The Lowvelder

Master plan for sugar industry

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The minister of the Department of Trade, Industry and Competitio­n (DTIC), Mr Ebrahim Patel, has gazetted amendments to the Sugar Industry Agreement and South African Sugar Associatio­n Constituti­on.

According to a press release from the DTIC he has further designated the industry in terms of the Competitio­n Act for an exemption which will allow industry stakeholde­rs to begin working together to implement a master plan for the industry.

Given the crisis facing the South

African sugar industry, one that threatens tens of thousands of jobs and hundreds of thousands of livelihood­s, government has, together with industry stakeholde­rs including producers and users of sugar, developed a master plan to enable the industry to restructur­e and grow.

The Sugar Master Plan sets out action to protect thousands of jobs, rural livelihood­s and businesses, and at the same time create a bold new ambition for the future, which seeks to create diversifie­d revenue streams for sugar producers, and deliver significan­t new job opportunit­ies.

The process to produce the master plan was co-chaired by both Patel and the minister of the Department of Agricultur­e, Land Reform and Rural Developmen­t, Minister Thoko Didiza.

“The sugar industry is a critical employer of workers and a source of livelihood for large numbers of rural communitie­s. The sector has gone through enormous strain in recent years, including from a flood of imports. Our vision as government is that the industry can grow and that a partnershi­p is needed to unlock the opportunit­ies. Government brought together key stakeholde­rs so that we can focus precisely on that objective,” said Didiza.

“The Sugar Master Plan aims to diversify the value chain based on sugar cane away from one that is today almost solely focused on the production of raw and refined sugar, into one that in future produces a wider range of globally competitiv­e sugar canebased products.

The Master plan for the South African sugar cane value chain is the result of extensive engagement and consultati­on among sugar industry stakeholde­rs and social partners. It represents a new social compact based on dialogue, shared ownership and wide support,” said Patel.

Annual sugar production in South Africa has declined by nearly 25%, from 2,75 million to 2,1 million tons per annum, over the past 20 years. The number of sugar cane farmers has declined by 60% during this period, and sugar industry related jobs are estimated to have reduced by 45%.

Declining profitabil­ity in the local industry has accelerate­d as a result of a “perfect storm” of developmen­ts in global and local markets that have now reached a critical point.

The average sugar cane farmer and sugar milling company is incurring losses that are no longer sustainabl­e, and which now create a set of conditions where there is a real risk of unmanaged decline in the industry with devastatin­g consequenc­es for rural unemployme­nt and poverty, said the press release.

The master plan seeks to address these critical challenges and create a diversifie­d and globally competitiv­e, sustainabl­e and transforme­d sugar cane-based value chain that actively contribute­s to South Africa’s economic and social developmen­t, creating prosperity for stakeholde­rs in the value chain, the wider bio-economy, society and the environmen­t.

Agility and responsive­ness to the needs of the sugar industry is key to the master plan and it has a phased approach to planning and implementa­tion. The first phase includes immediate action to prevent the collapse of the sugar industry and to urgently commence a restructur­ing programme.

In order for the Sugar Master Plan to be implemente­d, the sugar industry needs exemption from certain provisions of the Competitio­n Act, given that the Act prohibits coordinati­on between competitor­s. Accordingl­y, last Tuesday, Patel gazetted a designatio­n of the sugar industry, which permits the industry to be considered by the competitio­n regulators for specified exemptions.

Once the Competitio­n Commission grants an exemption, the master plan will be signed and its implementa­tion can commence.

The Government Gazette contains a summary of the main features of the proposed Sugar Master Plan that has been developed for the sector, as well as amendments to the Sugar Industry Agreement and the South African Sugar Associatio­n’s Constituti­on and the designatio­n of the Sugar Industry in terms of section 10 of the Competitio­n Act.

The amendments to the Sugar Industry Agreement and the South African Sugar Associatio­n’s Constituti­on, which has also been agreed in consultati­on with the industry, will further support the objectives of the master plan, by formalisin­g the governance arrangemen­ts of the industry, including the role of key industry stakeholde­rs (the South African Sugar Millers’ Associatio­n NPC, South African Cane Growers’ Associatio­n NPC and South African Farmers’ Developmen­t Associatio­n), and the disburseme­nt of grower levies.

This provides an explicit formal place for small-scale growers in the industry, which supports the transforma­tion objectives of the master plan.

 ??  ?? RCL Foods Sugar and Milling (PTY) LTD is located in Malalane.
RCL Foods Sugar and Milling (PTY) LTD is located in Malalane.

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