Monday, September 26, 2022
HomePigComponents hampering SA’s sugar business

Components hampering SA’s sugar business

Thabile Nkunjana, an agricultural economist on the Nationwide Agricultural Advertising Council (NAMC), and Dr Sifiso Ntombela, chief economist on the NAMC, study the decline in South Africa’s sugar manufacturing and the components threatening future development.

Shopper preferences, pushed largely by well being causes, have contributed to decrease sugar consumption.
Picture: FW Archive

South Africa’s agriculture sector generally continues to show optimistic development when measured when it comes to output, exports and the creation of employment. In 2020, the sector grew 13,4% year-on-year, and the forecasts for 2021 additionally recommend development.

Major agricultural employment has remained comparatively regular for the reason that begin of the COVID- 19 pandemic, with 868 000 folks employed within the fourth quarter of 2021, and export exercise reaching a file degree of US$12,4 billion (about R180 billion) in 2021.

Regardless of this optimistic total image, some industries throughout the sector, corresponding to sugar, have skilled difficulties.

The wrestle
When it comes to tariffs, the sugar business is arguably some of the protected in South Africa; it is usually amongst probably the most closely taxed, each domestically and globally. Taxes such because the Well being Promotion Levy (‘sugar tax’) are geared toward decreasing rising ranges of diabetes and weight problems.

The World Well being Group’s ‘World Motion Plan for the Prevention and Management of Noncommunicable Illnesses 2013-2020’, printed in 2013, was readily adopted by developed international locations.

In response to this, sugar producers turned modern with the intention to meet altering shopper calls for, and invested in product worth addition and diversification of infrastructure. These efforts turned a lifeline in among the international locations that adopted the precept of sugar taxes to scale back well being points corresponding to weight problems and diabetes.

The South African sugar business has not been spared world sugar market dynamics, on prime of its distinctive issues. Native position gamers have raised considerations about challenges going through the business. Excessive native manufacturing prices compared with different sugar exporters, deteriorating infrastructure, sugar ‘dumping’, and levies have been highlighted as the principle points.

In line with knowledge from the South African Sugar Affiliation, home sugar manufacturing between the 2005/06 and 2018/19 manufacturing seasons declined by at the very least 12,7%.
Of the 2 million tons of sugar produced domestically, 24% is claimed to return from black farmers, a powerful determine compared with the contribution of black growers of different discipline crops within the nation.

The sugar business has all the time been one of many greatest and most essential contributors to South Africa’s agricultural value-added merchandise and exports. Between 2010 and 2021, the business contributed a median of about R5,1 billion each year to agricultural value-added merchandise, and in 2019 it exported merchandise value R8,5 billion.

Nevertheless, this has step by step declined on account of points corresponding to low home manufacturing, escalating manufacturing prices, and rising low-cost sugar imports.

These declining sugar exports are mirrored within the 2021 commerce numbers. In line with the Worldwide Commerce Centre’s Commerce Map knowledge, complete export earnings have been recorded at R5,7 billion in 2021, which was 23% decrease than the R7,4 billion of 2020 and 33% decrease than the R8,5 billion of 2019.

Amongst the aforementioned components affecting South Africa’s functionality to export sugar merchandise are altering shopper tastes and preferences fuelled by well being causes, in addition to the COVID-19 pandemic. The influence of decreased affordability on shoppers’ buying behaviour and shifting consuming patterns attributable to the pandemic have exacerbated the lower in world demand for sugary meals.

Help programmes
Regardless of the altering dynamics on the worldwide sugar market, international locations that produce sugar have instituted numerous help programmes to make sure their home producers stay aggressive within the face of COVID-19 and altering sugar tax regimes.

Farmers in Brazil, Russia and India have benefitted from home commerce and home market help measures, thus serving to them to extend their sugar exports by 64%, 43% and 40% respectively between 2019 and 2020.

Equally, South African sugar farmers can profit from enhanced home market help measures to extend their manufacturing capability. The Sugarcane Worth Chain Grasp Plan to 2030 is among the instruments with the potential to help the home sugar business.

Commerce measures, corresponding to elevated tariffs on imported sugar, have been carried out for the reason that adoption of the grasp plan in 2020, and this has considerably assisted to mitigate low-cost sugar imports into the nation.

To additional help the sugar business, home market help programmes, corresponding to product diversification and shopper schooling campaigns, are vital. Shopper sentiment in the direction of wholesome consuming habits is among the components contributing to low sugar demand.

Higher shopper instructional campaigns are essential to maintain shoppers knowledgeable, whereas nonetheless sustaining a superb demand for sugar. Developed international locations are main this phenomenon, and creating international locations corresponding to South Africa are rapidly following up on this pattern.

The business would possibly must discover different makes use of for sugar or implement different artistic methods of promoting it. Due to this fact, diversification or value-addition by means of numerous agro-processing industries is important to growing demand for sugar and sustaining the business’s development.

It’s also essential to extend analysis and growth to discover more healthy sugar varieties that may guarantee shoppers’ consuming habits will not be affected sooner or later.

Given the significance of the business in creating jobs, producing overseas revenue and contributing to agricultural value-addition, policymakers and business captains must channel sources and efforts in the direction of the sugar grasp plan’s implementation to make sure the business is supported and stays aggressive on home and worldwide markets.

Quick-term exemption from sugar tax, for instance, might create a respiratory house for sugar farmers combating growing manufacturing prices and gasoline bills.

Lastly, state-supported instructional campaigns to extend consciousness amongst shoppers of sugar and the well being advantages related to consuming ample sugar vitamins are important to retaining demand for sugar and sugar merchandise on the native and regional markets.

Electronic mail Thabile Nkunjana at [email protected].



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