Posted: November 17, 2020
The Minister of Trade, Industry and Competition, Minister Ebrahim Patel, and the Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, have alongside stakeholders signed the Sugar Industry Master Plan.
As part of the master plan, industrial users and retailers have agreed to minimum off-take of sugar for a period of three years; with at least 80% of sugar consumption to come from South African farms and millers during the first year, increasing to 95% by 2023. During this period, the sugar industry has agreed to price restraint, and to begin a process of managed restructuring for the industry to help diversify revenue sources.
Given the crisis facing the South African sugar industry, one that threatens tens of thousands of jobs and hundreds of thousands of livelihoods, government has, together with industry stakeholders including producers and users of sugar, developed the master plan.
The sugar master plan seeks to take urgent action to protect thousands of jobs, rural livelihoods and businesses, and at the same time create a bold new ambition for the future, which seeks to create diversified revenue streams for sugar producers, and deliver significant new job opportunities. The process to produce the master plan was co-chaired by both Minister Patel and Minister Thoko Didiza.
“The sugar industry is a critical employer of workers and a source of livelihood for large numbers of rural communities. The sector has gone through enormous strain in recent years, including from a flood of imports. Our vision as government is that the industry can grow and that a partnership is needed to unlock the opportunities. Government brought together key stakeholders so that we can focus precisely on that objective,” said Minister Thoko Didiza.
The master plan for the South African sugarcane value chain is the result of a process of extensive engagement and consultation among sugar industry stakeholders and social partners, particularly small and large cane growers, millers and refiners, retailers and industrial users of sugar and sugar-derived products, as well as workers and government.
“It represents a new social compact based on dialogue, shared ownership and wide support. The sugar master plan aims to significantly diversify the value chain based on sugarcane away from one that is today almost solely focused on the production of raw and refined sugar, into one that in future produces a wide range of globally competitive sugarcane-based products,” stated Minister Patel.
Annual sugar production in South Africa has declined by nearly 25%, from 2.75 million to 2.1 million tons per annum, over the past 20 years. The number of sugarcane farmers has declined by 60% during this period, and sugar industry related jobs are estimated to have reduced by 45%. Phase 1 of the master plan will thus include a localization commitment.
Declining profitability in the local industry has accelerated as a result of a “perfect storm” of developments in global and local markets that have now reached a critical point.
The master plan seeks to address these critical challenges and create a diversified and globally competitive, sustainable and transformed sugarcane-based value chain that actively contributes to South Africa’s economic and social development, creating prosperity for stakeholders in the value chain, the wider bio-economy, society and the environment.
Agility and responsiveness to the needs of the sugar industry is key to the master plan and it has a phased approach to planning and implementation. The first phase includes immediate action to prevent the collapse of the sugar industry and urgently commence a restructuring programme.
In order for the sugar master plan to be implemented, the sugar industry has been granted an exemption from the Competition Act by the Competition Commission. This follows the gazetting of a designation by Minister Patel in June of the sugar industry for exemption from the act.
The levels of local sugar procurement have already begun to improve since the framework of the master plan was agreed earlier this year. In the period from January to September 2020, volumes of imported sugar have declined by 10% versus the prior year, with deep-sea imports (i.e. imports from outside the continent) declining by 20%.
In June 2020, the dtic published amendments to the Sugar Industry Agreement and the South African Sugar Association’s Constitution. The amendments, which were also been agreed in consultation with the industry, further support the objectives of the master plan, by formalising the governance arrangements of the industry, including the role of key industry stakeholders including the South African Sugar Millers’ Association NPC, South African Cane Growers’ Association NPC and South African Farmers’ Development Association, and the disbursement of grower levies. This provides an explicit formal place for small-scale growers in the industry, which supports the transformation objectives of the master plan.
Issued jointly by the Departments of Agriculture, Land Reform and Rural Development and Trade, Industry and Competition
Cell: 082 883 2458
Mobile: 079 492 1774
Follow us on Twitter: @the_dti