The sugar sector has called for the protection of the local industry from excessive imports, which it claims are negatively affecting crucial agri- cultural industries, executive director of the South African Sugar Association (Sasa) Trix Trikam told Business Day newspaper last month.

Addressing the media on the industry’s challenges, in Malelane, Mpumalanga, he stated that jobs were being compromised by cheap imports, especially from Brazil.

Sugar imports negatively affect the South African sugar industry, as sugar importers are tradespeople who do not make any direct financial or socioeconomic contribution to the South African economy, he said to Farmer’s Weekly in March.

He blamed excessive imports partly for the drastic reduction in the number of small-scale South African cane growers from 50 000 to 25 500, when speaking in Malelane.

He noted to Farmer’s Weekly that more than one-million people depend on South Africa’s sugar industry value chain, adding that, owing to the current formula used to calculate South Africa’s sugar import tariff, the tariff has been 0% for the last three years.

“An added problem is that the world sugar price is distorted by government subsidies and other international factors. Government has recognised this problem, but the process of revising the tariff on imported sugar is a long one. We have to apply to the International Trade Admini- stration Commission of South Africa and give motivations for increasing the import tariff on sugar,” explained Trikam.

Sasa highlights on its website that the country’s sugar is manufactured by six milling companies, with 14 sugar mills operating in KwaZulu-Natal (KZN), Mpumalanga and the Eastern Cape. The industry traditionally generates, on average, about 2.2-million tons of sugar per season, although this has dipped below two-million tons in recent years.

The association adds that about 70% of this sugar is marketed in the Southern African Customs Union, while the rest is exported to markets in Africa, Asia and the Middle East.
“However, over the past few years, South Africa has gradually allowed up to 240 000 t of sugar imports a year. This is equivalent to the production of two average mills in South Africa and poses a serious threat to the profitability and sustainability of local mills and an estimated 16 000 jobs,” said Trikam in Malelane.

South Africa has about 1 730 large-scale sugar cane growers, including 323 black farmers, who are responsible for 83.21% of the total sugar cane production. Milling companies, with their own sugar estates, produce 7.48% of the crop and small-scale growers produce 9.31%.

Trikam added that Sasa was strongly lobbying for government to impose quotas on international sugar imports, even if importers had to be restricted to halve the size of their imports to save jobs.

Access to major markets for raw and refined sugar is restricted by high tariffs and preferential trade arrangements such as tariff-rate quotas, says Sasa. The European Union (EU) market, which is undersupplied, presents an opportunity for the industry.

“It would be great if the South African sugar industry could be given duty-free, preferential trade access into the big sugar market of the EU. All the other sugar-producing countries in the Southern African Development Community (SADC) have this access,” explains Trikam.

Sasa, together with government, is holding discussions with the EU in an effort to obtain preferential access to its sugar market.

Business Day said this involved Sasa also urging the Department of Trade and Industry to include South Africa’s sugar sector in negotiations between the SADC and the EU over the bilateral Economic Partnership Agreement and tariff reductions, or at least to have the EU put in place a quota that would include South Africa in the SADC’s preferential sugar-export dispensation to the EU.

Trikam noted that this would bring much-needed foreign currency relief and could assist in stabilising South Africa’s sugar-producing sector.

He added that opportunities for the South African sugar industry to contribute further to South Africa lie ahead and include renewable energy.

“Towards the end of December 2012, the Minister of Energy announced a determination for electricity produced from biomass, under the category of cogeneration.

“Government has indicated support for 800 MW from industrial cogeneration sources including biomass,” said Trikam.

He stated that, if South Africa’s 14 sugar mills were adapted to provide electricity for the national grid, they could supply the 800 MW.

“The industry is in discussions with government on the commercial production of electricity from sugar cane fibre and believes that positive progress is being made. The industry is optimistic in the regard, considering the advancements made by government in the Renewable Energy Independent Power Producers Procurement Programme, which is internationally recognised,” says Sasa.

Meanwhile, sugar cane grower Grant Galloway tells Engineering News that although the sugar cane grower industry has had a tough few years and is facing challenges, owing to imports, the industry is currently improving.

“The challenges faced by the sector in the past few years were mainly because of poor average rainfalls and political uncertainty,” he says, adding that the above-average rainfall in KZN this year has dramatically improved yield.

“From a cane grower’s perspective, there is a positive industry outlook. Political uncertainty does not seem so uncertain anymore and farmers are reinvesting in their farms. The state of mind [of producers] directly affects the outlook of our industry and, currently, it is not looking bad,” he says.

Galloway notes that despite the more positive industry outlook, there are daily challenges that have a predominant effect on the industry.

“Big egos, escalating costs, vast areas of unproductive land and the inability of farmers to plan long-term, owing to the security of land-tenure issues, are daily challenges that farmers face,” he says.

Galloway notes that the South African sugar industry has been stagnant for the last 20 years with regard to the development and manufacturing of new technology.

“There are a few new exciting develop- ments such as biofuels, cogeneration and bioplastics; however, owing to internal issues within the industry, I do not see these developments materialising in the near future,” he states.

Galloway adds that these new develop- ments hold the biggest potential for the industry.

“Farmers are only paid for the sugar from the cane they send across the weighbridge. New technologies are needed so that farmers can profit more from their total product. Better profits lead to better production, which, in turn, leads to a sustainable future,” he says.

Further, Galloway notes that the industry is currently on a financial precipice regarding increase and decline.

“The industry is increasing because there are some innovative and forward- thinking people leading a grower resurgence, particularly in KZN,” he notes.
Galloway states that it is crucially important for the next generation of cane growers to be as educated as possible, not only as farmers but also as responsible South Africans.

“The farmers of tomorrow need to treat their farms as businesses. The chal- lenges of future farmers will not be the same challenges we face today. New-generation farmers need to adjust, learn and ensure that their fellow farmers stay in business.

“For a third-generation farmer, this education starts at home and the key is to start sharing our knowledge and collectively find new ways of becoming efficient and sustainable,” he concludes.