Saviour of cane farmers
THE SUGAR cane industry plays a major role in creating employment and promoting entrepreneurship in the KwaZulu-Natal province.
With the drought that hit South Africa in the last two years almost bringing the agricultural industry to its knees, the sector has managed to plod along, aided by Ithala Development Finance Corporation (IDFC), to ensure that jobs are secured.
One of these companies, Gledhow Sugar Company, managed to keep its operations going in the midst of the drought and it owes its survival to the finance institution.
The sugar company, which is dependent on 45 percent to 50 percent supply of sugar cane from land reform growers, came under threat after growers experienced difficulty raising their own finances in order to purchase fertiliser and chemicals to rehabilitate their farms.
To alleviate the effects of the drought and ensure sustainable throughput of the mill, Ithala provided a R15 million debt facility to Gledhow for on-lending to growers supplying sugar cane to the company.
The livelihood of about 58 000 people in KwaDukuza, on the KZN north coast, who contribute towards production of 20 million tons of sugar cane annually, would have been compromised had it not been for the support provided by IDFC.
“Our role as a development finance institution is not confined to funding, but forms part of a broader strategic role of support to our clients during times of need. Without such intervention, jobs would be lost and the sustainability of the sector would be challenged,” said Ithala Business Finance executive Bonginkosi Shangase.
In the past five years Ithala has financed more than 6 300 hectares of agricultural land to historically disadvantaged individuals, many of whom started out as small cane growers. Over the same period, R1.5 billion was advanced to primary agriculture and agri-business.
“The drought has been deemed the worst in 23 years, with the sugar industry body loss estimated at R1.7bn in gross revenue for 2015-16 season. This has resulted in serious ramifications for our agricultural portfolio, demanding that Ithala be innovative in addressing the challenges,” added Shangase.
The South African sugar industry is an important contributor to the national economy as characterised by its agricultural and industry investments, foreign exchange earnings, high employment and linkages with major suppliers, support industries and customers.
The cane growing sector comprises about 29 000 registered sugar cane growers who farm predominantly in KZN and Mpumalanga. –Ithala said the sugar industry created direct employment for 137 000 people and approximately one million people depend on the sugar industry for a living.
“Many of the farmers are long-standing clients of Ithala and have become very successful. One of our clients, Jacob Masuku, who started out as a small-scale farmer, became the first black commercial sugar cane farmer in Pongola. As his first financier, this is an achievement we are most proud of,” said Shangase.