The South African sugar industry has been thrown into renewed uncertainty following last Thursday’s announcement that Tongaat Hulett Limited has filed for provisional liquidation.

South African Farmers Development Association (Safda) executive chairperson Dr Siyabonga Madlala said the news has sent shockwaves through the sector.

“We thought we dodged this bullet in 2022 when Tongaat Hulett entered business rescue,” he said. “It was hoped that the business rescue process would turn around the fortunes of this company.”

The company’s business rescue practitioners (BRPs) said that they had exhausted all viable options to save the ailing sugar giant’s operations in South Africa and that the key sale agreement with strategic partner Vision Group had lapsed. The development has created widespread panic across the sector, among both commercial and small-scale growers.

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According to Safda, the company accounts for 27% of national sugar production. Of the 25 653 small-scale farmers active in the sugar industry, roughly 60% – or 15 446 growers – supply cane to Tongaat Hulett’s three sugar mills in Tongaat (Maidstone Mill), Gingindlovu (Amatikulu Mill) and Empangeni (Felixton Mill).

If milling operations come to an abrupt halt, the growers could be left stranded without payment for cane already delivered and nowhere to process the current harvest. Liquidation may also mean that the mills would be prevented from selling their existing stock of refined sugar to manufacturers and retailers.

Madlala said the coming weeks are expected to be critical in determining the future of one of South Africa’s oldest agricultural companies.

“We are engaging with government, industry and sector leaders exploring options and solutions for the crisis we face. We call for calm among our growers and the public at large. No challenge is insurmountable when we work together.”

SA Canegrowers director Pratish Sharma described the potential loss of Tongaat Hulett as catastrophic.

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“This is devastating news! There are thousands of people whose livelihoods hang in the balance,” said Sharma.

“From what we have heard, this is not the end. There is still a process to follow and the prospect of operation under liquidation – we are waiting for more news with regards to the next steps.”

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