Industry organisation SA Canegrowers has welcomed the disbursement of R60-million in transformation intervention funding to black and small-scale growers through the South African Sugar Association.

Chairperson Andrew Russell emphasises that this funding is critical as the industry continues to face the crisis in the milling sector and growers try to recover from the financial shocks of the last season.

The industry has budgeted R125-million for black and small-scale growers delivering less than 1 800 t of cane in the 2023/24 season.

Of this, R60-million was to be paid out at the end of July, together with the payments for cane delivered in June. A further R50-million will be paid out in November, with the balance to be paid out in January 2024.

Also, R51-million has been budgeted for black growers and joint ventures delivering more than 1 800 t of cane. These are predominantly land reform growers.

Small-scale growers were particularly hard hit by the decisions of the business rescue practitioners (BRPs) at the Tongaat Hulett and Gledhow sugar mills to default on financial obligations to the industry totalling R1.5-billion, Russell says.

This reduced the final recoverable value price of sugar for the season by more than R400/t. The legal action brought in this regard is ongoing, he indicates.

Notwithstanding the unresolved matter of the 2022/23 financial obligations, the business rescue processes at both mills appear to be progressing. Last week, the BRPs for Tongaat Hulett announced the selection of a strategic equity partner to help save the milling giant’s South African operations, Russell outlined.

He says that, while SA Canegrowers has welcomed this announcement, it remains to be seen what the final arrangements for Tongaat Hulett will be, and whether these can save the sugarcane operations that are so vital to local economies on the North Coast of KwaZulu-Natal.

“In light of these challenges, the funding disbursed this month is vital to sustain growers in the interim. It will provide critical support in an environment marked by rising debt servicing costs and high input costs. This is especially important for small-scale growers, who face the greatest challenge in accessing operating and capital finance,” Russell avers.