By Andrew Russell
In his State of the Nation Address, President Cyril Ramaphosa announced a number of interventions to address the load-shedding crisis, including tax incentives being introduced for alternative energy sources such as rooftop solar panels.
For the sugar industry, which faces a loss of at least R700 million this year as a result of load shedding, these interventions are crucial for its continued sustainability. What remains to be seen is whether the Budget speech will deliver on the promise of Sona by allocating the resources needed for these interventions to succeed.
More critically, and in order to ensure the long-term survival of our industry, Finance Minister Enoch Godongwana will also need to take a step back from destructive policies like the Health Promotion Levy, which threatens 1 million livelihoods in South Africa’s rural economies.
The HPL, or “sugar tax”, cost the sugar industry R2 billion and 16 000 jobs in its first year of implementation alone – nearly triple the losses expected from load shedding this year. New modelling commissioned by the SA Sugar Association shows that a further 6 000 jobs will be lost if the planned increase in the sugar tax takes effect on April 1, 2023. Moreover, the businesses of around 3 000 small-scale growers will be put in jeopardy.
Over the past few years, growers have withstood a perfect storm of floods, arson attacks, rising input costs as a result of the war in Ukraine, recent bouts of ongoing load shedding, and a milling crisis. There can be no stronger case for granting the industry a reprieve from the burden that is the sugar tax. And yet there is even more at stake if it remains in place.
In his Sona speech, Ramaphosa announced government interventions to support small-scale growers. But these interventions will achieve very little if the HPL remains in place. Likewise, the R1 billion in funding committed by the sugar industry (with R800 million disbursed to date) to accelerate transformation in our sector will all be for naught if this tax is allowed to continue crippling our business.
Over and above this funding, our industry has also implemented bursary schemes for the children of both growers and farmworkers. We have also facilitated training and supported the launch of the Vukani Co-operative to assist in developing women growers and leaders in the industry. However, many of these programmes are now in jeopardy as the industry faces a financial crisis unlike any other in its known history.
When the Sugar Cane Value Chain Master Plan was signed in November 2020, with the goal of restructuring the industry to ensure its future sustainability, all signatories agreed to review the implications of tax policy for the industry.
There has, however, been no evidence of such a review, and the sugar tax has been maintained. The question we must ask is why there is such devotion to this most destructive of policies when there has been little evidence the tax has reduced obesity levels in South Africa?
We all understand the importance of a healthy population to reduce the burden on the national fiscus and for people to thrive. Physical health is one part of well-being, but living in a growing local economy with access to opportunities and jobs is equally important.
In South Africa’s rural communities, where opportunities are few and far between, the question cannot be of economic opportunities versus health, but of how we can achieve both. We may not have the answer now, but we certainly know it cannot lie in penalising embattled, job-creating growers in KwaZulu-Natal and Mpumalanga.
In perhaps its darkest hour yet, the sugar industry needs decisive action from Godongwana in his Budget speech to remove a policy that is sinking the industry and threatening livelihoods. This intervention would also buy time for stakeholders to engage on a holistic plan to address the country’s health challenges, an effort that the sugar industry is committed to supporting.
The time for experimental policies has passed. Godongwana must suspend the levy in its entirety, so that growers are given a lifeline in an otherwise gruelling environment marked by load shedding, inflation and a milling crisis.
SA Canegrowers remains committed to doing its part to ensure the long-term survival of our industry, and in particular protecting the 1 million livelihoods that depend on it. We hope the government demonstrates its continued commitment to supporting growers, workers, and communities in KZN and Mpumalanga by scrapping the HPL for the coming financial year.
Andrew Russell is the chairperson at SA Canegrowers.
BUSINESS REPORT