Sugar Industry Report


The challenge for South African sugarcane growers and producers as well as those in othermiddle-income and developing countries is to compete in the global market with producers in countries that heavily subsidise their sugar industries.

Earlier this year FLINT, a London based business advisory consultancy, in partnership with the non-profit European Center for International Political Economy (ECIPE), released a comprehensive report on the global sugar trade.

Among other things, the report examined in detail the levels of subsidization among the world’s major sugar-producing countries.

The report considered data from the International Sugar Organization (ISO), the Organization for Economic Cooperation and Development (OECD), the European Commission (EC), the US Department of Agriculture (USDA), and other national governments.

It found that a range of direct and indirect policy instruments are used to subsidise domestic sugar industries, including direct payments to farmers, price support mechanisms, preferential loans, production quotas and ethanol policy. Based on this data, the report concludes that the world sugar market is heavily distorted by government interventions.

The US rate of subsidisation is 66 percent of th eproduction value at farmgate. In Brazil the rate is 27 percent. In Thailand the rate is 34 percent and in the EU 18 percent.

It is against this backdrop that trade protection and price support for South African sugar is critically important.


According to a recently released landmark report, time to avert catastrophic environmental impacts from climate change is rapidly running out. Without urgent mitigation South Africa can expect worsening droughts, more powerful storms and rising sea levels. The Cape Town water crisis of 2018 is unlikely to be an anomaly if climate change remains unabated.

The report by the UN’s Intergovernmental Panel for Climate Change (IPCC) makes it clear that we need a global commitment to move away from fossil fuels. The report maintains that in order to avert cataclysmic impacts, global emissions of carbon dioxide need to fall 45 percent over the next 12 years.

The report notes that significant investment in biofuels and associated carbon capture and storage could make a big difference. The biofuels scenario laid out in the
report calls for feedstock covering an area twice the size of India to make the impact required.

Historically South Africa played a keyrole in the adoption of the historic Paris Agreement on Climate Change and made a voluntary commitment to combat climate change and set the goals of reducing greenhouse gas emissions by 34 percent by 2020 and 42 percent by 2025.

But lack of any meaningful progress on the implementation of a national biofuels strategy seriously calls into question how South Africa will meet those commitments.

In 2014, South Africa issued a draft position paper on a regulatory framework for biofuels. The paper missed the mark on several fronts. But perhaps its most glaring deficiency was that it identified sorghum as the preferred feedstock for biofuels.

This year according to SA Grains, South African agriculture will produce 83,000 tonnes of sorghum compared to the 20 million tonnes of sugarcane. There is not enough sorghum in South Africa to feed even a single biofuels refinery. A far more sensible approach would be to promote a variety of biofuels feedstock not withstanding the obvious advantages of sugarcane, which is the preferred feedstock of biofuels production around the world.

The benefits of biofuels from sugarcane are well known. Compared to petroleum, sugarcane ethanol cuts carbon dioxide emissions by 90 percent on average. That’s better than any other liquid biofuel produced today at commercial scale.

South Africa has always tempered its commitment on climate change with concerns about its overriding priorities to eliminate poverty and eradicate inequality.

Eliminating poverty and eradicating inequality requires addressing major challenges in creating decent employment.

The fact is that poverty and inequality is rampant in South Africa’s rural communities. Progress on a biofuels strategy that puts ethanol from sugarcane in the forefront can create an estimated 100,000 new jobs, mostly in rural areas, and improve the prospects of over 20,000 small sugarcane growers.

Nowhere is poverty and in equality more rampant than in South Africa’s rural communities. Progress on a biofuels strategy that puts ethanol from sugarcane in the forefront can create an estimated 100,000 new jobs, mostly in rural areas, and improve the prospects of over 20,000 small sugarcane growers


For the better part of the last decade, South Africa’s policy makers have recognised the enormous potential for the development of a biofuels industry in South Africa.

All over the world industrialised and developing countries alike provide examples of how to succeed in attracting investment in biofuels. This creates jobs and economic growth primarily in rural areas, mitigates climate change by reducing the consumption of fossil fuels and enhances energy security by limiting dependence on foreign oil supplies.

Every analysis of world ethanol production points to sugarcane as the preferred feedstock for biofuel refineries. Sugarcane is abundantly available in South Africa. Sugarcane cultivation uses less agro-chemicals such as nutrients and pesticides than other field crops and therefore has fewer environmental impacts. Sugarcane as a biofuels feedstock poses no risk to food security compared to other grain crops. Biofuel from sugarcane is superior in terms of both the reduction of greenhouse gas emissions and in its cost-effectiveness. Over 20,000 small-scale farmers in South Africa grow it so sugarcane ethanol is an obvious catalyst for rural economic development. Because of a worldwide glut in sugar production it is abundantly available as a biofuels feedstock.

