Tongaat Hulett provisional liquidation hearing is critical for the bulk of South Africa’s sugarcane growers. Meanwhile, the new industry Masterplan bodes well for growth
The KwaZulu-Natal High Court hearing on the potential liquidation of Tongaat Hulett Limited will be a watershed moment for two-thirds of South Africa’s sugarcane growers. More than 18000 growers, the bulk of whom are small-scale growers, have no other option than Tongaat Hulett mills to process their sugarcane. Should the company enter an unfunded liquidation, their farms could become economically unviable, leading to thousands of rural job losses. This year’s milling season has already opened for sugarcane growers in other regions, but growers who are served by Tongaat Hulett mills are still waiting to hear when the mills will reopen.
Tongaat Hulett Limited has been in business rescue since October 2022, but has remained operational throughout. Earlier this year, the company’s business rescue practitioners filed for provisional liquidation after the sale agreement with the Vision consortium lapsed.
Among those opposing the provisional liquidation are: SA Canegrowers, representing almost 30,000 sugarcane growers, the Industrial Development Corporation (IDC), which provided over R2.3 billion in funding during the business rescue process, and the Minister of Trade, Industry, and Competition Parks Tau.
“The liquidation of Tongaat Hulett affects the entire sugar industry, and it is a direct threat to tens of thousands of rural jobs and livelihoods. For SA Canegrowers, safeguarding these communities must come first. The cost of preserving these operations is far lower than the long-term economic and social damage of allowing a viable milling business to collapse,” said Higgins Mdluli, chairman of SA Canegrowers.
Tongaat Hulett is a key contributor to South Africa’s economy and to the stability of rural communities. Tongaat Hulett operates three sugar mills and is the country’s only standalone refiner of white sugar. White sugar is used in beverages, biscuits, and confectionary. As such, it is a cornerstone of the national sugar value chain, which supports more than one million livelihoods – from small-scale and large-scale growers to mill workers, transporters, and food and beverage manufacturers.
Should Tongaat Hulett enter unfunded liquidation, it would force the large commercial beverage and snack manufacturers to rely solely on imported white sugar, exposing the local economy even more to the instability of global sugar prices and severely threatening the viability of the entire local sugar industry.
It is important to note that Tongaat Hulett has not yet entered formal liquidation. Stakeholders, including SA Canegrowers, are actively engaged in discussions to explore options that may prevent liquidation entirely.
But, if liquidation becomes unavoidable, SA Canegrowers believe that a funded liquidation needs to be negotiated that will ensure the mills remain operational and are not left unoccupied, which opens the risk of vandalism.
Welcoming the Masterplan
SA Canegrowers welcomes the signing of the second phase of the Sugar Industry Masterplan on Friday April 10, by the government, growers, millers, and commercial end-users including retailers and food and beverage manufacturers.
The South African sugar industry supports over one million livelihoods, making collaboration across the entire value chain essential to safeguarding an industry currently under significant strain from a high levels of imports and rising input costs.
SA Canegrowers is calling on retailers and food manufacturers to prioritise locally produced sugar, reinforcing support for livelihoods and rural development across South Africa.
“South Africa’s sugar industry is too important to fail. In signing the Masterplan, SA Canegrowers was expressing its commitment to work alongside the government and other stakeholders to build a resilient and sustainable sugar industry “ said Higgins Mdluli Chairman of SA Canegrowers. “The second phase of the Masterplan is a commitment from all stakeholders to work together, diversify, and build a proudly South African industry.”
The sugar industry supports growers in rural KwaZulu Natal and Mpumalanga where there are few other economic opportunities and is therefore essential to rural stability and development.
Currently growers are facing skyrocketing diesel costs and rising fertiliser costs, making it impossible to compete fairly against imports that are subsidised in their countries of origin.
South Africa needs a fair tariff system that protects local growers from unfair competition and highly subsidised sugar prices. It also needs the support of consumers to buy locally produced sugar as indicated on the label.
Representing 1,250 large-scale growers and 29,845 small-scale growers, SA Canegrowers remains firmly committed to growing a proudly South African sugar industry, one that ensures the country never has to rely on sugar imports.
The Masterplan also underscores the industry’s dedication to diversification as a pathway to long-term sustainability.
SA Canegrowers has been investigating biofuels and sustainable aviation fuels as diversification pathways. Investment in production facilities would require an environment conducive to foreign FDI as well as extensive government support.
SA Canegrowers will continue to work on ways to diversify the industry to sustain it for generations to come.
SA Canegrowers
