The sugarcane industry in KwaZulu-Natal says the decision by National Treasury to increase the sugar tax – formally known as the Health Promotion Levy is a slap in the face to small-scale farmers.
In his budget speech Finance Minister Enoch Godongwana – announced that the levy will increase by 4-point-five percent.
The industry says since the implementation of the levy in April 2018, sugarcane growers have lost revenue of approximately R1.2 billion per season.
South Africa has about 22 000 farmers in the sugar sector, and about 21 000 of these are small-scale farmers.
On average the sugarcane industry produces 20-million tones of crop from 14 supply areas located in KwaZulu-Natal and Mpumalanga.
The industry says the introduction of the Health Promotion Levy (HPL) also known as sugar tax, in 2018 has had a devastating impact on sugar demand.
It is said to have shrunk local market demand for sugar by about 20 percent, forcing small-scale farmers to exit the industry.
Stakeholders hoped the industry would be excluded from sugar tax increase this year. They cite the ongoing talks with government on the Sugarcane Value Chain Master Plan which includes a moratorium on product tax policy changes as a reason.
Chairperson of the South African Sugar Association Sindi Mabaso-Koyana, says the 4.5 sugar tax increase announcement came as a shock.
An executive of the South African Farmers Development Association, Thandokwakhe Sibiya – says the increase will affect their already battling industry badly. Sibiya says they will lose customers and be forced to shut down.
Healthier products
However, some dieticians believe that since there is a growing number of people in South Africa who are diabetic and obese, the sugar tax will force companies to produce much healthier products with less sugar. Doctor Laurecia Govender from the Faculty of Dietetics and Human Nutrition at the University of KwaZulu-Natal.
“I think that it will encourage our consumers to really think about what they are purchasing and what it contains and this might reduce amount for sugar sweet and beverages and hopefully it will mean less production of unhealthy drinks. Companies now will start changing the formulation of their products to make it more health conscious and healthier for the consumer.”
Meanwhile, the sugarcane industry says despite the disappointing increase in sugar tax, they are hopeful that the ongoing engagements with government will help them find an appropriate solution for all parties.
Finance Minister Enoch Godongwana delivers the 2022 budget speech
