemented by government action to stem the inflow of cheap sugar imports, which is costing the industry R2 billion a year. SA Canegrowers hopes to hear Minister Patel speak to the work being done in this regard.

Transformation

The industry has also taken steps to honour the Masterplan’s commitment to supporting Small-Scale Growers and promoting the transformation of the industry. 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.

However, critical for the survival of large and Small-Scale Growers is government fulfilling its commitment when it comes to a review of the socio-economic impact of the Health Promotion Levy (HPL or sugar tax).

While no evidence has been produced to date that the tax has had a positive impact on obesity levels in the country, it has had a devastating impact on growers and the livelihoods they support. This has resulted in 16,621 jobs and R2,04 billion in revenue being lost during the first year of its implementation alone.

We therefore call on the Minister to commit government to conducting much needed research into the impact of the HPL.

Finally, the acceleration of the diversification of the sugarcane value chain is also crucial to the industry’s long-term sustainability. In May 2021, SA Canegrowers and the Roundtable  on Sustainable Biomaterials announced the findings of a joint study on the viability of using South African sugarcane to manufacture sustainable aviation fuel. This study was presented to the Value Chain Diversification Task Team established under the Masterplan. SA Canegrowers therefore hopes to hear Minister Patel make a meaningful announcement about the progress of work underway to establish an enabling framework for this promising industry.

SA Canegrowers remains steadfast in its commitment to the successful implementation of the Masterplan, and to working with government to acheive this so we can safeguard the one million livelihoods the industry supports.