In addition to the US tariffs, sugarcane growers are concerned about cheap imports entering South Africa.
Amid a punishing tariff increase on South Africa imposed by US President Donald Trump, sugarcane growers have asked Minister of Trade, Industry and Competition Parks Tau to act hastily to put into use regulations to enable the trading of local sugar without violating competition laws.
Industry hit by US tariffs and foreign sugar
The local industry has pinned its hopes on the exemption from anti-competition practice as a way to help them survive as they start feeling the pinch of Trump’s 30% tariff hike on South African goods. The US move has exacerbated the plight of the local growers, who had been grappling with cheap imports flooding the local market.
The minister published draft regulations in May that allow consultations on the procurement of more than 90% local sugar between growers, millers, retailers and food and beverage manufacturers, without the talks or agreements breaching provisions of the Competition Act.
The growers at the time welcomed the minister’s move, but now that the tariffs have become a reality, they want Tau to speed up the regulations to save the industry.
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On Thursday, they appealed to Tau to urgently finalise the regulations. They believe government support would go a long way towards saving them from having to close shop or cut jobs.
US tariffs
When effected, the regulations would ease their plight as they suffer profit losses due to low volumes of exports to the US that are expected to worsen with time.
The US does not grow enough of its own cane sugar and relies on imports to supplement its domestic demand. Up until earlier this year, the US controlled its sugar imports through a quota system, which meant South African sugar did not negatively impact US growers. But now the new US tariffs have made South African sugar less competitive in a crucial export market.
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SA Canegrowers chairperson, Higgins Mdluli, said the industryhas since asked Tau to fast-track the industry consultation process, which is yet to be scheduled, months after the public comment period on the draft exemptions closed.
“The sugar industry needs the limited exemption from competition regulations in order to have industry-wide discussions without fear of falling foul of the Competition Act. Such discussions include working towards commitments from local commercial users of sugar and retailers to use and stock mainly locally produced sugar.
“We have written to Minister Tau and urged him to act with urgency. The livelihoods of sugarcane growers depend on it,” Mdluli said.
Cheap imports into SA
According to Mdluli the domestic action is also critical to safeguard the industry from cheap sugar imports from countries that heavily subsidise their own sugar industries.
He said the cheaper sugar does not benefit consumers, but allows importers to make higher profit margins.
“The South African sugar industry is a national asset. We support local jobs and farming, yet our market is being flooded by cheap, subsidised imports. This displaces local sugar, jeopardising countless jobs and the stability of the rural economies of Mpumalanga and KwaZulu-Natal,” Mdluli said.
SA Canegrowers also urged the government to prioritise its negotiations with the US to finalise a mutually beneficial trade deal, which would include a tariff exemption for sugar or a return to the previous US quota mechanism.
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