Sugar farmers sour over cheap imports

08.08.2013

Durban - Hundreds of KwaZulu-Natal’s new black farmers in the R12-billion sugar industry are at risk as cheap sugar imports, sold at lower than production cost, threaten the industry.

Sugar bosses warned this week that the industry was in “crisis” and unless the government acted swiftly to halt the flooding of cheap sugar into the country, black farmers who owned 21 percent of sugar cane farms, through government-backed reform projects, would collapse.

Further, Durban’s sugar terminal will come under increasing storage pressure as at least 250 000 extra tons of raw sugar were exported this year, with further spikes expected as tariff negotiations have yet to get off the ground.

As a “price taker” on the world sugar market competing with high-producing countries such as Brazil and Australia, where production is heavily subsidised, South Africa’s sugar cane farmers will reap revenues lower than production costs this year, despite a bumper crop.

As a “price taker”, South Africa’s sugar industry is also dependent on a set world price.

The industry provides 79 000 jobs, which represent 11 percent of the country’s total agricultural workforce.

Also, at least 170 black growers, farming on more than 20 000 hectares – which excludes those in co-operatives and on tribal land – could go out of business.

Suresh Naidoo, the head of the South African Canegrowers Organisation, said the industry had expected 200 000 extra tons of sugar would be exported over the past year.

“But there has been a huge jump. There are a lot of new entrants into sugar farming because of government land reform imperatives. They will be the first to hurt,” he said.

South African Sugar Association executive director Trix Trikam said 10 percent of the two million ton domestic market was now taken by cheap sugar imports that were coming into the country as a direct result of low import tariffs.

“The bulk of our industry revenue comes from the local market. We only export what is left over. Now we are exporting the highest tonnage yet in relation to the sugar crop produced,” Trikam said.

He said the income lost to imports was about R600-million a year and climbing.

“We are facing an industry crisis,” he said.

“There is only one way to minimise imports and save this industry and that is to raise the dollar-based reference price, which would trigger an appropriate tariff.

“We applied to the International Trade Administration Commission for this purpose at the beginning of March and, while we respect there are procedures and processes, unfortunately the longer this is delayed the closer we come to a serious crisis.”

Thembinkosi Gamlashe, from the commission, confirmed the industry had asked for the dollar-based reference price for sugar imports to be increased from $358 (R3 532) a ton to $764 a ton, but said the application was only in its preliminary phase of investigation.

The largest sugar cane grower, Charl Senekal, said the latest industry figures revealed that 34 000 tons of the cheap sugar had been brought into the country last month.

“That 250 000 tons extra sugar exported this year is equivalent to the production capacity of two mills. Then we start talking about jobs at risk. We cannot afford to lose jobs.”

Trikam said that the massive sugar terminal at Durban’s port would also “feel the pinch” as export volumes increased.

“While we do have current capacity, it is getting tight.”


iol