Bitter news for sugar industry

The government’s planned ‘sugar tax’ would most likely cause the local sugar industry to collapse, said the South African Sugar Association.

If the tax is introduced next April as announced by finance minister Pravin Gordhan in his budget speech earlier this year, SASA believes 170 000 tons less sugar will be needed, which would threaten many jobs and cause some mills to close down.

Gordhan announced that a 20 percent tax on sugary drinks would be introduced in a bid to persuade drinks manufacturers to cut down on sugar content. He said in addition to the extra money for the State, there would be health benefits in combating obesity.

SASA chairman Rolf Lütge told a press conference in Durban on Monday that the plan gave farmers too little notice and urged the government to wait until at least a dietary intake study is completed to quantify the role of sugary drinks in people’s diet.

“Keep in mind the drought has affected the profit of the sugar industry especially the farmers in Kwa-Zulu-Natal. Should the taxation be introduced it is estimated that there will be a displacement of 170 000 tons of sugar from the South African market,” said Lütge.

The sugar industry creates 85 000 direct jobs and 350 000 indirect jobs in the country.

“The two sugarcane producing provinces of Kwa-Zulu Natal and Mpumulanga will suffer great economic loss. The sugar mills are mostly situated in rural areas and the impact should not be underestimated. We do not know how many jobs will be lost for a cause that might not work. We do not know that sugar causes obesity,” said Lütge .

Lütge said although there were talks about the implementation of sugar tax, the announcement took SASA by surprise.

“We were hoping the government would have considered the consequences that such a decision will make to the sugar industry and the already weak economy,” he said.

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