Sugar tax takes its toll – say North Coast farmers

Local cane growers are begging government for relief, claiming the sugar tax is bringing the already fragile industry to its knees.

As of April 2018, government placed a 2.1 cent tax on a gram of sugar for beverages, with hopes to curb obesity – cutting down the sugar demand by nearly 170 000 tons and costing the industry an estimated R1 billion in revenue in just one year.

This week, Tongaat cane growers told Democratic Alliance (DA) chief whip John Steenhuisen and shadow minister for trade and industry, Dean Macpherson, that aside from sugar tax, illegally imported sugar and low exporting tariff prices were perfect storms for job losses in the industry.

They said if government did not urgently review the sugar tax and implement stricter controls, the industry could soon collapse.

“Our local mills are importing sugar into the country at a cheaper rate from places like Swaziland and Zambia, which is putting us locals in a tough position,” a group of small-scale growers told the politicians.

“We cannot get a licence to export into those countries, so it is a one-way deal. To add to this, SARS does not have the capacity to monitor all the borders and only about 1-2 percent of the containers coming into the country are inspected. This sees tons of sugar being smuggled in, sometimes under the pretense of rice since there is no tax charged on that.”

The farmers said last year more than 500 000 tons of sugar was illegally dumped in the country which SARS could not account for as their systems were down for seven weeks.

According to SA Canegrowers Association statistics, there are currently more than 21 000 registered sugar cane growers delivering to 14 sugar mills.

Also read: Farming ubuntu style on the North Coast

The industry generates R15 billion in revenue and is responsible for the livelihood of 79 000 direct workers and 350 000 indirect workers.

They said since the drought three years ago, farmers are hardly making a profit due to high production costs and low export tariffs. In the 70s, one could make a good living from 5000 tons of cane but no longer, they said.

SA Cane Growers Association chairperson Graeme Stainbank said government needed to acknowledge the serious damage sugar tax had done to the economy.

“Now that the sugar tax has been in place for a year, we are in a position to assess its actual impact for the first time: nearly R1 billion in reduced revenue and thousands of jobs at serious risk.”

Steenhusien told farmers that on February 11, party officials wrote to the chairperson of the trade and industry portfolio committee asking her to hold an urgent meeting.

“The chairperson has responded through a parliamentary statement, noting that this matter can wait until after the elections. The fact of the matter is that 350 000 people do not have the luxury of waiting for another two months. By then, we may not have a sugar industry to speak of.”

Steenhuisen said the DA again submitted a motion to parliament speakers requesting an urgent debate.

“To turn this ship around parliament must immediately place a moratorium on the sugar tax, must ensure adequate tariff and industry protections, and must ensure that illegal imports are curtailed. Legal imports must be also regulated, and the dollar based reference price must be corrected urgently, to ensure adequate industry protections for South African sugar farmers.”

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