dtic to engage on sugar tax, but industry must diversify and boost competitiveness

The Department Trade, Industry and Competition (dtic) will engage various government departments on the economic impact of the Health Promotion Levy (HPL) on Sugary Beverages, or sugar tax, said Trade, Industry and Competition Deputy Minister Zuko Godlimpi.

Government has committed to supporting the sugar industry to diversify it and preserve jobs.

A single-product industry was still a risk, whether government increased or decreased the tax, he said.

“Restructuring and rebalancing the industry’s capacity to cut costs, boost competitiveness, lessen dependency on tariff protection, and lay the groundwork for diversification is crucial.”

He encouraged the industry to engage with players in the aviation, environmental and energy sectors for future partnerships.

“The industry also needs to look at a diversification strategy that will enable it to tap into alternative energy sources and renewables, such as biofuel, that will revive and sustain the sector,” he suggested.

Godlimpi and Agriculture, Rural Development and Land Reform Deputy Minister Zoleka Capa attended a meeting between government and the sugar industry stakeholders in Durban, KwaZulu-Natal on November 6 to discuss the role of the industry as a catalyst for economic development and the creation of jobs in the rural areas of KwaZulu-Natal and Mpumalanga, in particular.

Industry organisation South African Sugar Association chairperson Fay Mukaddam called for a moratorium on increases to the HPL to be extended to 2030.

The sugar industry has identified product diversification opportunities, which are currently at scoping and prefeasibility stages.

An extension of the current moratorium that is aligned with the Sugar Value Chain Master Plan would ensure that the industry had sufficient time to pursue these identified product diversification opportunities, she said.

“A two-year moratorium to diversify is grossly insufficient. We need more time to reach the commercialisation phase when it comes to identified product diversification opportunities,” she said.

Further, the sugar tax remained in opposition to the Sugar Value Chain Master Plan as it worked against the objectives of the master plan, she said.

Since its introduction in April 2018, the sugar tax had led to thousands of job losses and the permanent closure of two mills in KwaZulu-Natal, with Darnall becoming a ghost town and crime levels skyrocketing owing to the closure of the sugar factory in the area, highlighted Mukaddam.

Further, progress had been made since the signing of the Sugar Value Chain Master Plan, including a premium price paid to support small-scale growers, and industry transformation interventions. To date the industry had spent more than R1.2-billion as part of transformation, she added.