One government tax crushing critical South African industry

The body representing sugarcane growers in South Africa has called on Finance Minister Enoch Godongwana to scrap the sugar tax, which it claims is putting severe pressure on the country’s sugarcane industry.

In a statement released on Tuesday, 13 January, SA Canegrowers called on the government to “urgently” scrap the sugar tax in light of a surge in imported sugar.

This imported sugar, the organisation warned, is increasingly displacing locally produced sugar and threatening the survival of the South African sugar industry. 

SA Canegrowers pointed out that the local sugar industry supports more than one million livelihoods, directly and indirectly, across KwaZulu-Natal and Mpumalanga. 

“The 27,000 small-scale and 1,100 large-scale sugarcane growers form the backbone of this value chain, yet for the past year they have been under unprecedented pressure,” it said.

This pressure stems from the combined effects of rising input costs and volatile global markets, with the local sugar tax only serving to compound the strain on the sector.

“SA Canegrowers is urging government, industry partners and consumers to stand together to protect a sector that underpins many rural economies,” the organisation said.

One of the most damaging factors impacting the local sugar industry is cheap sugar imports from markets like Brazil and India.

In those markets, the sugarcane industry is highly subsidised, allowing exporters to charge low prices that the South African market cannot compete with.

SA Canegrowers chairman Higgins Mdluli previously estimated that for every ton of imported sugar entering the South African market, the local sugar industry loses R7,500.

“Imported sugar is often heavily subsidised in exporting countries, but the only people who benefit are the agents who import the sugar into South Africa and are often able to reap high short-term profits by selling the sugar at local market prices,” Mdluli said.

SA Canegrowers analysed the trade figures recently released by SARS, which revealed that 153,344 tons of heavily subsidised imported sugar entered South Africa between January and September 2025. 

As a comparison, over the same period in 2020, South Africa imported only 20,924 tons, whilst the previous highest level of imports was in 2024 at 55,213 tons for the same period.  

Local taxes compound the problem

SA Canegrowers explained that the global sugar market is currently characterised by persistent oversupply and heavily distorted trade.

This is due to large exporting countries offloading surplus sugar in South Africa at artificially low prices, mainly because of subsidies, currency advantages, and weak global demand growth. 

“In this environment, protecting South Africa’s domestic market is critical,” Higgins said. 

“Without effective safeguards, local growers are forced to compete against dumped imports while simultaneously facing policies that suppress local demand.” 

“Allowing imported sugar to displace locally produced sugar under these conditions undermines food security, erodes rural economies and places a strategic agricultural sector at long-term risk.”

He explained that South Africa’s sugarcane growers produce more than enough sugar to meet local demand. Therefore, imported sugar displaces locally produced sugar from retail shelves and food and beverage manufacturers.

At the same time, SA Canegrowers said it remains concerned about the ongoing reliance on the sugar tax to punish local drinks manufacturers who include sugar in their drinks. 

“While the industry fully supports efforts to address public health challenges, there is no evidence that the sugar tax has delivered any meaningful health outcomes, while it has inflicted significant economic damage on growers, millers and workers,” the organisation said. 

“When the sugar tax was introduced in 2018, the industry shed more than 16,000 jobs in the first year alone.”

Mdluli referred to the sugar tax as an “unproven policy experiment” with severe consequences for rural jobs and investment. 

“Any future decisions must be informed by a balanced assessment of health data and a calorie-intake survey of South Africans, balanced with the impact on the economy and on the sustainability of local food production,” he said.

SA Canegrowers reiterated calls to the government to ensure fair trade conditions, including the effective implementation of existing import protection measures.

In addition, the organisation urged the government to engage meaningfully with the sugarcane industry on policies that affect the sector’s long-term viability. 

“A meaningful first step would be for Finance Minister Enoch Godongwana to scrap the sugar tax,” it said.

In addition, the organisation urged consumers to support locally produced sugar and recognise the broader social and economic value of the industry.

“Saving the sugar industry is not just about growers – it is about communities, jobs and South Africa’s ability to produce its own food,” SA Canegrowers said. 

“By standing together now, we can protect a strategic sector and secure a more sustainable future for generations to come.”