Sugar industry expected to lose more than R723 million due to load shedding

Durban – SA Canegrowers chairperson Andrew Russell has echoed an alarm that the South African sugar industry is set to lose R723 million this year due to ongoing blackouts.

Russell has said that, according to data that was recently compiled by the South African Canegrowers, the sugar industry is set for major losses this year due to the continuous load shedding.

He added that these losses are potentially catastrophic for growers and the industry’s workers because the sugar giant Tongaat Hulett is currently undergoing business rescue and that is coupled with the destructive Health Promotion Levy, which is already hampering the sugar cane industry.

“Growers already face significant headwinds. The milling giant Tongaat Hulett was placed under business rescue in October 2022 and remains in that process. Meanwhile, the industry faces an increase to the destructive Health Promotion Levy (the sugar tax) when the Minister of Finance, Enock Godongwana, will deliver his budget speech next month,” Russell stressed.

Russell further said that SA Canegrowers is therefore appealing to the government to put short-term measures in place to mitigate the impact of load shedding on growers while long-term solutions are considered.

“Load shedding affects 1 135 irrigated growers who employ more than 10 000 workers. An estimated 34% of South Africa’s sugar cane is produced in irrigated areas, including Komatipoort and Malelane in Mpumalanga, and Pongola in KwaZulu-Natal,” Russell said.

He added that the sugar cane growers are expected to incur more than R189 million in additional energy costs in 2023 because of the disruptions that impact on the irrigation schedules caused by the ongoing blackouts.

Russell continued to say that most irrigated growers in KwaZulu-Natal and Mpumalanga operate on a Ruraflex system which allows them to pay a lower tariff for operating during low-demand times.

“But the converse also applies – growers pay a significantly higher rate for pumping during peak-demand times. As a result of load shedding, cane growers have been forced to irrigate whenever electricity is available, regardless of demand,” he said.

In addition to the increased cost of energy, Russell stressed that cane growers also face yield losses as they have fewer hours of continuous energy supply.

He said cane growers need a minimum of six hours of continuous, uninterrupted energy for proper irrigation.

He added that as a result of the intermittency of the power supply which is disrupting irrigation, irrigated growers will lose up to 40% of water capacity, with the resultant loss of yield amounting to more than R723 million.

“SA Canegrowers’ scenario modelling shows that continuous load shedding at stages 4–6 will cost growers more than R723 million in 2023.

“An escalation to stages 6–8 could cost the industry more than R1.8 billion. Anything beyond stage 8 could cost the industry more than R2.4 billion,” he said.

Russell added that the continuation of load shedding without any arrangement to enable irrigation will also have long-term implications. He said that sugar cane stalks left in the ground can produce sugar cane for up to 10 years.

Insufficient irrigation not only reduces sugar cane quality and causes yield losses, but it will also lead to increased stool mortality, significantly shortening the lifespan of the cane.

SA Canegrowers is therefore appealing to Eskom and the government to help the industry in particular, as well as the broader agricultural sector, to find urgent solutions to mitigate the impact of load shedding.

“Some of the short-term measures SA Canegrowers has asked the government to consider include restricting load shedding to stage 4 in irrigated sugar cane growing areas during peak watering season; diesel rebates for growers utilising generators; and tax rebates for those investing in alternative energy sources.

“We will continue to engage with all industry stakeholders as we work to save the one million livelihoods that the sugar industry supports,” Russell concluded.

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