Sugar industry's bitter pill

16 September 2013 - 08:25 By NIVASHNI NAIR
Eating too much sugar may wreak havoc on your heart, a new US study finds.
Eating too much sugar may wreak havoc on your heart, a new US study finds.
Image: ©Loris Eichenberger/shutterstock.com

South Africa's sugar industry is at a tipping point with more than 40000 jobs hanging in the balance.

"We are losing R50-million a month because sugar is being imported into South Africa.

"This [imported] sugar is below the cost of production globally," SA Sugar Association chairman Bongani Linda yesterday told Minister of Rural Development and Land Reform Gugile Nkwinti.

Earlier this year, the industry said it was in crisis as imports, particularly from Brazil, displaced its product and forced it to export its surplus at a poor price.

"This year imports, especially from Brazil, are close to 400000t. It is about 17% of the demand and is equal to the production of three [South African sugar] mills.

" Production at the mills will start to fall away because they will be getting less for their cane.

"Together with the farmer and the miller, we are looking at about 40000 jobs being lost," SA Sugar Association executive director Trix Trikam said.

He said cheap imports were dominating the domestic markets as a direct result of low import tariffs.

"The importers are taking advantage of our weakness," he said.

"These are global players who are coming into South Africa just for the money.

"They set up packing plants in parts of the country like Johannesburg, Durban and Cape Town, employing just two or three people because packing is automated.

"They import the sugar and do their own packing," Trikam said.

The imported sugar is not tested in conformity with South Africa's quality control processes but nevertheless appears on supermarket shelves .

"The importer also does not follow South Africa's food labelling regulations and declares only that the product was packed in South Africa," Trikam said.

The industry has applied to the International Trade Administration Commission for a review of the import tariff. A tariff is implemented if the price of imported sugar falls below a certain level.

This level, the industry believes, is too low and should be raised so that tariff imposition is triggered sooner.

"There is no direct correlation between the world sugar price and the cost of production," Trikam said.

The commission is expected to announce its decision on Friday.

Nkwinti yesterday said he would meet Minister of Finance Pravin Gordhan, Minister of Economic Development Ebrahim Patel and Minister of Trade and Industry Rob Davies within the next two weeks to discuss the crisis.

"The situation is grave. I have learned from the leadership of the industry of the gravity of the situation," he said.

Sugar is refined in South Africa by six milling companies in 14 mills. South Africa has about 22000 sugar cane growers.

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