Trees have grown through the two brick chimneys of the mill, which closed in 1978. The sugar-cane trucks now wend their way past it on a gravel road as schoolchildren snatch up the falling stalks to suck out the sweet juice. Consolidation and struggling businesses have seen a wave of mills close.
“When I see this place it always breaks my heart,” said 56-year-old Kiki Mzoneli, a fifth-generation sugar farmer who’s watched as sugar prices fall and kept planting for fear of ceding unproductive
And while the industry has deteriorated, the state has — despite a series of unimplemented plans to rescue it — largely stood by.
Imports in the first six months of this year were 124 594 tons compared with just 1 619 tons in the same period in 2022, according to the Congress of South African Trade Unions. Much of that sugar was imported from Brazil, India and Thailand. Sugar growers in those countries benefit from established ethanol industries and state subsidies.
“The sugar industry is in crisis,” Cosatu said in a statement, calling for lower electricity costs, better rail service and a crackdown on imports.
RCL Foods, a smaller producer, said on August 31 that the imports forced it to sell sugar on international markers at less than half of what it could have got locally.
“Import volumes remain exceptionally high, the domestic market has contracted and producers continue to face pressure on volume and margins,’’ said Gavin Dalgleish, Tongaat’s chief executive officer. Illovo didn’t respond to requests for comment.
Overhaul the sugar industry, plead business rescuers
The government has now, after years of lobbying, offered producers some relief. In August, it raised the dollar-based reference price used to calculate sugar import duties to $785 a ton from $680, its first increase since 2018. While well below the $905 sought by growers, it’s above the price of sugar traded in London of about $520 and is an attempt to balance the interests of growers against sugar users.
The government is “committed to defending the domestic sugar industry against unfair competition,” the trade and industry department said in a response to questions. “South African producers compete with countries where sugar production may benefit from various forms of government support, different cost structures, economies of scale and favourable production conditions.”
The measure may make imports less attractive but it does little to address the industry’ structural woes.
Other countries have moved rapidly to blend bioethanol from sugar and other crops into motor fuel, with Brazil doing so from 1931 and Zimbabwe from 1980 with a Tongaat operation in that country making the fuel.
South Africa adopted a biofuels industrial strategy in 2007 and announced blending targets and then never implemented them. A new plan was signed by industry and the government in April that envisages biofuel production, the trade department said.
“Fuel ethanol from sugarcane is not a speculative idea in this country,” said Moyo. “It’s a policy that has been approved, announced, and then allowed to gather dust.”
His company now wants the government to act on its ethanol commitments and to pave the way for generation of electricity from sugar waste that could be sold via the national grid. The nation’s sugar association estimates the industry can contribute about 700 megawatts of power to the grid through co-generation projects.
Sugar milling is just one South African industry where state dithering and inaction on industrial policy has seen plants close and government scramble to put in place rescue plans when the damage has already been done.
ArcelorMittal SA’s local unit last year closed two construction steel plants, citing excessive imports and state assistance to smaller rivals that produce lower-grade products. The country is currently offering ferrochrome producers lower electricity prices after more than a decade of surging tariffs drove most of them out of business.
“You hear all of this talk about how we are going to do something and then nothing happens,’’ said Jee-A van der Linde, a senior Africa economist at Oxford Economics. “Once it’s too late, there is a reaction.’’
For now, with few other options, the rural communities that supply the remaining mills with cane are doing their best to keep the industry afloat.
Siyabonga Madlala is leading attempts to revive cane farming in eSnamfu, where production fell to 2 000 tons a year in 2009 in the decade after Illovo closed the Glendale mill, leading to the collapse of irrigation programs. Some of those have now been restored and the plantations have partly been restored.
Still, the millers he sold his cane to have at times been in business rescue, a South African legal process that gives financially distressed companies temporary protection from creditors.
“I’ve had a really devastating two or three years,” he said.
But Madlala sees drought, floods, labour shortages and imports as risks that can be managed as long as farmers keep growing the crop.
“If you kill the primary production of sugar cane, you can imagine how many livelihoods you are affecting,” he said on a muggy Saturday morning as adherents of the local Shembe faith worshipped outdoors on his land and chickens wandered by.
Siyabonga Madlala among mature cane plants in Maphumulo, KwaZulu Natal, an area whose landscape and economy have long been shaped by the crop. Image: Cebisile Mbonani/Bloomberg
The government’s higher tariff may buy some time.
The Tongaat rescue may, for now, preserve crucial milling capacity. But for the mainly poor Black South African farmers who rely on it, the economics of the crop are unchanged.
“My ancestors fought to be recognised as human beings, then they fought to be recognised as business people in their own right in the sugar industry,” Mzoneli said. “Now it is our turn” to fight to survive, she adds.
