Sugar Industry

Sugar Tax ‘can save jobs’

Predatory sugar imports threaten industry and ‘more flexible tariff would help its growth!

At stake is an industry which produces more than
2 million tons of sugar a year and contributes R14bn to GDP

  • 80 000 people are directly employed
  • Indirectly, a further 350 000 people are employed
  • Other industries, from food and beverages to chemicals, depend on sugar as an input
  • The industry operates in job-starved rural areas
  • It sustains the economies of rural towns
  • A million people could be affected if the industry

THE sugar industry has united behind a tariff proposal to and thousands of jobs”.

The International Trade Administration Commission (Itac) in Pretoria yesterday heard an application by the SA Sugar Association for a tariff proposal that the association says could have the industry help save the industry and thousands of jobs threatened by predatory sugar imports.

At the same time, outside in the streets of Pretoria the FairPlay movement against predatory trade joined politicians and hundreds of sugarcane farmers and industry leaders from KwaZulu-Natal and Mpumalanga in a – march to the Department of Trade and Industry to voice their concerns about the “insufficient tariff” that is in place.

The application has the support of the tire industry, from bosses to workers, from small and large sugar growers to – sugar producers, millers and unions.

FairPlay believes the industry should be an engine of growth for South Africa and its neighboursand supports:

  • The implementation of an ethanol mandate,
  • The promotion of biogas for power generation,and
  • Ensuring that the industrial and – pharmaceutical uses of sugar is applied to create a sustainable sugar industry.

Annette Steyn DA MP and shadow minister of trade and industry, who attended the march, said due to an administrative blunder by the DTI and Itac, for seven weeks last year imports into South Africa were rated ‘As a result, our local market of sugar at zero. as flooded by cheap imports, putting jobs on the line.”

She said between April and September last year, “the tariffs were set far lower than they should have been”.

“Many farmers cannot compete with the flood of cheap sugar imports, which – is estimated at 25% of the total market.”

FairPlay also wants the tariffs on sugar to he changed more regularly and easily than is now the case.

Francois Baird, FairPlay founder, said: “We believe that a more flexible and responsive tariff regime is one element of achieving a sustainable industry.

A more flexible tariff would stabilise the industry so that it can grow, create jobs and expand through diversifying into areas such as fuel ethanol.

“A substantial ethanol industry would also help produce oil imports and improve South Africa’s balance of payments.”

He said the united front being presented by the industry demonstrates the impact that subsidised imports and a lack of adequate protection are having.

As part of the regulatory process overseen by the DTI, the Sugar Association is applying to Itac for an increase in the reference price from which sugar import duties are calculated.

The price has for a long time been significantly below levels needed to protect the local industry, the association says. The application is for the price to increase from $566 (R7677) to $856 a ton.

In theory, when the world sugar price drops below the reference price, import tariffs are triggered.

In practice, the response is often slow, leaving the industry exposed to increasing volumes of dumped imports from countries where farmers enjoy huge subsidies. Sugar imports, mainly from Brazil, more than quadrupled last year from 114000 tons in 2016 to 520.000 tons in 2017.

“All 120 sugar-producing countries protect their local industries through tariff and non-tariff barriers.

That is why, even though it is a world leading, cost-competitive industry, South Africa needs the system to trigger import duties against artificially low-priced imports.” The Itac hearing yesterday was vital for the future ofthe South African sugarindustry, Baird said.