In an open letter, several sugar industry associations have called on Finance Minister Enoch Godongwana to honour a commitment he made in his 2023 Budget, where he announced that consultations would be initiated with affected and interested parties on adjustments to the Health Promotion Levy (HPL), or sugar tax, including the proposed lowering of the 4 g threshold and the extension of the levy to fruit juices.

“These consultations are essential for affected and interested parties to provide factual information and data on the potential unintended consequences of the HPL, which will help guide the National Treasury decision-making process,” the open letter stated.

The letter, which was published on October 28 and signed by the South African Sugar Association, the South African Sugar Millers' Association, the South African Farmers Development Association, South African Canegrowers, the Consumer Goods Council of South Africa and South African Sugar Converters Association, was also addressed to Trade, Industry and Competition Minister Parks Tau and Agriculture Minister John Steenhuisen.

The signees represent a cross section of the entire sugar value chain, from small- and large-scale sugarcane growers, to sugar millers and food and beverage manufacturers, as well as retailers.

“Together, we represent hundreds of thousands of jobs and millions of livelihoods with our industry making a significant contribution to the South African economy,” the signees collectively said, stating that they were deeply concerned that the HPL led to the loss of 16 000 jobs in the first year of the tax alone, according to a study by the National Economic Development and Labour Council.

If increased, the concern was that the HPL would lead to the loss of further jobs, including in impoverished rural cane-growing provinces that need employment the most.

The HPL was implemented in April 2018 as one of the measures by the Department of Health to address obesity and non-communicable diseases in South Africa. The collective claimed that there had since been not one single study conducted or provided to show whether the tax had led to meaningful health outcomes, such as reduced diabetes or obesity, or a healthier population.

“What we do know is the tax has added to economic instability, cut jobs and further threatens livelihoods. At current levels, agricultural consultancy Bureau for Food and Agricultural Policy calculated that the tax will lead to a 10% decrease in sugarcane under cultivation by 2030. Any increase will further decimate the land under cultivation and force thousands of small-scale growers into abject poverty,” the letter said.

The signees asserted that an increased tax on sugar threatened the one-million livelihoods supported by the sugar industry and undermined both food security and economic stability in Mpumalanga and KwaZulu-Natal, where sugarcane was grown.

“In short, more job losses will increase hunger and food insecurity when there is no scientific evidence that the tax has improved people’s health,” the letter said.

Since the introduction of the HPL, the relevant industry associations have been awaiting a cohesive government policy approach to the sugar industry and the tax. One such mechanism that all parties committed to was the Sugarcane Industry Value Chain Master Plan to 2030.

The masterplan process – in which government, value chain stakeholders and industry partnered together – attempted to create a framework in which government policies across departments align to address the negative effects of the HPL.

The masterplan process also aimed to ensure that the country’s sugar industry was sustainable and that it created inclusive growth for emerging and small-scale sugarcane growers.

In addition, under the process, the industry committed to continuing its investment in diversification and has supported increased transformation among sugarcane growers and in the value chain.

The government, for its part, committed to commissioning two evidence-based studies. One was to measure the total dietary intake of the population to better understand the full array of causes of obesity and lifestyle diseases among South Africans, while the other study aimed to measure the full socio-economic impact of the sugar tax.

The collective asserted that the sugar industry had so far invested significant time and effort into committing to its part of the bargain by driving transformation and diversification strategies, but that the promised studies on the population’s nutritional intake or the socioeconomic impact of the HPL had not yet been concluded.

“Minister, when you commendably imposed a two-year moratorium on increases of the HPL in [2023], you promised industry-wide consultations on the tax. However, the industry is still awaiting these promised consultations and has yet to see any credible evidence justifying an increase or extension of the tax.

“We once again ask for a commitment to cohesive and evidence-based policies in government, and a commitment to saving and creating jobs, particularly in rural agricultural areas. We are of the considered view that this critical matter must be approached in a manner which accentuates the importance of evidence-based decision-making,” the sugar industry representatives said.

As a “united industry”, the signees called on Godongwana to scrap the HPL or, at the barest minimum, extend the moratorium on any increases or broadening of the reach of the HPL until the promised inclusive consultations on the impact of the HPL were held with industry.

The parties to the open letter said they would thereafter require adequate time to consider the implications of the consultations, if any, on the sugar value chain, the economy and the health of the nation.

“We invite you to engage with the sugar and downstream industries to learn about our plans for ensuring the long-term viability of sugarcane farming through diversification and the value chain as a whole, and how a cohesive policy environment will help further unlock growth and employment, while fostering a healthier nation,” the open letter concluded.