South Africa's Parliamentary Portfolio Committee on Trade, Industry and Competition has warned that the future of Tongaat Hulett remains a major threat to the sugar industry’s recovery, and that viable diversification options that facilitate inclusive growth and transformation are critical for the industry.

“Flexibility within the sugar value chain is essential to ensure its long-term sustainability,” said committee chairperson Mzwandile Masina.

An enabling biofuels regulatory framework, similar to that of Brazil and India, is critical to facilitate these options, he added.

The committee was briefed by the Department of Trade, Industry and Competition (dtic) and industry organisation the South African Sugar Association on the implementation of the Sugar Value Chain Master Plan and diversification proposals.

The sugar industry faced several challenges, including import pressures from cheap sugar imports, funding uncertainty to enable the implementation of the master plan, and the finalisation of pricing and trade protection measures, the committee said.

Industry players propose the introduction of safeguards against cheap deep-sea imports, which is currently before the International Trade Administration Commission of South Africa (Itac), which is also finalising its investigation on the need to adjust the dollar-based reference price for sugar.

Further, the industry also faced diversification risks and the impact of the possible liquidation of distressed sugar miller Tongaat Hulett, the committee said in a statement.

Given Tongaat Hulett’s contribution to the industry, rural development and jobs, the committee emphasised that government and the private sector should cooperate to save the company, and welcomed the Industrial Development Corporation’s (IDC's) financial support for the sugar miller.

However, the Parliamentary Committee urged the IDC to support Tongaat Hulett to move out of business rescue and the court process for liquidation.

Further, the committee welcomed achievements made during the first phase of the master plan, with local sugar sales having increased to 1.55-million tons from 1.25-million tons previously, while the proportion of local purchases by downstream users increased to 98% of sugar used, which resulted in the growth of the local market.

Additionally, there have been expanded efforts to support the 12 000 small-scale growers and increase transformation funding available to them.

The committee also welcomed the finalisation of 2025 amendments to the sugar industry regulations.

The first phase of the master plan, which ended in March 2025, had been aimed at stabilising the industry, job retention, small-scale grower support, transformation, local market restoration, price restraint, trade protection, restructuring and diversification planning.

The second phase of the master plan was signed in April this year and will focus on structural reform, employment retention, long-term competitiveness, diversification, transformation and inclusive growth.

INDUSTRY CONCERNS
Meanwhile, industry organisation the South African Canegrowers Association called on the dtic, business rescue practitioners and the IDC to urgently take all necessary measures to avert liquidation of Tongaat Hulett.

White refined sugar is a crucial ingredient for soft drinks, snacks and confectionery.

If the company were to enter an unfunded liquidation and the uncertainty continue, the local commercial demand for white sugar would shift abroad and reduce the local market's demand for South African sugar.

“If liquidation is unavoidable, we advocate a funded process, known as a funded liquidation, in which funds are provided to allow the mills to continue operating,” said SA Canegrowers chairperson Higgins Mdluli.

The future of Tongaat is vital to the survival of the country’s sugar industry. The potential collapse of Tongaat Hulett poses a significant threat to the entire KwaZulu-Natal and Mpumalanga sugar industry.

“SA Canegrowers has written to Trade, Industry and Competition Deputy Minister Zuko Godlimpi to ask that the dtic step in and do all that is necessary to ensure Tongaat Hulett is saved,” Mdluli reported.

More than 18 000 growers, most small-scale growers, rely directly on Tongaat Hulett’s three mills to crush their cane.

Growers need certainty that Tongaat’s mills will remain open for the entire season.

Transporting cane to mills further afield will lead to prohibitively high costs. Without Tongaat’s operations these growers will lose essential income in areas with few other economic prospects.

Saving Tongaat Hulett was about safeguarding the sugar industry and rural stability within South Africa, Mdluli said.

Further, imports of sugar had more than doubled during the past year, to 213 322 t imported into South Africa between April 2025 and March, more than double the 98 860 t imported in the prior year.

The country has high levels of imported sugar that is priced lower than the cost of local production and which continues to flood into South Africa. Certain foreign nations heavily subsidise their sugar industries, which enables them to sell sugar at prices that are unsustainably low for local producers.

“To protect our sugar industry effectively, South Africa needs a robust tariff regime that shields it from imports, with tariffs adjusted timeously in response to fluctuations in global sugar prices.

“A stronger tariff is also urgently needed to reduce the incentive to import sugar, which Itac is investigating.

“We call on the dtic to protect all canegrowers against the rising tide of imports flooding into South Africa,” said Mdluli.

The hearing into the liquidation of Tongaat Hulett is scheduled to take place later this month.