Sugarcane business organisation SA Canegrowers says the immediate risk arising from sugar company Tongaat Hulett's entry into business rescue is that R401-million that was due to be paid to growers at the end of October will likely not be transferred on time, as Tongaat has lost access to its bank accounts.

This will have dire financial consequences for growers, as well as the farm workers they support. This situation could plunge thousands of growers and workers into destitution and raises the risk of unrest in KwaZulu-Natal’s rural cane growing communities, says SA Canegrowers chairperson Andrew Russell.

Payments to supplying growers are made in the month following delivery. The payments due at the end of this month are for sugarcane delivered in September.

For a number of small-scale growers, September marked their first deliveries of the season, and any default on these payments will have devastating impacts on their livelihoods, as well as the communities they support.

"SA Canegrowers is deeply concerned by the announcement that Tongaat Hulett has entered its South African operations into business rescue owing to the catastrophic consequences it has for South African sugarcane growers and the entire sugarcane value chain," Russell says.

Questions also remain about how payments will be made for deliveries in October, November and December, which means the impact on growers is likely to worsen if the mills do not remain operational.

Although the sugar industry has been aware of Tongaat's financial woes, the decision to enter into business rescue at this time has come without warning. As the surrounding mills in the province lack the ability to take on Tongaat's deliveries, the decision also has serious short- and long-term implications for the supply of sugar to the local market.

SA Canegrowers is also mindful of the potential ramifications of this move on the livelihoods of Tongaat Hulett mill workers and other workers throughout the sugarcane value chain.

"SA Canegrowers will follow all the relevant steps to engage with the business rescue process in order to ensure that payments due to growers are prioritised. In the meantime, urgent action is required to prevent the catastrophic social consequences that will arise if the immediate threat of non-payment materialises over the next few days.

"We, therefore, urge all involved, including the business rescue practitioners, the Tongatt board and executive management, and financial institutions to do everything possible in the circumstances to ensure that payments are made with as little disruption as possible," says Russell.