By Higgins Mdluli
The sugar tax is destroying desperately needed jobs in South Africa. And although health activists are currently claiming otherwise and currently calling for a higher tax, there is independent data to prove the tax has reduced employment levels without an iota of evidence the tax has improved anyone’s health.
When the Health Promotion Levy (or sugar tax) was introduced in 2018, the National Economic Development and Labour Council (Nedlac) commissioned a study on the impact of the tax. The Nedlac study found that between 2018 and 2019, the sugar tax cost 16 000 jobs in the sugar and beverage industries alone.
Earlier this year, the activist group Healthy Living Alliance (Heala) misleadingly claimed that these job losses resulted from the Covid-19 pandemic, and that there were in fact no job losses caused by the sugar tax. The Covid-19 pandemic hit the world only in 2020, yet the Nedlac study revealed the jobs were lost a year before that.
Activists and the academics behind the tax have also doubled down on denying job losses in recent media reports.
Heala and the Wits academic institute Priceless (SAMRC/Wits Centre for Health Economics and Decision Science) that conducted the research promoting the tax have also claimed repeatedly that figures from the SA Quarterly Labour Force Survey (QLFS) reveal no jobs were lost. Their error in understanding the statistics is so basic, it could arguably be deliberate. The QLFS measures jobs in all farming sectors including beef, citrus, table grapes and maize. Health activists cite overall agricultural employment figures without isolating those specific to the sugar sector. It is disingenuous at best and manipulation of data at worst.
Yet the devastating effects of the sugar tax on canegrowers have since further been demonstrated by studies and modelling done by the independent agricultural consultancy, the Bureau for Food and Agricultural Policy (BFAP). Their studies have shown that land under cane cultivation is declining, which in their studies can be directly linked to the effect that the sugar tax has on local growers. What is especially concerning is that the impact is felt first by small-scale growers, who are often more vulnerable to price or demand shocks. BFAP modelling shows that under a continuing sugar tax regime, land under sugarcane cultivation will further decline, and can lead to a further 10% job losses by 2031.
Heala claims that these studies are paid for by industry, and therefore void of validity. This again is simply not true. Nedlac is a government initiative and receives funding from the Department of Labour. And the studies and modelling of BFAP, an independent agricultural consultancy, were not done to reach a predetermined outcome but to assess the many risks facing the industry.
What is clear is that the sugar tax is costing South Africa jobs – most often jobs in rural KwaZulu-Natal and Mpumalanga where there are few other options for employment.
This is an important point to note: South Africa’s canegrowers grow their crops in specific areas with specific environments, making it difficult to switch to other crops. Agriculture is by and large a rural activity – and most growers are anchors in rural agricultural economies with few other employment options.
This very obvious fact seems to escape activists like Heala, when they make overly simplistic statements like: “a job in one industry where fewer products are being bought will be replaced by a job in another industry where products are being purchased”.
If finding and keeping jobs were such a simple and easy process in South Africa, we would not be sitting with an unemployment rate of 33.5% – one of the highest unemployment rates in the world. Such statements amount to a callous disregard for the livelihoods that depend on canegrowers and the sugar industry.
SA Canegrowers represent over 1 200 commercial growers and 24 000 small-scale growers, and each of these have families to support and employ people to work permanently or seasonally in their fields. “Replacing” these critical jobs is just not as simple as Heala would like you to believe.
What makes the threat to jobs so egregious is that the sugar tax is not even delivering its intended outcome. When it was introduced, it was sold as a health policy to address obesity and the related lifestyle diseases that obesity may trigger.
But since 2018, the evidence supporting this outcome has been mixed at best, or clearly demonstrates that the sugar tax does not accomplish what it set out to do.
Consumers might be buying fewer sugar-sweetened beverages (or “sodas” to borrow the American term that health activists like to use), but consumers are displacing these purchases with other food and beverage options – not necessarily healthier options - to achieve the same caloric intake. In one study in Soweto, participants drank less of the taxed sugar-sweetened beverages, but their Body Mass Index (an indicator of healthy or unhealthy weight) still went up. Such displacement of food and beverage choices (to the further potential detriment of health) has been observed world-wide in countries that instituted a sugar tax.
This indicates the core problem with the sugar tax as a policy to drive health and behaviour change. Obesity and related lifestyle diseases are caused by many factors. The World Health Organisation (WHO) itself describes being overweight or obese as a “multifactorial disease” - with no singular cause but a complex interplay of diet, exercise, health and genetics, and can even be influenced by the medication one takes. Simplistic solutions that ignore the complexity are destined to fail.
When the first Sugarcane Industry Value Chain Masterplan, a partnership with industry and government, was initiated in 2019, the impact of diet, exercise and other health factors were supposed to be studied to assess whether the sugar tax was indeed an appropriate policy measure. A satisfactory study has not been conducted yet. In some instances, the same health activist academics who called for the sugar tax in the first place, are even conducting so-called “independent studies” on the issue, without declaring their conflicts of interest in the prestigious journals they publish in.
The Masterplan also acknowledged that for the sugar industry to thrive, it needed to diversify. Since 2019, much work has been done in identifying alternative uses for sugarcane. The industry is now at a crossroads where enabling government policy and investment could secure the future of canegrowers in South Africa.
To achieve this, scrapping the sugar tax would allow the sugar industry and government the time to put these plans into action, and will give the government the time to develop evidence-based interventions to secure the health of South Africans.
Higgins Mdluli is the chairman of SA Canegrowers.