R84 million in losses threaten rural sugarcane jobs

R84 million in losses threaten rural sugarcane jobs

KwaZulu-Natal looting puts sugarcane industry under massive pressure as mills reject cane burnt by arsonists and revenue lost by farmers puts rural jobs at risk.

The South African Canegrowers Association (SA Canegrowers) is extremely concerned about the impact on the sugar industry of the recent unrest that swept through parts of KwaZulu Natal and Gauteng. SA Canegrowers has therefore written to government requesting immediate financial relief to be paid to growers, especially small scale growers,  as the extent of the damage becomes clearer by the day, there are now  thousands of precious rural jobs are at risk.

At the time of the riots, SA Canegrowers reported a running total of the potential damage to local canegrowers as R300 million if mills could not crush the more than 500,000 tons of cane that was burnt in arson attacks. These fears are now materialising.

To date, mills in Kwa Zulu Natal have rejected 135,222 tons of damaged cane. This amounts to more than R84,5 million. Almost a third of the cane rejected thus far, more 38,000 tons, belongs to small-scale grows who are most at risk of not recovering from revenue losses of this magnitude.

The majority of small-scale growers have no form of insurance. While many await relief from fire insurance co-operative Grocane and the South African Special Risk Insurance Association(SASRIA), they have also been notified that all cane that was burnt prior to mill closures will not be covered by these entities, even though many mills only closed down after a large amount of cane had already been targeted by arsonists.

Furthermore, since industry transformation benefits are directly linked to the tonnage of cane delivered, small-scale growers whose cane is rejected stand to lose these benefits as well.

The current sub-standard performance of some mills is also exacerbating grower losses. In order to minimise losses, growers need mills to work optimally; but this is not happening in many places. SA Canegrowers therefore expects that these losses will continue to mount as mills fail to process arsoned cane quickly enough.

SA Canegrowers has written to a number of government entities requesting financial assistance be paid directly to growers severely impacted by the riots. This includes the Department of Trade, Industry and Competition (DTIC); the National Agricultural Marketing Council (NAMC); the Industrial Development Corporation’s (IDC) Agro Funding Unit and the Parliamentary Portfolio Committee on Agriculture, Land Reform and Rural Development. 

SA Canegrowers welcomes its engagements with some of these stakeholders. Notably, we were grateful to have the opportunity to shed more light on the devastation across the industry during oversight visits conducted by the Parliamentary Portfolio Committee last week to assess the scale of the damage in the province. SA Canegrowers leadership has also been meeting with the IDC to discuss possible bridging finance for affected growers.

However, the damage sustained has the potential to cripple the industry, which has already been struggling due to severe drought, the influx of cheap imports and the health promotion levy (or sugar tax). 

To reduce the impact on the growers and communities that rely on the industry for their livelihoods, urgent intervention is required from government including immediate financial relief, which will allow growers to stay afloat, maintain operations and retain workers as the sector works to rebuild itself. 

SA Canegrowers will also seek further opportunities to act as a facilitator between growers and the government. This includes the Kwa Zulu Natal government in  in light of the declaration of a State of Disaster in province on 29 July 2021. It is vital that plans to address the  situation across the province include intervention for the sugar industry, which provides more than one million livelihoods where they are desperately needed in rural communities.

SA Canegrowers remains committed to working with government, growers and local communities to rebuild our industry. With the risk to lives substantially reduced, our goal now is to protect and restore the livelihoods that depend on the sugar industry. 

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