South Africa: Lobby seeks to end sugar tax, save weakened industry

By Ashely Simango, Ray Mwareya
Posted on Wednesday, 20 April 2022 14:42

Power lines supplying electricity by stated owned Eskom run through sugar cane fields on a Tongaat Hulett farm in Shongweni
Power lines supplying electricity by stated owned Eskom run through sugar cane fields on a Tongaat Hulett farm in Shongweni, South Africa April 29, 2018. REUTERS/Rogan Ward

While South Africa’s government has delayed plans to hike the country’s controversial sugar tax to April 2023, The South African Canegrowers Association (SA Canegrowers), a lobby representing 22,000 farmers, continues to argue for a total withdrawal of the tax to support a sector in decline.

The combined pressures of ongoing drought, cheap sugar imports from Brazil and Swaziland, rising fertilizer prices and the lingering impact of riots in July 2021 – which damaged around R84m ($5.5m) worth of raw cane – continues to hamper growth in South Africa’s fragile sugar industry.

As such, additional taxes in the sector will have cane growers “fighting for their survival,” says Thomas Funke, chief executive of SA Canegrowers.

“Many of them won’t survive the sugar tax. It must be completely abandoned.”

Expressed in cents per gram, the sugar tax currently stands at 2.21 cents per gram. It is slated to jump to 2.31 per gram when the policy is implemented next year.

Lacking evidence

In 2018, South Africa’s health minister, Aaron Motsoaledi, introduced a tax on sugar, citing studies that showed overweight and obesity rates among women of childbearing age in South Africa had risen from 51.3% to 60% between 1998 and 2017, costing the government billions of Rands in public healthcare bills.

As a result of the tax hike, local demand for South African sugar has fallen and has forced some producers to find buyers within the saturated international market.  “In the worst cases sugar has been sold at a loss,” says Funke.

Some cane sugar farmers have had to let go of workers, which is “a devastating result for rural economies,” he says.

To firm his position, Funke cites The National Economic Development and Labour Council which says the sugar tax has devastated the South Africa sugar industry and has cost South Africa more than 16,000 jobs and wiped R2.05bn off the value of the sector in 2019. The industry generates an average of R14bn in direct sales annually.

Moreover, Funke highlights that modelling from the South Africa Bureau for Food and Agricultural Policy predicts that maintaining the sugar at current levels would cost the industry a further 15,984 seasonal and permanent jobs. It may also result in a decline of 46,000 hectares of land dedicated to growing cane over the next ten years, he says.

For Dennis Juru, president of the South Africa International Cross Borders Traders Association, an association that is also against the tax on sugar, there’s ample proof that the sugar tax increase could hammer rural jobs in South Africa’s KwaZulu Natal province, where the majority of cane is grown.

Business leaders fear this could deepen job losses and poverty in the province and raise the risk for damaging riots like those that in July 2021.

Climbing obesity rates

Obesity rates have continued to climb in South Africa even with the tax in place. The South African National Health and Nutrition Examination Survey results published in May 2021 suggests 49% of South Africans claimed to have gained weight in 2020, two years after the introduction of the sugar tax.

“Obesity is a complex problem that is growing around the world,” says Funke. “Blaming South Africa’s obesity rates on sugar alone (is) an unfortunate form of scapegoating.”

In order to build a fuller picture of the country’s weight and obesity issues, the government should instead conduct a comprehensive dietary intake study before introducing taxes on the sector, he says.

But as Stanley Samusodza, an independent public health physician working across southern African countries tells The Africa Report: “Added sugar, enabled by low prices, is powering the matrix of obesity, diabetes, and heart diseases in South Africa. It’s mischievous for the sugar lobby to attack the evidence.

“Refusing to acknowledge that sugar is the chief ingredient behind South Africa’s soaring obesity rates and related lifestyle-diseases complications is mischievous,” he says.

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