“Growers continue to face increased input costs, with the impact of the 52% hike in the minimum wage for farm workers necessitating a keen look at farming and business operations,” said Canegrowers executive director David Wayne. “A challenge will be to achieve continued improved levels of productivity to manage the erosion of revenue.”
The crop estimate for 2013/2014 was slightly in excess of 20,1 million tons as of October 2013, with the 2014/2015 crop expected to maintain the same level of production, given normal spring and summer rainfall. A global production surplus was forecast, putting South Africa at risk with more imports. Imports are sold here for less than the cost of production in countries of origin, forcing local producers to export sugar at a lower world price.
“Imports into southern Africa, mainly of Brazilian origin, have escalated. Imports are top of the list of potential threats to the sustainability of the industry,” said Wayne. Tongaat Hulett CEO Peter Staude said farmers needed protection from imports. “Imports have reached the equivalent production of three SA sugar mills, which each employs about 8 000 people. They have a detrimental effect on jobs in the industry.”
An application has been made to the International Trade Administration Commission (Itac) for a review of the dollar-based reference price (DBRP), which is set at a level that currently produces a zero tariff. “A full investigation into an appropriate level of DBRP is welcomed. We’re encouraged by government’s support for local industries and its wish to develop and retain jobs in South Africa,” said Wayne.
Revisions to the new Sugar Act have been agreed in principle between growers and millers, but Wayne said it was unlikely that the revised Act would be signed into law during 2014. Opportunities in 2014 lay in further consolidation of crop recovery.
“Canegrowers, through its Innovations Group, is investigating various options for growers to add value to their cane crop,” said Wayne. Staude said co-generation played a key role in the drive to optimise revenue from sugarcane, adding that Tongaat Hulett had registered the company’s interest in new electricity generation.
“Tongaat Hulett now awaits the opportunity to submit a bid for the first 80MW power station. Planning for the project, including the environmental impact assessments and plant construction contracting processes, is well advanced,”
he said.
