An agreement has been reached between Tongaat Hulett and the South African Canegrowers Association for outstanding sugar cane payments, while confirming payment plans for the end of November.

This comes in the wake of widespread concern across the local sugar industry after Tongaat Hulett entered voluntary business rescue at the end of October.

The company, which is currently being operated by business rescue practitioners (BRPs), initially missed an October 31 payment deadline for R401-million, putting thousands of jobs at risk.

Around 4 000 small-scale growers were paid earlier this week, but the remaining 300 larger operations had to wait longer, with some payments still outstanding.

“Under the agreement, outstanding October payments to commercial growers for sugar cane delivered in September will be made by Friday. Most have already received the October payments,” said SA Canegrowers chairman, Andrew Russell.

In the time since the missed deadline, the three Tongaat Hulett north coast mills at Maidstone, Amatikulu and Felixton have closed, but growers will now resume supply as part of the agreement.

This will give the company the opportunity to restart cash flow generation which will help to combat shortfalls in working capital of R1.5-billion (at time of business rescue).

“Payments due to small-scale growers at the end of November for sugar cane delivered in October will be paid in full, while suitable terms have been agreed for staggered payments to commercial growers,” said Russell.

Commercial growers agreed to waive accrued interest on the outstanding October payments, given the difficult position Tongaat Hulett finds itself in.

“SA Canegrowers also emphasised the necessity of payments to industry service providers such as contractors, haulier companies, and input suppliers without whom growers cannot operate. The business rescue practitioners have confirmed that the outstanding payments to service providers will also be effected this week, together with payments to commercial growers,” he said.

Although this is a positive step and will provide some security for growers going forward, the potential for a crisis remains.

“It remains to be seen whether Tongaat Hulett will be able to secure the funding needed to complete the off-crop maintenance that is required for its mills to operate next season. The risk remains that Tongaat Hulett will not emerge from business rescue, once again plunging the industry into a crisis.”

Russell again implored relevant government officials to respond proactively to ensure that an industry defining crisis does not emerge next year.

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