Local sugarcane growers are expecting a significantly improved harvest this season, following a rebound in rainfall after last year’s drier-than-normal conditions, says industry body SA Canegrowers.

The organisation estimates farmers to have harvested 17.7-million tons of sugarcane this season, compared with 16.4-million tons harvested in the prior season.

Notably, the prior year’s crop marked the lowest in eight seasons.

While this recovery in yield is welcome news, the industry’s economic outlook remains under serious threat owing to delays in adjusting South Africa’s import tariff, the flood of cheap imports into the country and the looming 30% tariff by the US on South African sugar exports.

“The delay in adjusting our own sugar import tariff to reflect current global realities is undermining the competitiveness of local producers,” says SA Canegrowers chairperson Higgins Mdluli.

He adds that, simultaneously, the US tariff threatens producers’ access to what has historically been one of South African sugar producers’ premium export markets.

Meanwhile, South Africa is currently experiencing a surge in sugar imports. Much of this imported sugar is heavily subsidised in its country of origin, arriving in South Africa at a price far below local production costs undercutting local growers’ sugarcane revenue and their financial sustainability.

Importers in South Africa are taking advantage of the gap between the current import duty and the level that should be in place, as provided for in legislation.

However, the large amounts of cheap sugar entering South Africa do not benefit consumers – importers continue to sell at local retail and industrial prices, increasing profits at the direct expense of local farmers, SA Canegrowers explains.

“Unrestrained sugar imports displace local product from shelves or as input for local commercial users, which lowers domestic sales. This lower level of local sales forces the industry to export more sugar at a significant price disadvantage,” Mdluli states.

For context, in 2017/18 and 2018/19, a similar delay in enacting fair import tariffs – as per South African government regulations – meant the South African sugar industry had to export large volumes of sugar to a highly distorted international market leading to significant financial losses for the industry.

“A repeat of this scenario will lead to job losses, as growers are also already facing many other threats, including the sugar tax and rising input costs,” Mdluli warns.

The South African sugarcane industry produces sufficient sugar to meet all demand in the Southern African Customs Union and still has excess volume to export. With production levels back to normal, but with suppressed local demand as foreign sugar displaces local sugar, more sugar will likely have to be exported at a considerable loss this year.

This year, the global trading environment is even more uncertain. The likelihood of a 30% tariff on South African products entering the US, at least for the time being, further disadvantages South African sugar on the global market.

“We urge government to move swiftly: to revise the import duty in line with current global prices and to prioritise a new trade agreement with the US that safeguards our export potential,” concludes Mdluli.