The crucial Sugarcane Value Chain Master Plan to 2030 is a done deal – it has the blessing of all stakeholders… from sugarcane farmers, millers, downstream users, workers, retailers, government to Parliament!

All stakeholders have agreed to the master plan in principle, paving the way for its implementation. The master plan is aimed at ensuring growth and sustainability of the sugar industry which is currently in crisis due to a number of serious challenges threatening its continued existence. Chief among these challenges is the so-called sugar tax, the Health Promotion Levy (HPL). Since its implementation on 1 April 2018, the HPL has had a deleterious effect on the industry and led to many job losses. The industry’s cumulative losses, as the result of the HPL, stand at more than R3.6 billion. The other challenges relate to insufficient tariff and increasing volumes of sugar from Eswatini. Over the past 20 years, annual sugar production has declined by nearly 25%, from 2.75 million to 2.1 million tons per annum. The number of sugarcane farmers has declined by 60% during this period and industry related jobs are estimated to have reduced by 45%.

The number of sugarcane farmers has declined by 60% during this period and industry related jobs are estimated to have reduced by 45%.

The master plan is being hailed as a major breakthrough for the industry which finds itself in dire straits. Jointly led by the Ministers of Trade, Industry and Competition, and Agriculture, Land Reform and Rural Development (Ministers Ebrahim Patel and Thoko Didiza respectively), the master plan is of significant interest to President Cyril Ramaphosa. The Ministers’ Deputies also made important contributions to the process. Patel’s Sectoral Advisor, Harald Harvey is the master plan facilitator. 

“Due to the nature of the immediate crisis facing the sugar industry, one that threatens significant job losses in some of the most vulnerable areas of our country, this master plan was required to deliver a social compact that both commits all parties to a radically different future, while at the same time having to secure agreement amongst all stakeholders on a short-term intervention plan to pull the industry back from the precipice of collapse,” said Harvey, giving the background to the master plan development process.

The industry is unanimous in endorsing the master plan. Independent Chairperson of the South African Sugar Association, Sindi Mabaso-Koyana, said the master plan offered the industry a critical opportunity to come up with clear diversified solutions, which is crucial for the continued existence and sustainability of the industry. 

South African Cane Growers’ Association Chairman Rex Talmage said they were fully committed to the success of the master plan and the creation of a more diversified sustainable industry that ensures meaningful and lasting synergistic participation of both commercial and small-scale growers in the sector. “The whole is greater than the sum of its parts,” he added. 

South African Farmers Development Association Executive Chairman Siyabonga Madlala said this master plan was a strong evidence that the government is serious about the development and protection of small-scale farmers, adding that: “the master plan deals with achieving a preferential payment for small-scale farmers who are a vulnerable group within the industry.” 

The South African Sugar Millers’ Association (SASMA) welcomed the master plan as an opportunity for all industry stakeholders to engage and develop a new roadmap for the industry in order to support its sustainability and profitability. “The industry requires access to diversification opportunities on a similar basis to those international sugar industries against which we compete. New diversification opportunities in a green economy must be developed in order to reduce the reliance of the industry on sugar for the majority of its revenue,” said SASMA Chairman John du Plessis.

Harvey explained that the master plan was premised on the following principles:

A phased approach to planning and implementation of the evolving master plan - as implementation progresses, as the immediate crisis is addressed, stakeholder commitments, strategies and plans will also develop and evolve. The master plan has flexibility which enables agility and responsiveness;

Social dialogue among the key stakeholders, ensuring that ownership of the ambition and plans is shared and rooted in a wide base of support;

Specific and concrete commitments by all the stakeholders, so that the master plan draws on the combined resources and capacity of industry, labour and government to achieve the desired objectives;

Shared governance, accountability and implementation of the vision and commitments;

A bias for action, agility and plans that are practical and pragmatic.

Currently, the South African industry only produces sugar, as per the Sugar Act, Sugar Industry Agreement and the South African Sugar Constitution. The master plan intends to revolutionise the industry, by expanding the product mix. 

The plan comes with opportunities for:

  • Bioethanol for fuel blending
  • Biojet fuel
  • Potable, industrial and pharmaceutical-grade bioethanol
  • Biomass/co-generated electricity
  • Biogas
  • No- and low-calorie sweeteners
  • Various platform and specialty chemicals and bio-based polymers for application in different sectors i.e. plastics, packaging, automotive, industrial, textiles etc.

The vision for the master plan

The vision for the master plan is “A diversified and globally competitive, sustainable and transformed sugarcane-based value chain that actively contributes to South Africa’s economic and social development, creating prosperity for stakeholders in the sugarcane value chain, the wider bio-economy, society and the environment”. 

To stem the industry decline to preserve 2019 job numbers (estimated
65 000 jobs), and over the long run grow jobs again in a diversified industry based on sugarcane; 
Restructure and rebalance industry capacity to reduce inefficiencies, reduce costs and restore competitiveness, reduce reliance on tariff protection and to set the foundations for diversification; 
Transformation through inclusive and broad-based participation in the value chain for workers, black and women farmers and black industrialists; 
Invest in globally competitive and sustainable diversified sugarcane-based value chains.

Phased approach

The master plan is structured in a phased approach with clear targets and implementation plans. Phase One will focus on immediate actions and commitments focused on addressing the short-term crisis, stabilising the industry and creating a window of 2-3 years during which the industry will undergo restructuring to set the foundations for the future and accelerated planning through joint task teams to set the detailed strategies and plans that will deliver on the long-term vision. There will be ongoing monitoring of the plan with regards to its progress and implementation.

Phase One

In a nutshell, Phase One will prioritise restructuring and setting the foundations for diversification. This phase will run for three years and is focused on key actions with the following objectives:

  • Stabilising the industry;
  • Restructure industry capacity and costs in an orderly manner to ensure alignment to current and future market size, and establish the appropriate platform for a diversified sugarcane-based value chain by 2030 (“Vision 2030”);
  • Protect and retain sugarcane value-chain (including upstream and downstream) jobs as far as possible through the transition;
  • Secure the foundational role of small-scale growers in the sugarcane value chain, and ensure a balanced approach to supporting small-scale grower sustainability towards Vision 2030;
  • Mitigate the impact on workers and small-scale growers of capacity reductions, and;
  • Ensure that transformation of ownership and participation is significantly advanced through the restructuring and the transition to Vision 2030.

Seven short-term action commitments

The stabilisation and restructuring will be implemented through seven short-term action commitments aimed at stabilising and restructuring the industry, and seven joint task teams focused on delivering the longer-term diversification plan. The seven action commitments are to:

  • Restore the local market and offtake commitments
  • Producer price restraint and certainty
  • Strategic trade protection
  • Employment protection and mitigation
  • Small-scale grower retention and support
  • Transformation
  • Managed industry restructuring