Trade, Industry and Competition Minister Ebrahim Patel, Agriculture, Land Reform and Rural Development Minister Thoko Didiza and sugar industry stakeholders have signed the Sugar Industry Master Plan.
As part of the master plan, industrial users and retailers have agreed to minimum offtake 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.
“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,” says 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," states Patel.
South Africa's sugar production has decreased by nearly 25% over the past 20 years to about 2.1-million tons a year. 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 localisation commitment.
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 Patel in June of the sugar industry for exemption from the act.
Meanwhile, the Department of Trade, Industry and Competition says the levels of local sugar procurement have already begun to improve since the framework of the master plan was agreed earlier this year.
From January to September, volumes of imported sugar have declined by 10% versus the prior year, with imports from outside the continent having declined by 20%.