SA Canegrowers urges sugar tax to be scrapped in South Africa budget process

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SA Canegrowers urge tax removal

Highlights

SA Canegrowers urges Finance Minister Enoch Godongwana to scrap the Health Promotion Levy, citing over one million livelihoods and industry financial pressures.
A Nedlac-commissioned study found the sugarcane farming and milling industries lost 16,000 jobs and 250,000 tons of sugar sales in the levy’s first year.
Sugarcane deliveries to mills are down 18% and recoverable value by 17% this season, with the sector also pressured by weak tariff enforcement and import competition.

Industry pressure builds ahead of budget statement

As reported by Moneyweb, SA Canegrowers is asking Finance Minister Enoch Godongwana to scrap the Health Promotion Levy, commonly known as the sugar tax, through the upcoming medium-term budget policy statement. The organisation says the levy is adding to financial pressure on an industry that supports more than one million livelihoods in South Africa.

SA Canegrowers chairman Higgins Mdluli says small- and large-scale growers are being hit on multiple fronts, with less cane reaching mills and locally processed sugar losing retail shelf space to foreign imports. The levy, introduced in April 2018, is also creating uncertainty for diversification plans, with Mdluli saying growers, millers and investors cannot plan adequately for the future while it remains in place.

The industry group says a Nedlac-commissioned study found that the sugarcane farming and milling industries had lost 16,000 jobs by 2019. It adds that the sector also lost 250,000 tons of sugar sales in the first year of the levy.

Trade and investment risks for the sugar sector

This season, sugarcane deliveries to mills are down 18% from the previous season, while the recoverable value extracted from cane has fallen 17%, according to SA Canegrowers. The group also says weak tariff structures and enforcement have allowed foreign sugar into the country for more than two years, adding to pressure on domestic producers.

SA Canegrowers points to further instability from Tongaat Hulett remaining in business rescue. The organisation also questions the continued justification for the levy, saying the revenue is not ring-fenced for health promotion and instead flows into the National Revenue Fund.

The group says removing the levy would improve policy certainty for the sector and support longer-term investment across the sugar value chain. That, it argues, is increasingly important as producers face lower output, import competition and reduced confidence in future expansion.

Our earlier report on Bangladesh’s National Special Economic Zone in Mirsarai showed how the flagship industrial hub remains far behind its investment, export and job-creation targets, with only a small number of factories in commercial production. We noted that delays in land development, unreliable utilities and shortages in worker housing and support infrastructure have continued to undermine operations and investor confidence despite large plot allocations.

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