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Securing the future of the SA sugar industry

Home Business Management Finance & Investment Securing the future of the SA sugar industry

The Sugar Industry Master Plan was signed by all stakeholders and social partners on the 16th of November 2020. Dave Howells, MD of Tongaat Hulett Sugar South Africa, shares some of the progress made so far on what he believes is a new chapter for the industry.

THE Masterplan aims to transform the industry under a social compact in which transformation and industry sustainability are key pillars, and which seeks to meaningfully contribute to South Africa’s economic and social redevelopment.

It commits all parties to a radically different future that is focused on diversifying the sugarcane value-chain.

While it’s currently focused predominantly on the production of raw and refined sugar, the potential exists for the SA sugar industry to produce sugar as well as a wide range of globally competitive sugarcane-based products. These could include bioplastics, biofuels, bioethanol and cogenerated power.

The first phase focuses on short-term action plans and commitments through social partners to prevent the further decline of the industry. A parallel process focuses on a restructuring programme that through the establishment of various task teams, sets the new foundations necessary to deliver on the long-term vision.

Progress made to-date on some of the commitments includes:

  • Commitment 1: Restore the local market offtake

The local sugar industry stakeholders have committed to sourcing 80% of all their sugar requirements from the local sugar industry. Over the next 2 years, this commitment increases to sourcing at least 95% of all sugar requirements from the local sugar industry.

We have already seen a shift to increased local procurement by local customers, both in direct market sales and offtake by manufacturers.

  • Commitment 2: Producer price restraint

Inflation-linked notional price increases were implemented by the local industry.

  • Commitment 3: Product Tax certainty

There were no changes announced to the Health Promotion Levy (sugar tax) in either the 2020/21 or 2021/22 Budgets

Task teams progress to-date:

  • Programme of work

All Task Teams are progressing the key elements of the long-term restructuring and diversification plan. The Task Teams have been formally constituted, work plans adopted and work has commenced.

  • Project management office

The project management office, which monitors and drives the implementation process of this sugar value chain master plan, has been formally established.

Tongaat Hulett is committed to partnering with our social partners to continue to craft a sustainable future for the SA sugar industry.

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