Gledhow Mill survival crucial for 14 000 farming jobs

Uncertainty surrounding the North Coast sugar industry has reached an all-time high after the Gledhow Sugar Company (GSC) announced voluntary business rescue proceedings last week.

This follows the same decision made by Tongaat Hulett in October last year, with whom GSC runs all four still operational Northern KwaZulu-Natal mills at Gledhow (GSC) and Maidstone, Felixton and Amatikulu (Tongaat Hulett).

Together, the shaky financial situation of both companies has left local cane growers looking for firm promises on milling capacity and payment plans going forward.

According to GSC board member and chairman of the Gledhow Grower Council, Guy Heenan, who also owns a farm in Esenembe, the business rescue practitioner (BRP) has given assurances that growers would be treated as critical suppliers and paid on time.

Experienced BRP, Harry Spain, was appointed to the role and has already been active in meeting with relevant stakeholders, said Heenan.

“The mill is still operational and will continue to crush cane. Everyone involved is aware of how critical it is that the business aspects can continue,” he said.

After Tongaat Hulett received funding, they were also able to commit to grower payments for the upcoming season.

Their business rescue plan is expected on Friday, in time for the 2023 season which begins on April 1.

Gledhow Mill services a massive farming community, which produces 1.1-million tonnes, or 6% of South Africa’s total sugar cane yield annually.

“We have seen reports of a few thousand jobs that are directly affected by the mill, but my rough estimation is that it is likely nearer to 14 000,” said Heenan.

This aside from 374 people who are employed at the mill.

“The main priority for the BRP is to avoid liquidation which would be a catastrophe and cause widespread job losses. After lengthy discussions with all stakeholders however, I am confident that this will not happen,” he said.

Still, the decision to enter business rescue points to a clearly troubled current financial situation at Gledhow Sugar Company.

GSC cited the July 2021 unrest, April 2022 floods and ongoing inflationary input costs associated with the Russia-Ukraine war as defining factors which led to the company being classified as ‘financially distressed’.

Doornkop farmer, Vusi Gumede, previously a Gledhow supplier and currently a supplier to Tongaat Hulett, said he had been forced to diversify.

“Honestly, we’re so unsure of what’s happening that there is not really a good option to turn to in terms of sugar. I have cut down my cane production by a big margin and have focused on poultry to make it through,” he said.

But for many – Heenan estimated upwards of 90% of the 440 farms that supply Gledhow – their sugar cane farms are their primary asset.

Tongaat Hulett may have been too big to fail, which caused government to bail them out, but GSC might not have that luxury.

It will be up to the BRP and all involved to pull the company, and by extension the community, through this difficult period.

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