SA Canegrowers and the South African Farmers Development Association have appealed to President Cyril Ramaphosa to scrap the sugar tax or extend HPL moratorium. Picture: File
SA Canegrowers and the South African Farmers Development Association (Safda) are appealing to President Cyril Ramaphosa to scrap the Health Promotion Levy (HPL) which is also known as the sugar tax or extend the HPL moratorium until 2030.
Both associations are concerned that any increase to the sugar tax or lowering of the threshold will impact the sugarcane sector which will result in 25,000 cane farmers being pushed out of business, plunging families into poverty.
The associations said that while they were given a two-year reprieve from Finance Minister Enoch Godongwana in February 2023 to diversify the industry and restructure, their research indicates that two years is inadequate for the realisation of product diversification.
Dr Siyabonga Madlala, executive chairman, Safda and Higgins Mdluli, chairman, SA Canegrowers said: “Therefore, we implore President Cyril Ramaphosa and his administration to either scrap the sugar tax entirely, or at the very least extend the HPL moratorium until 2030, which is in line with the Sugarcane Value Chain Master Plan to 2030, a brainchild of the president which saved the industry from an existential crisis.”
According to the associations, the Masterplan processes must be allowed to run their course without the threat of uncertainty pertaining to the HPL.
Safda and SA Canegrowers said that since the sugar tax was introduced in April 2018, it has wreaked havoc on the sugar industry, leading to a multi-billion-rand revenue loss, substantial job losses and the closure of two KwaZulu-Natal mills.
A study commissioned by NEDLAC on the socio-economic impact of the HPL revealed that both sugarcane farming and sugar milling sectors had lost 13,536 jobs, including 12,860 farm jobs by 2019. In the first year of the HPL, the industry lost 250,000 tons of sugar sales.
Another study from independent agricultural consultancy BFAP found that the lowering of the threshold of the levy would result in a reduced demand for locally refined sugar by 125,000 tons in 2023/2024 and reduction of 35,000 tons in 2024/2025.
The associations said that decreasing the HPL threshold could cost an estimated 1,975 permanent jobs and 2,076 seasonal jobs, while 1,630 small-scale growers would be at risk of going out of business altogether.
“We cannot allow the destructive sugar tax to kill the industry, which has been in recovery mode, thanks to phase one of the Masterplan. Actually, any increase to the HPL or lowering of the threshold would be tantamount to undoing all the great work and progress achieved under the auspices of the Masterplan,” Mdluli and Madlala said.
The associations said that it must also be pointed out that there continues to be no credible studies showing that the HPL has led to the intended decrease in obesity and diabetes. There is no credible research in SA and worldwide to show that sugar taxes work, they said.
“Why then punish us as cane farmers who make a major economic contribution to deeply rural and job-starved areas of KwaZulu-Natal and Mpumalanga? We plead with our government to ensure the encumbered success of the Masterplan by ensuring policy alignment among departments – the Masterplan is the centre here, and the centre must hold,” Madlala and Mdluli said.
“We need sufficient time to pursue identified product diversification opportunities as we move from being a sugar industry to a sugarcane-based industry. As our research has shown, we should have finalised our diversification endeavours by 2030.”
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