New reference price for imported sugar offers only temporary relief

While the South African sugar industry is grateful for the new Dollar Based Reference Price (DBRP) that may help to curb rampant imports of cheap sugar, feelings remain that this measure will be unsustainable in the medium to long term.

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Approximately 160 000t of sugar was imported into SA in December and January, almost matching the country’s sugar exports.
The International Trade Administration Commission (Itac) of SA recently approved an increase in the DBRP for imported sugar from the long-standing US$358 (R3 753,09) per ton to US$566 (R5 933,66) per ton.

According to the SA Sugar Association’s (Sasa) executive director, Trix Trikam, the original DBRP had “afforded no protection to the sugar industry”. This had prompted the industry’s 2013 application to Itac for an increased DBRP. “The level [of the DBRP] is lower than the one the sugar industry applied for, however the industry is appreciative of the government’s support and believes it is a step in the right direction,” Trikam said.

Sasa explained that the increased DBRP would give SA’s sugar industry some protection against sugar imports for the first time in four years. “The [sugar import] tariff is the difference between the DBRP and the world [sugar] price based on a formula explained in the Itac report. Therefore, the tariff is not a fixed amount and is directly affected by world sugar prices and exchange rate fluctuations,” said a Sasa statement.

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Trikam, together with local sugar companies, Illovo Sugar SA and TSB, agreed that the new DBRP would only provide temporary relief to the SA sugar industry. However, Dave Howells, Illovo Sugar SA’s managing director said, “We look forward to future engagement with the government regarding the protection of the industry from cheap imports.”

TSB’s spokesperson, Vusi Khoza, said that cheap sugar imports had had “dreadful consequences for rural communities who depend on the sugar industry for their livelihoods”. “We are well aware that government intervention can only provide temporary relief,” said, Khoza. “We believe that long-term sustainability will be achieved through cost reduction and increased efficiency throughout the entire value chain.”

Trikam pointed out that more than a million people depended on the SA sugar industry that “makes a significant contribution to the socio-economic growth of South Africa”.