Sugar Industry

Sugar trade threatened by imports

Local production overtaken by 25% leading to R2.3bn decline

THE SOUTH African Sugar Association (Sasa) has warned that the local industry is under threat from imports.

The association said imported sugar had overtaken local production by nearly 25%, leading to a R2.3 billion decline in the industry’s overall revenue in the past season from April 2017 to March 2018. Sasa’s commercial director Judith Wilson said low tariffs paid by foreign producers had resulted in increased imports. Wilson said the local industry was now losing the market share to imports.

She said the situation was akin to exporting jobs to other countries. “If this crisis is not arrested soon, the industry could collapse, leading to job losses in an industry which employs 85 000 directly, 350000 indirectly as transporters, bag makers, with another 1 million people dependent on the cane growing and milling activities of the industry,” Wilson said.

The country’s largest sugar producer Tongaat Hulett said in March its headline earnings for the year to end March were negatively impacted by imports, low international sugar prices and a stronger rand as it reported a 37.2% decline. Hulett said its headline earnings decreased to R617 million from R82m last year.

The group said operating profit for the period also declined by 16.1% to R1.96 billion, down from R2.33bn, while operating profit for various sugar operations was down by 34.15% to R837m, down from R1.27bn. Yesterday, members of the industry marched to the Department of Trade and Industry in Pretoria to ask the government to increase the tariff so that imported sugar cost $856 per ton in order to equal cost of local production.

The march consisted of Sasa, South African Farmers Development Association, South African Canegrowers Association, South African Sugar Millers Association and representatives from various political parties. Not profitable University of KwaZulu Natal agricultural economics professor Lloyd Baiyegunhi said the local industry was not profitable.

Baiyegunhi said most farmers have left the industry because they needed to purchase expensive technology in order to be competitive.

“Are we importing sugar because there is insufficient supply of sugar for bakeries and beverage companies that depend on it or is it because the imported sugar was cheaper?

“If it is the latter, then the government must level the playing fields,” said Baiyegunhi.