‘About turn’ on sugar protection leaves a bitter taste

Local sugar producers are concerned about the future of the R14 billion industry – which provides over 350 000 jobs – after an about-turn by government regarding the protection of local production.

Last week, the Portfolio Committee on Trade and Industry said the protectionist strategy for the sugar industry needed to be phased out, following engagements between the industry and Minister of Trade and Industry Ebrahim Patel as well as Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza. 

The portfolio committee highlighted the fact that stakeholders had agreed to an export-led approach targeting the African market through the implementation of the African Continental Free Trade Agreement (AfCTA) to “support industry competitiveness”. 

Sugar producers, however, believe that this represents a refusal to agree to pleas from the local industry to tighten controls on sugar entering the South African market from other African countries.

Rex Talmage, the chairperson of SA Canegrowers, joined other industry associations in calling for further protection measures as the dollar-based reference price (DBRP) – raised from $566 per tonne to $680 per tonne – had proven “ineffective in stemming the tide of cheap imported sugar”.

Producers appealed for an import tariff of $856 per tonne of sugar.

“Eswatini is expected to produce about 743 000 tons of sugar in the 2019/20 season, of which most will make its way onto the South African market free of any import tariff, in line with the free trade agreements in the Southern African Customs Union (SACU) region,” said Talmage.

Following a massive protest march in June, led by the South African Sugar Association (Sasa) and the South African Farmers Development Association (Safda), government reportedly provided assurances to sugarcane farmers that their industry would be protected.

At the time, Sasa chairperson Suresh Naidoo said the local sugar industry was “under siege” and warned that should the import trend continue, the results would be “catastrophic”.

 “Jobs, economic activity and livelihoods will be dismantled," he said.

The Department of Trade and Industry (the dti) acknowledged the challenges faced by the sugar producers but emphasised the need for the sugar industry to diversify its product offerings. These include producing ethanol, using sugarcane for co-generation of electricity and bio-based plastic products, among others.

“The industry faces ongoing global and domestic challenges, such as a low global price, competition from sugar imports, high input costs and lower demand for sugar since the health promotion levy on sugar-sweetened beverages was introduced. Thus, the over-reliance on sugar production without investing in alternative products is unsustainable,” said Duma Nkosi, chairperson of the Portfolio Committee on Trade and Industry.

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