South Africa’s struggling sugar industry is urging the government to delay any increase in the health promotion tax until 2030, when a crucial master plan for its recovery and long-term sustainability will be completed. It avers that the tax has negatively affected companies, jobs, and overall sustainability.
The South African Sugar Association (Sasa) has long argued that the tax, which targets sweetened beverages, has hurt businesses and caused job losses. In February 2023, Finance Minister Enoch Godongwana agreed to freeze the tax at its current rate of 2.21 cents per gram of sugar content exceeding 4g per 100ml. The freeze, or moratorium, is set to expire in 2025. However, Sasa is calling for a five-year extension, warning that the industry’s recovery hinges on this delay.
Sasa reports that the tax has cost the industry over R2 billion and resulted in the loss of 16,000 jobs in its first year of implementation. According to Sasa, the sugar tax has caused the closure of the Darnall and Umzimkulu sugar mills in KwaZulu-Natal. The Darnall mill, owned by Tongaat Hulett, was shut down in 2020, while Umzimkulu, owned by Illovo Sugar, faced a similar fate in the same year.
Sasa’s executive director, Trix Trikam, was on record expressing a dire warning: many sugarcane farmers will leave the crop if the moratorium is not extended because of unprofitability. “Farmers will leave sugarcane because they’ll be making losses. There is no viable alternative crop for them,” Trikam said, adding that the situation could lead to a looming “major disaster.”
