After not paying levies owed to the South African Sugar Association (Sasa) since October 2022, sugar producer Tongaat Hulett has again been ordered by the Durban High Court to pay the outstanding levies.   

The levies are essential to the economic survival of many sugarcane farmers and the thousands of livelihoods they support, says industry body SA Canegrowers, which welcomes the High Court judgment.

Judge Rashid Vahed confirmed that the Sugar Industry Agreement (SIA) is statutory legislation and payments due under it are still required to be made despite Tongaat being in business rescue.

The Durban High Court initially made a ruling in December that the levies must be paid, but the Tongaat business rescue practitioners (BRPs) subsequently appealed the ruling, which has not been dismissed.

The appeal application was met with opposition by Trade, Industry and Competition Minister Ebrahim Patel, Sasa, SA Canegrowers, South African Sugar Export Corporation and other industry bodies.

The court reiterated that the purpose of the SIA was to ensure that growers, millers and refiners each receive an equitable share of the proceeds from local sugar production. The sugar levy paid to Sasa is part of a redistributive mechanism in a complex, highly regulated industry that ensures all farmers get the same price per tonne of sugar and larger mills subsidise smaller players.

Vahed said Tongaat must honour the financial obligations under the SIA and pay the R526-million owed to the industry. His ruling found that the sugar industry was unified in its understanding of the SIA and the importance of the sugar industry in South Africa’s economy.

Although the Tongaat BRPs may still approach the Supreme Court of Appeal or the Constitutional Court on the matter, SA Canegrowers is hopeful that Vahed’s ruling will bring closure to the issue, since the overdue payments are putting growers and livelihoods at risk.

Thousands of sugarcane farmers and millers have had to make up for the shortfall to Sasa, owing to Tongaat’s nonpayment.

Tongaat first entered into business rescue in October 2022 owing to financial mismanagement and misconduct on the part of former executives. The company has since been engaged in debt restructuring initiatives and changes in management, including the appointment of a chief restructuring officer.

The company’s business rescue plan was ultimately approved by creditors in January this year. Tongaat can only exit business rescue once the plan has been substantially implemented, or if it is no longer financially distressed.

The decision to terminate business rescue lies with the BRPs or alternatively the High Court on application.