SOUTH AFRICA – SA will produce its smallest sugar cane crop in 21 years as the industry battles the country’s driest spell on record, squeezing growers.
The industry generates R12bn a year and employs 79,000 people directly, or about 11% of the country’s primary agricultural workforce.
Last year, KwaZulu-Natal received R114m for drought relief, which will be disbursed by the province to farmers who apply for aid.
The South African Sugar Association estimates that sugar production will plunge to 1.53-million tonnes for the 2015-16 season, which closes at the end of next month, from 2.1-million tonnes the previous season.
This was the smallest estimate since 1995, when drought restricted production to 1.6-million tonnes of sugar, association executive director Trix Trikam said this week.
“During (that) drought, the lowest crop dipped to 1.17-million tonnes in the 1993-94 season, causing extensive job losses,” explained Mr Trikam.
He said it was too early to tell if the industry would suffer financial or job losses this season because of the prevailing drought.
Mr Trikam said some mills had either not been opened or remained closed for extended periods because of the drought.
“Although the drought is affecting all growers, small-scale growers, land-reform growers and new-entrant growers may be hardest hit.”
The sector is dominated by six milling companies, with 14 mills in KwaZulu-Natal and Mpumalanga.
Mr Trikam did not respond to questions about the industry’s export plans, but said he was confident that there would be sufficient supply to satisfy the domestic market.
Less than 2% of the industry’s product goes to foreign markets. Food and Allied Workers Union organiser in KwaZulu-Natal, August Mbhele, said the union was confident that sugar companies would be able to handle the drought’s effects without resorting to job cuts.
Last year, Tongaat Hulett and Illovo, the country’s largest sugar producers, shut down their Umzimkulu and Darnall mills.
In November, Tongaat Hulett said in its interim results statement that it expected its sugar production for 2015-16 to be between 310,000 and 325,000 tonnes, down from 541,000 tonnes in 2014-15.
Tongaat Hulett spokeswoman Michelle Jean-Louis said the rainy season, now under way, was better than last year.
All the country’s sugar mills are in an off-crop period, meaning no cane-crushing is taking place.
“Tongaat Hulett is working with the industry to secure drought-relief funding from the government for growers,” said Ms Jean-Louis.
In November last year, Illovo said in its interim results that output was down 10% because of the drought.
Company spokesman Chris FitzGerald said that, for the second consecutive year, it would not crush cane at its Umzimkulu mill, but it was not planning to close any of its other facilities when the next season started.
The drought slashed cane supply to Illovo’s mills by 20% year on year.
“We are not anticipating a reduction in labour requirements. We have taken steps to reduce our agricultural and manufacturing cost base and introduced measures to maximise asset utilisation,” said Mr FitzGerald.
About 25% of the country’s land under sugar cane is irrigated, while the rest relies on adequate rainfall.
The seasonal rainfall required for cane crops has decreased 60% since November 2014.