The South Africa Cane Growers Association (SA Canegrowers) has called for the Health Promotion Levy, or sugar tax, to be scrapped. According to the industrial organisation, removal of the levy will enable the industry to grow while doubling of the tax poses a threat to 21 805 jobs.
“It is projected that, should the tax remain the same, 6 198 permanent jobs and 9 786 seasonal jobs would be under threat. These are jobs in the most vulnerable communities, with the least alternative employment available,” noted the association.
SA Canegrowers has previously drawn the National Treasury’s attention to the findings of the socioeconomic assessment commissioned by the National Economic Development and Labour Council, which shows that the sugar tax cost South Africa more than 16 000 jobs and R2.05-billion in the first year of its implementation alone.
“Research has shown how much the sugar tax has already cost the country in terms of investment, contribution to gross domestic product and jobs. South Africa cannot afford the sugar tax at its current level and any increase in the sugar tax would be catastrophic,” SA Canegrowers argues.
Sugarcane Value Chain Masterplan
“Government and industry stakeholders have devoted immense effort towards the successful implementation of the Sugarcane Value Chain Masterplan, and it would be a travesty to see these efforts hobbled by the continuation of a policy that is unsupported by data. Should an increase in the sugar tax remove an additional 100 000 t of demand from the local market, it would completely undo the success of the first year of the masterplan that has seen industry stakeholders restore more than 150 000 t of local demand as required by the plan,” the association adds.
SA Canegrowers points out that it commissioned the Bureau for Food and Agricultural Policy to conduct modelling on the future impact of the sugar tax under different scenarios, which showed that, if the sugar tax remains in place at the current level, it will be a major contributing factor towards a decline of 46 600 ha under cane over the next ten years.
“This is 13% of the current hectares under cane. South Africa already lost 14.6% of its area under cane between 2005 and 2015, but this decline had stabilised by 2016. The sugar tax was introduced in 2018 and, along with an inflow of cheap sugar imports from eSwatini and climate change, has resulted in area under cane declining once again.”
The modelling also shows that, should the sugar tax be doubled, which has been called for by some lobby groups, this could lead to an additional 17 000 ha of cane going out of production over and above the projected 46 600 ha reduction, if the tax remains the same. The impact of this additional loss on the industry and farming communities would be devastating, the association avers.
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