‘Sugar tax’ moratorium to help industry focus on diversification

In 2018, National Treasury introduced a health promotion levy on sugary drinks with more than 4g of sugar per 100ml. Pictures: Supplied

In 2018, National Treasury introduced a health promotion levy on sugary drinks with more than 4g of sugar per 100ml. Pictures: Supplied

Published Feb 23, 2023


The sugar industry would now be able to pursue various diversification opportunities which would allow it to export less sugar and ensure the sustainability of the industry, said SA Farmers Development Association executive chairperson Dr Siyabonga Madlala.

He said they welcomed Wednesday’s announcement by Minister of Finance Enoch Godongwana that the government would leave the health promotion levy (sugar tax) unchanged for the next two years.

“This is a relief to the sugar industry and, most importantly, to our farmers, who have been anxiously waiting for the minister to announce this good news.”

In 2018, National Treasury introduced the HPL on sugary drinks with more than 4g of sugar per 100ml.

The rate was currently fixed at 2.1 cents per gram of the sugar content that exceeds 4g per 100ml.

This resulted in a decline for the South African sugar industry, because beverage producers reviewed their recipes and formulated away from cane sugar to mitigate the magnitude of their tax exposure.

Madlala said they were also pleased by the minister’s announcement in relation to the floods that took place in 2021 and last year that an amount of R695 million would be made available for immediate relief, and that a further R1 billion would be disbursed next year.

“We believe that this will assist our farmers who were affected by the floods and have not yet received any assistance to fix their infield roads, farmhouses, and so on. We hope that this financial relief will assist our farmers to get back to business, as some have not been operational due to lack of assistance,” Madlala said.

He said they sincerely thanked ministers Thoko Didiza of the Department of Agriculture, Land Reform and Rural Development and Ebrahim Patel of the Department of Trade, Industry and Competition for their continued support of the recovery efforts aimed at boosting the struggling sugar sector.

The SA Sugar Association also welcomed the government’s decision to keep the HPL unchanged for the next two fiscal years to accord the sugar industry space to pursue diversification.

Trix Trikam, the association’s executive director, said they were grateful to the government for acceding to their request for a moratorium on any increases in the HPL while they vigorously pursued product diversification opportunities identified during the first phase of the all-important Sugarcane Value Chain Master Plan to 2030.

He added that these diversification projects had the potential to change the trajectory and performance of the industry.

“The HPL remaining unchanged gives us time to achieve a just transition of the sugar sector into new activities and industries.”

The industry supports 65 000 direct jobs and 270 000 indirect livelihoods in deep rural communities of KwaZulu-Natal and Mpumalanga.

At least 1 million people are dependent on the cane-growing and milling activities of the industry.

The HPL has had a deleterious impact on the industry since its introduction in April 2018, leading to multibillion-rand revenue falls, thousands of job losses, and the permanent closure of two sugar mills in KZN.

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