Industry organisation the South African Canegrowers Association (SA Canegrowers) has called for urgent, coordinated intervention to help stabilise the South African sugar industry.

The proposed liquidation of Tongaat Hulett and the uncertainty surrounding its milling operations is not about the survival of a single corporate entity, but rather about the systemic importance of these milling operations to the broader South African sugar value chain and economy, the association says.

Tongaat Hulett’s mills are critical infrastructure. Of South Africa’s 27 000 small-scale and 1 100 large-scale sugarcane growers, Tongaat Hulett is the only milling company available to 18 000 growers.

“There is no economically viable alternative milling option for these growers.

“If Tongaat Hulett’s operations fail or enter unfunded liquidation without structured intervention, the majority of South Africa’s growers will immediately lose market access, an estimated 40 000 workers could face unemployment, and the surrounding rural communities will lose an important source of employment.”

Sugarcane growers and the broader sugar industry are significant drivers of rural economic activity and employers in their surrounding communities.

Further, millers and growers share revenue of sugar sales in the South African sugar industry through the Sugar Industry Agreement framework.

An unfunded liquidation of Tongaat Hulett will mean that Tongaat Hulett’s levy payments will cease, which will require all growers and the remaining millers to make up the shortfall, as will the sale of Tongaat Hulett's existing stock of refined sugar.

All of South Africa’s sugarcane growers will be severely negatively affected by the liquidation, unless some form of agreement can be reached to keep the milling operations open, SA Canegrowers says.

“The cost of stabilising and preserving these operations is materially lower than the long-term social, fiscal and industrial cost of rebuilding a collapsed value chain,” says SA Canegrowers chairperson Higgins Mdluli.

“For this reason, Tongaat Hulett’s operational continuity has become a matter of systemic economic stability. Urgent, coordinated government intervention is required to prevent a failure whose consequences would extend far beyond a single company,” he says.

The association has formally written to President Cyril Ramaphosa, Finance Minister Enoch Godongwana, Trade, Industry and Competition Minister Parks Tau, Agriculture Minister John Steenhuisen and Public Works and Infrastructure Minister Dean Macpherson calling for urgent, coordinated intervention to help stabilise the South African sugar industry.

“We call on the President to coordinate a response to save rural jobs and livelihoods,” says Mdluli.

Allowing Tongaat Hulett’s operational footprint to collapse would accelerate South Africa’s dependence on sugar imports, and increase long-term exposure to global prices and exchange rate risks.

Further, what may appear to be a contained corporate failure would trigger cascading negative economic consequences across KwaZulu-Natal, Mpumalanga and the national food and beverage system, he adds.

Specifically, it calls on the Department of Trade, Industry and Competition (dtic) and development financier the Industrial Development Corporation to do all within their power to ensure the Tongaat mills and refineries remain operational in the immediate future and beyond.

SA Canegrowers also calls on the dtic and the International Trade Administration Commission of South Africa to review and amend the sugar import dollar-based reference price to bring it in line with global economic realities, as per the industry’s submission in 2025.

Additionally, it wants Treasury to scrap the Health Promotion Levy, a tax that cost the industry 16 000 jobs and R2-billion in revenue in 2018, and which has presented no direct evidence of positive health impacts in the eight years since its implementation.

It also wants all stakeholders to recommit to the outcomes of the Sugarcane Value Chain Master Plan 2030, including local procurement of sugar, harmonising sugar supply within the Southern African Development Community trade bloc.

It also calls for a commitment to policies that would enable green industrialisation projects, including projects such as sustainable aviation fuels based on ethanol made from sugarcane.

The industry can also serve as a catalyst for new investment, job creation and long-term growth in emerging greenfield industries, such as biofuels, with the right, coordinated government policy framework, Mdluli says.