SA cane growers call for review of sugar tax amid struggling industry

The SA Canegrowers says the implementation of HPL will put sector jobs at risk. Picture: Bongani Mbatha Independent Newspapers

The SA Canegrowers says the implementation of HPL will put sector jobs at risk. Picture: Bongani Mbatha Independent Newspapers

Published Jun 6, 2024


SA Canegrowers have decried the impact of the Health Promotion Levy (HPL), or so-called sugar tax, saying that it undermined the sustainability of the industry and the million jobs and rural livelihoods that it supports.

With the sugar tax due to increase next year, SA Canegrowers have once again said they were going to stress to the government that it needed to support the industry to safeguard jobs.

Higgins Mdluli, the newly elected board chairperson of SA Canegrowers, yesterday said the sugar industry was still battling with the long-term implications of two sugar mills being in financial distress and needs to plan for the ramifications in case the business rescue processes fail.

Both Tongaat Hulett and Gledhow sugar mills are currently in business rescue.

“We need the industry to do more than survive; we need it to thrive. The more we grow and expand, the more we can invest into supporting small-scale growers,” Mdluli said.

“To advance transformation, we need to recognise the barriers to sustainability and growth. We need to eliminate the Health Promotion Levy.”

At the annual general meeting of SA Canegrowers held on the North Coast, KwaZulu-Natal, this week, Mdluli said that the sugar tax was supposed to be reviewed under phase one of the Sugarcane Value Chain Masterplan, but this promise was not kept and to date no meaningful engagement has been undertaken with the industry.

He said the sugar tax has suppressed the market for locally produced sugar and cost the industry more than 16 000 jobs.

SA Canegrowers also said the sugar tax was also a barrier to investment in the industry’s transformation.

“Studies done by the Bureau for Food and Agricultural Policy (BFAP) have shown that an increase in the Health Promotion Levy will lead to less land under sugar cane cultivation and less sugar cane being delivered to mills,” it said.

“BFAP found that the most significant job losses will occur under small-scale farmers.”

According to Healthy Living Alliance (HEALA), a coalition of civil society organisations advocating for equitable access to affordable, nutritious food, the HPL generated R7.9 billion in cumulative revenue from domestically produced and imported products from its inception on 1 April 2018 to 31 March 2021.

HEALA said collections in 2018/19, 2019/20 and 2020/21 financial years were R3.2bn, R2.5bn and R2.1bn, respectively.

“An increase in the HPL to the recommended 20% could almost double the revenue collected by Treasury. In 2023 the Finance minister announced a moratorium on any increases on the HPL until 2025. We cannot keep delaying the increase to the levy and prioritising the sugar industry’s profits over our health,” the organisation said at the beginning of this year.

SA Canegrowers has also called on government to fast-track the value chain diversification project through the second phase of the Masterplan, with support for diversification into strategic aviation fuels, for example.

The industry Masterplan was said to be the best mechanism to address the various threats and opportunities to the sugar industry in a coherent and collaborative manner.