South African sugar producers relieved with pause in rise of Health Promotion Levy

SOUTH AFRICA – The South African Cane Growers Association (SA Canegrowers) has welcomed the announcement by Finance Minister Enoch Godongwana of a 12-month delay in the implementation of the planned increase of the Health Promotion Levy (HPL), which is also known as the sugar tax.

An increase in the sugar tax from 2.21c/g to 2.31c/g had been announced in the Minister’s Budget Speech in February and was expected to come into effect on April 4.

“The delay is a welcome reprieve for South Africa’s growers, especially small-scale growers. In the first year of its implementation alone, the sugar tax cost South Africa more than 16 000 jobs and R2.05-billion.

“This is despite government failing to produce any evidence to date that the tax has had any impact on bringing down obesity levels in the country, since it was introduced in 2018,” says SA Canegrowers CEO Thomas Funke.

He points out that modelling commissioned by SA Canegrowers with the Bureau for Food and Agricultural Policy (BFAP) has shown that maintaining the sugar tax at the current level will still cost the industry a further 15 984 seasonal and permanent jobs and will be a major contributing factor towards a decline of 46 600 ha of area under cane over the next ten years.

However, there would have been even further job and revenue losses if the planned increase had gone ahead, posits Funke.

“The increase would have exacerbated the challenges the industry already faces as a result of rising input costs, including price hikes in diesel fuel, which is currently 40% above the price in March 2021 and expected to go a lot higher, and fertiliser, the cost of which has increased more than 160% compared to last year.

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“However, while today’s announcement provides some short-term relief to growers, it is critical that government focuses on assessing the long-term implications of keeping the tax in place,” Funke states.

He says SA Canegrowers will continue to engage government in this regard and will continue calling for further research into the impact of the tax on obesity levels, as well as on jobs and revenue from 2018 to date.

“SA Canegrowers remains committed to the protection of the one-million livelihoods that the sugar industry supports and to the success of the Sugar Cane Value Chain Masterplan.

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“We believe the only way to achieve this is to scrap the sugar tax entirely and to implement a holistic approach to health that takes into account all of the factors that contribute to obesity in South Africa,” Funke says.

The HPL on sugar-sweetened beverages, was implemented in April 2018, as one of the measures by the Department of Health to address obesity and non-communicable diseases (NCDs) in South Africa.

Even as the lobby group calls for empirical evidence from the government on the impact of the sugar tax in relation to reduction of obesity levels, recent research by health experts highlighted that, since the introduction of the sugar tax, there was a 51% reduction in sugar, a 52% reduction in calories, and a 29% reduction in volume of beverages purchased per person per day.

This was especially significant in the lower income households that experience the greater burden of obesity, diabetes, hypertension, and other nutrition-related non-communicable diseases.

Other than the sugar industry, the South African government has also spared the alcohol industry by adjusting the annual excise for beer at slightly above inflation.

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