TARIFFS AND TRADE
Sugar industry to protest against imports shock
About 2,000 members of the sugar industry are set to descend on the Department of Trade and Industry’s campus in Tshwane on Tuesday morning, in a bid to highlight the plight of an industry on the "brink of collapse" due to a flood of imports.
This comes as the industry is appealing to the International Trade Administration Commission (Itac) to expedite its decision on the application by the South African Sugar Association (Sasa) for higher tariffs on imported sugar. Retailers and industrial users such as soft-drink manufacturers are the main users of imported sugar.
Thirty busloads of small-scale farmers from KwaZulu-Natal and Mpumalanga, in addition to numbers of large commercial growers, are expected to participate in the march to the campus that houses Itac.
Representatives from Sasa, the South African Sugar Millers Association, the South African Farmers Development Association (Safda) and the South African Cane Growers Association will also be participating in the march and making oral submissions to an Itac hearing on Sasa’s tariff application.
Safda executive chairman Siyabonga Madlala said it was necessary for the industry to highlight its dire situation through the march, especially in the light of the strong lobby by sugar importers against the tariff application.
In February, Sasa applied for an increase to about $866 per tonne from the current dollar-based reference price of $566 per tonne of sugar, which is the basis on which import tariffs are calculated. Sasa says this price is below the cost of production.
This month the current applied duty was 55% compared to the maximum bound rate of 105%, which is allowed in terms of SA’s commitments to the World Trade Organisation.
Sasa’s final application for an increase was completed in April and, according to Madlala, was lowered to about $790.
In a presentation to Parliament’s trade and industry committee earlier in June, Itac chief commissioner Meluleki Nzimande said that in 2016-17, imports of sugar increased 253% to reach a three-year high. Imports from Brazil and the United Arab Emirates accounted for about 49% and 25%, respectively, with duty-free sugar from Swaziland also representing a large share.
"Despite an increase in the Southern African Customs Union demand for sugar, the market share of domestic sugar producers declined from 95% in 2015-16 to approximately 84% in 2016-17, while the share of imports increased from 5% to 16% during the same period," Nzimande told MPs.
He said sugar farmers were unable to pass the escalating costs of production on to consumers. "Since the 2014-15 season to date, South African sugar producers have been experiencing losses," Nzimande said.
He said Itac was working hard to finalise Sasa’s tariff application within a shorter period than the six months it normally took to finalise investigations into amendments to customs tariffs.
Sasa chairman Suresh Naidoo said the current dollar-based reference price had not changed for the past five or six years and did not cover the cost of local production. "If not adjusted to a more appropriate level a lot more farmers will be going out of production," he warned. The industry was on the "brink of collapse".
Madlala said SA produced more sugar than it consumed and therefore it made no sense for the country to import it.
"It costs us more to farm sugar than we are actually earning back. Small-scale farmers are being forced out of business and more families are being made dependent on social grants."
He noted that the number of small-scale farmers had fallen from about 50,000 10 years ago to about 20,000 today and expected a further drop in 2018 if Itac did not increase import tariffs.