Unchanged sugar tax brings partial relief for farmers

While the recent announcement by minister of finance Enoch Godongwana to keep the health promotion levy (sugar tax) unchanged for the next two years is welcomed, local farmers say government will need to do more to mitigate the multi-pronged challenges faced by the industry.

SA Canegrowers CEO, Thomas Funke, said this was a significant intervention for the sugar industry.

The industry faces multi-pronged challenges ranging from a crisis in the milling sector, high input costs, recurring floods, and more recently the escalating threat of loadshedding.

“Each of these crises raises the cost of cane growing and the risk to growers significantly and the consequences of these intersecting threats will not only be felt by growers.

“Through both direct and indirect employment, the sugar industry supports about a million livelihoods in South Africa’s rural communities. These are areas with few opportunities and therefore areas which can least afford the job losses that would occur should the industry collapse,” said Funke.

He said the industry would still need extensive government support, especially to address flood damage and mitigate the impact of loadshedding.

“There is much to be done to position the industry for long-term success, but the relief provided by the minister in his budget speech was a good start.”

Dr Siyabonga Madlala, chairman of The South African Farmers Development Association, said they had been anxiously waiting on the minister to announce this good news.

“This would enable the industry to pursue diversification opportunities which would allow the industry to export less sugar and ensure the sustainability of the industry.

“In 2018, treasury introduced the Health Promotion Levy (HPL) on sugary drinks with more than four grams of sugar per 100 ml. The rate is currently fixed at 2.1 cents per gram of the sugar content that exceeds four grams per 100ml.

“This resulted in a decline of South African sugar because the beverage producers reviewed their beverage recipes and formulated away from cane sugar to mitigate the magnitude of their tax exposure,” said Madlala.

Follow The North Coast Courier on Facebook, Twitter, Instagram & YouTube for breaking news

Telegram Broadcast Service: https://t.me/joinchat/yJULuN8NaCs5OGM0

WhatsApp Broadcast Service: Add The Courier to WhatsApp at 082 792 9405 and WhatsApp your name and surname to be added.