Master plan boosting limping industry

With the sugar industry starting to show signs of recovery after years of decline, South African Sugar Association (Sasa) executive director Trix Trikam says the implementation of the South African Sugarcane Value Chain Master Plan to 2030 will further help the industry stabilise.

The master plan aims to ensure stability, growth and sustainability of the local sugar industry going forward. The first phase of the plan will focus on immediate actions and commitments focused on addressing short-term concerns, stabilising the industry and creating a window of two to three years during which the industry will undergo restructuring.

“The future of the industry is mainly dependent on the successful implementation of the master plan. Two of its priorities speak to the optimisation of local market demand and diversified solutions for the industry. Changes brought about by the master plan that promote efficiency will also assist in protecting the industry from imports,” says Trikam.

He further suggests that, going forward, optimising the local sugar market, particularly in terms of increasing local sales and avoiding selling locally produced sugar to the loss-making export market, will help the local sugar industry to grow.

Trikam points out that the Competition Commission granted the sugar industry an exemption from the local Competition Act in October 2020.

The exemption has been granted “to ensure that the information Sasa and its members share is limited to what is necessary to give effect to the purposes of the master plan to 2030, without compromising competition in the long term”.

This exemption mainly is limited to coordination among millers, growers and refiners, but excludes any envisaged coordination among different retailers.

Trikam adds that, as a result of the master plan being implemented, retailers and industrial sugar users have also committed to minimum levels of offtake for at least three years. At least 80% of sugar consumption has also been specified to be sourced from local farms and millers during the first year, which will increase to 95% in 2023.

These commitments also do not require coordination among retailers or industrial users.

He maintains that some of these measures have already helped the industry to stabilise because of sugar sales –in the current season to direct and industrial markets – performing well and exceeding estimates.

Relative to the previous season, sales to direct and industrial sugar markets are ahead by more than 160 000 t, he states.

This increase, Trikam enthuses, is evidence that the demand for sugar from local customers has increased substantially, and that commitments regarding price restraint have been upheld.

In the 2019/20 season, production in the local industry amounted to about 2.2-million tons of sugar. The industry is also worth about R18-billion yearly in terms of sugar and molasses, and is continuing to increase in value, according to Trikam.

“Ensuring the sustainability of the industry remains vital in the short and long term. Ensuring constructive and energetic engagement on the master plan is important to achieve long-term viability,” he concludes.