In his budget vote on May 18, Minister Ebrahim Patel should urgently announce his department’s plans to help South Africa’s sugarcane growers survive the current milling crisis, or risk presiding over the collapse of parts of the sector, industry organisation SA Canegrowers chairperson Andrew Russell urges.
Nearly seven months after Tongaat Hulett entered its South African operations into business rescue, growers continue to face financial and operational uncertainty, he says.
He notes that the organisation is “deeply concerned” that, unless urgent action is forthcoming, several small-scale growers will not survive this season.
The crisis facing growers was exacerbated by the R1.5-billion defaults announced by Tongaat Hulett and Gledhow. This led to a more than R400 drop in the revenue per ton of recoverable value (RV) last season, at the same time that growers have been experiencing exorbitant input costs increases, especially owing to escalating levels of loadshedding, Russell outlines.
He emphasises that growers cannot wait for the resolution of the matter of the defaults by Tongaat Hulett and Gledhow to be resolved through the court system.
“To survive, they require funding urgently to fill the gap caused by the defaults. This is revenue growers rely upon to resume their operations this season and meet their financial obligations to workers, contractors and suppliers,” Russell points out.
He warns that the failure to provide relief funding could have catastrophic knock-on effects throughout the sugar industry value chain and for the local, mostly rural, economies that depend on the industry.
The current crisis follows three years of investment into saving and restructuring the industry under the Sugarcane Value Chain Masterplan.
In addition to these efforts, the industry has invested a further R800-million over the past four years into transformation funding through the South African Sugar Association, Russell informs.
“To allow small-scale growers to go out of business – through no fault of their own – after this substantial investment, is untenable.”
Russell says the organisation is mindful that the South African economy faces numerous challenges and there is great need across all sectors for relief considering loadshedding, high input costs and infrastructure challenges.
However, he emphasises that the sugar industry supports one-million livelihoods, overwhelmingly in South Africa’s rural economies, where there are few alternative options for workers. KwaZulu-Natal and Mpumalanga, in particular, cannot afford the collapse of the sugar industry, Russell posits.
The organisation is, therefore, urging Patel to take the opportunity of the budget vote to announce measures to help growers survive the milling crisis and thereby protect the one-million livelihoods the industry supports.