The Sad Saga of Sugar Cane in South Africa

The Sad Saga of Sugar Cane in South Africa

It’s that time of the year again… Easter Eggs everywhere! And here’s the question – what goes into the making of Easter Eggs? Well, according to one source, they’re almost two thirds sugar. Now I’m not for a moment suggesting that you don’t eat Easter Eggs and the associated sweet treats of Easter – I’m a big believer that a little something delicious on occasion doesn’t hurt anyone (it’s more about what you do on a day-to-day basis that affects your health). But what is an interesting topic of discussion is where all that sugar comes from… And how important it is to KNOW where it comes from!

In these columns we explore issues relevant to South Africa. We often suggest ways in which you, as a private individual, are able to make a difference or contribute to making this beautiful country just a little better. Today’s column is a little convoluted, but it does provide solutions – so be sure to read to the end ????.

Let’s start at the beginning with health implications. It is a known fact that obesity costs South Africa billions. In an article written by Micheal Boachie for Wits, dated 13 September 2022 (see info block), he states that, “Based on our calculations, overweight and obesity are costing South Africa’s health system R33 billion (US$1.9bn) a year. This represents 15.38% of government health expenditure and is equivalent to 0.67% of GDP. Annual per person cost of overweight and obesity is R2,769. Among the most expensive conditions to manage are diabetes and cardiovascular diseases.” And this is just the tip of the iceberg! One estimate suggests the South African economy loses more than R700 billion (US$ 45 billion) a year as a result of obesity-related loss of productivity, absenteeism, presenteeism and medical costs. The list goes on…

Reading the above paragraph, it makes sense that the government introduced what is loosely known as the “Sugar Tax”. South Africa became the first country in Africa to legalise sugar tax, which was implemented on 1 April 2018 as a tax on sugar-sweetened beverages (SSBs). Referred to as the Health Promotion Levy (HPL), the sugar tax was expected to reduce public health expenditure in the long term and projected to raise billions of rands in revenues. Has it reduced consumption enough to reduce the health implications? Well, the jury seems to still be out on the subject. 

In a damning report by Baker McKenzie on 27 July 2023 (see info box), they state: “In the past three years, the sugar tax has contributed the sum of ZAR 7.9 billion to the South African Revenue Service (SARS). This was revealed by the former Minister of Finance, Tito Mboweni in his reply to a question concerning the effectiveness of the HPL in reducing obesity. The Minister further stated that the tax revenues from the HPL are not ringfenced for any particular expenditures, but instead flow into the National Revenue Fund. It is worth noting that of the ZAR 7.9 billion that has been collected from the domestic consumption tax on sugary beverages, only ZAR 38 million has been spent on the National Department of Health to promote healthy living standards. Therefore, about 0.5% of funds are being spent on promoting health awareness. It is paradoxical that the main objective of the sugar tax is to promote healthy living, but only 0.5% of the funds from the tax are spent by the National Department of Health to promote healthy living. It is a known fact that the most underprivileged in our society are in need of support to overcome diabetes in particular, but after six years, they still have no access to healthcare facilities and medical assistance aimed at treating diabetes.

The government is clearly not taking the necessary steps to rehabilitate or resolve the health hazard that is allegedly caused by sugar. Furthermore, it has been six years since the sugar tax was implemented in South Africa and the government has not released any update on whether the incidences of obesity or being overweight has reduced since then. The CGCSA has also raised the concern that the government refuses to accept previous requests to allocate or ring-fence money raised from the levy for health promotion as originally planned.” 

Where this tax definitely has had an impact is in the economic arena, and NOT in a good way. This industry has been a part of our South African economy for 176 years – in 1848, Edmund Morewood planted the first cane in South Africa on the North Coast of Natal and established a small sugar mill in the Compensation area.  In the Baker McKenzie report, it was noted that the sugar industry suffered an overall job loss of 16 621 employees. According to the South African Sugar Association website, direct employment within the sugar industry is approximately 85 000 jobs, which represents a significant percentage of the total agricultural workforce in South Africa. Indirect employment is estimated at 350 000. In addition, there are 22 949 registered cane growers. That’s a huge amount of people that are affected by this drama. 

The sugar tax was implemented right when the sugarcane famers and millers were recovering from a long drought. The industry has faced serious challenges since the implementation of that tax, including cheap sugar imports, civil unrest (disrupted production and supply chains), sugar cane fields being burned in June/July 2021, and the COVID-19 pandemic. The combined effects of high input cost inflation, natural disasters (flooding of cane fields in 2022) and deteriorating logistics infrastructure only add to their woes. The SA Canegrowers’ 2023 scenario modelling showed that continuous loadshedding at stages 4-6 would cost growers more than R723 million in 2023. An escalation to stages 6-8 could cost the industry more than R1,8 billion. Anything beyond stage 8 could cost the industry more than R2,4 billion. I was unable to find actual figures for 2023, but I hate to think what the realities were… In 2021, two sugar mills in KwaZulu-Natal (Tongaat Hulett’s Darnall and Illovo Sugar’s Umzimkulu) closed due to financial challenges. Tongaat Hulett (which accounts for a quarter of South Africa’s sugar production) entered voluntary business rescue on the 27th of October 2022. Thanks to an undisclosed amount of money procured from the government, Tongaat Hulett will apparently live to take on another production season. Gledhow Sugar Company voluntarily commenced business rescue proceedings on 10th March 2023. This poses challenges for the entire industry.

So, you may ask, what can we do to help our people involved in the sugar industry? Well, there’s a fantastic initiative known as “Save our Sugar” – which encourages us to purchase only South African sugar. In fact, they’re asking you to pledge to do so. This action alone can create an extraordinary difference in the industry (take a look at the web site as detailed in the info block). Why on earth would you want to purchase ‘foreign’ sugar when we have a local industry that supports your own country?

How do you KNOW it’s local sugar? Because it states “Product of South Africa” or has the Proudly South African logo on the packaging. Otherwise, it is likely an imported product that is contributing to South Africa’s unemployment rate!!

You could, of course, also eat a couple of extra Easter Eggs. Or bake some delicious traditional Easter treats… The choice is yours ????…

#HomeSweetHome #SaveOurSugar

Jacqui Ikin & The Cross Country Team

INFO BLOCK:

Obesity costs South Africa billions. We did the sums:
https://www.wits.ac.za/news/latest-news/opinion/2022/2022-09/obesity-costs-south-africa-billions-we-did-the-sums.html

SA’s tax on sugary drinks has brought in R8 billion – less than 1% is spent on health ‘promotion’:
https://www.news24.com/news24/bi-archive/south-africa-sugar-tax-is-not-being-spent-on-healthcare-2021-7

South Africa: The bittersweet extension of sugar tax to pure juice:
https://insightplus.bakermckenzie.com/bm/tax/south-africa-the-bittersweet-extension-of-sugar-tax-to-pure-juice

SA Canegrowers on FB: 
https://web.facebook.com/sacanegrowers1

Meet the unsung heroes of South Africa’s sugar industry:
https://web.facebook.com/story.php?story_fbid=796258229206824&id=100064679617771

Save our Sugar:
https://saveoursugar.org.za/

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