Trade, Industry and Competition Minister Ebrahim Patel and Minister of Agriculture, Land Reform and Rural Development, Thoko Didiza, alongside industry stakeholders, have signed the Sugar Industry Master Plan.
The sugar master plan seeks to take urgent action to protect thousands of jobs, rural livelihoods and businesses, and at the same time create a bold new ambition for the future, which seeks to create diversified revenue streams for sugar producers, and deliver significant new job opportunities.
The process to produce the master plan was co-chaired by both Minister Patel and Minister Thoko Didiza.
“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,” said the Departments of Agriculture, Land Reform and Rural Development and Trade, Industry and Competion in a joint statement on Monday.
The plan was developed by government and industry stakeholders, including producers.
Minister Didiza said the sugar industry is a critical employer.
“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,” she said at Monday’s signing.
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.
Meanwhile, Patel said the master plan 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,” he said.
Challenges
Annual sugar production in South Africa has declined by nearly 25%, from 2.75 million to 2.1 million tons per annum, over the past 20 years. 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 includes a localisation commitment.
Declining profitability in the local industry has accelerated as a result of a “perfect storm” of developments in global and local markets that have now reached a critical point.
The master plan seeks to address these critical challenges and create a diversified and globally competitive, sustainable and transformed sugarcane-based value chain that actively contributes to South Africa’s economic and social development, creating prosperity for stakeholders in the value chain, the wider bio-economy, society and the environment.
Agility and responsiveness to the needs of the sugar industry is key to the master plan and it has a phased approach to planning and implementation. The first phase includes immediate action to prevent the collapse of the sugar industry and urgently commence a restructuring programme.
Exemption
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 Minister Patel in June of the sugar industry for exemption from the act.
The levels of local sugar procurement have already begun to improve since the framework of the master plan was agreed to earlier this year.
In the period from January to September 2020, volumes of imported sugar have declined by 10% versus the prior year, with deep-sea imports (i.e. imports from outside the continent) declining by 20%.
In June 2020, the dtic published amendments to the the Sugar Industry Agreement and the South African Sugar Association’s Constitution.
The amendments, which were also been agreed in consultation with the industry, further support the objectives of the master plan, by formalising the governance arrangements of the industry, including the role of key industry stakeholders including the South African Sugar Millers’ Association NPC, South African Cane Growers’ Association NPC and South African Farmers’ Development Association, and the disbursement of grower levies.
This provides an explicit formal place for small-scale growers in the industry, which supports the transformation objectives of the master plan. – SAnews.gov.za
