South African sugar industry unveils diversification plans amid economic pressures 

SOUTH AFRICA – The South African sugar industry has announced ambitious plans to diversify its product offerings in response to economic challenges, including the impact of the sugar tax.  

The South African Sugar Association (SASA) outlined these initiatives as part of the second phase of the Sugarcane Value Chain Masterplan 2030, aimed at securing the future of 25,000 cane farmers across the country. 

SASA consultant Brian Tait emphasized the necessity of diversification, highlighting sugarcane’s potential beyond traditional sugar production.  

He explained that sugarcane juice extraction enables the production of bioethanol, which serves as a base for downstream products such as sustainable aviation fuel and bio-polyethylene.  

He noted that the proposed infrastructure investment, estimated at over R2 billion, would enable the production of 125 million litres of bioethanol petrol annually. This initiative is expected to create 21,000 new jobs through extended farming seasons and increased sugarcane cultivation. 

The industry’s existing capacity could already generate 110 million litres of sustainable aviation fuel (SAF) per year, with the potential to expand to 375 million litres annually. 

Discussions with government departments, including Agriculture, Trade and Industry, and Competition, as well as private sector stakeholders such as PetroSA, Sasol, and Engen Petroleum, have commenced to advance these projects. 

In addition to bioethanol and aviation fuel production, the South African sugar industry aims to contribute approximately 700MW of electricity to the national grid through cogeneration projects.  

According to Tait, sugarcane-based cogeneration is one of the few technologies with a positive economic impact and could create 26,500 new jobs. 

SASA CEO Sifiso Mhlaba highlighted the industry’s significant economic role in rural areas, particularly in KwaZulu-Natal and Mpumalanga, where more than 25,000 farmers depend on sugarcane cultivation.  

He noted that the industry supports the livelihoods of approximately one million people, creating 65,000 direct and 270,000 indirect jobs. 

Mhlaba also addressed the negative impact of the sugar tax, officially known as the Health Promotion Levy (HPL), on the industry. The levy, introduced as a public health measure to combat obesity, diabetes, and related diseases, has led to significant financial losses for the sector.  

He attributed the permanent closure of two sugar mills in KwaZulu-Natal and substantial revenue declines to the tax, which he described as counterproductive to the objectives of the Sugarcane Value Chain Masterplan. 

To ensure the success of diversification efforts, SASA is advocating for an extension of the two-year moratorium on the sugar tax until 2030.  

Mhlaba emphasized that this extension is critical for enabling long-term investments in alternative sugarcane-based products. 

SA Canegrowers, an organization representing sugarcane farmers, has argued that the sugar tax has failed to achieve its intended health benefits while severely damaging economic growth and employment.  

A study by the National Economic Development and Labour Council (Nedlac) found that the levy resulted in over 16,000 job losses and R2 billion (US$108.6M) in lost income within its first year of implementation. 

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