The experience of other countries draws a clear road map of policy options for creating an enabling environment to attract investment in bio-refineries in South Africa.

Following is a menu of policy options used by countries that have been successful in attracting investment for the development of an ethanol industry.

Rather than simply a tax relie for a subsidy-based approach, mandatory fuel blending is an incentive-based approach. Over 60 countries around the world have ethanol-blending mandates or renewable-fuels standards that exert more direct control over fuel markets. From the government’s perspective, a blending standard is revenue neutral. South Africa’s “voluntary” blending approach is entirely unworkable because blending usually takes place at the refinery rather than the filling station.

A few countries impose carbon taxes or energy taxes on fossil fuels. As a result of these taxes renewable fuels become less
expensive than fossil fuels.

Fuel-excise-tax reduction is the most direct and widely used instrument to help biofuels compete with fossil fuels. Most nations levy a tax on the consumption of gasoline and diesel, and a fuel-tax reduction for biofuel aims to lower the cost of biofuel relative to gasoline or diesel.

To further attract biofuels investment, incentives such as grants, loans and loan guarantees, and a variety of tax-related incentives such as tax holidays, accelerated depreciation and tax reductions are being provided in almost all countries to biofuel refineries. In short, South Africa has the potential to be among the world leaders in ethanol production. It has the resources and the skills needed. But what it needs is a clear and enabling policy environment to bring this potential to fruition.


Farmer’s Weekly reports that Coca-Cola Beverages South Africa(CCBSA) and FairPlay have agreed to work together to ensure the survival of South Africa’s beleaguered sugar industry.

This follows reports of the import of sugar by Coca-Cola reportedly at prices below the South African industry’s costs of production. Farmer’s Weekly notes that after “extensive discussions” between FairPlay and CCBSA the two parties released a joint statement indicating that they had agreed to work together to ensure the survival of South Africa’s beleaguered sugar industry.

Following is the text of the joint statement:

1. The parties recognise the economic contribution the sugar industry makes to the economies of KZN and Mpumalanga –
especially insofar as small-scale and developing growers are concerned.

2. CCBSA and FairPlay agree on the diversification of the sugar industry and will support the current process led by the Department of Trade and Industry to develop the sugar industry transformation plan and the industry strategy master plan. This master plan will provide insights and guidance on how the diversification of the sugar industry will be structured and how it will be prioritised, and we will support these in accordance with the work undertaken by government.

3. CCBSA is committed to undertaking measures that aim to uplift small-scale and developing growers and will continue to do so in collaboration with and in leveraging already existing partnerships with small-scale growers.

4. CCBSA respects and endeavours to treat all its stakeholders equally, and to this end, CCBSA will respect existing relationships and partnerships as appropriate.

FairPlay and CCBSA have accordingly agreed to build on this engagement with each other in the best interest of enhancing the interests of small and developing growers as part of the sugar industry and South Africa.

Speaking to Farmer’s Weekly, Coca Cola SA spokesperson Tshidi Ramogasse said that while details of how the two entities will work together have not yet been established “the intention is to work with the sugar industry and any other interested parties to support the sustainability of the industry”. Ramogasse added that a key focus would be supporting South Africa’s small-scale sugarcane growers.

FairPlay spokesperson Melinda Shaw noted that sugar production was “a strategic industry for future growth and employment.”

Shaw added” diversification of the industry into ethanol production has growth opportunities not only for South Africa, but for the Southern African region.”

The FairPlay Movement is a not-for-profit trade movement that fights for jobs. Its goal is to end predatory trade practices between countries so that big and small nations play by the same rules. It supports the principle that penalties for transgressing those rules apply equally to everybody.

FairPlay was founded in October 2016. In alliance with existing organisations and experts it formulates and promotes strategies to defend communities made vulnerable by predatory trade practices and promote sustainable livelihoods.

These alliance partners are international, currently from the USA, Canada, UK, Ghana and South Africa.

FairPlay mission: To end the scourge of dumping as an immoral trade practice.

FairPlay vision: A world where dumping no longer exists, with free trade according to the rules.

Follow FairPlay Social Media on  @FairPlayZA

Generic selectors

Exact matches only

Search in title

Search in content

Search in posts

Search in pages

Filter by Categories


All News

Chicken Industry

Clothing and textiles

Dumping and predatory trade

Economic development


Food safety

Food security

International trade

Media Releases

Monthly Reports




Sugar Industry


VAT FREE Chicken