SOUTH AFRICA – South African Sugar Association (SASA) threatens to take legal action against Tongaat Hulett (THL) and Gledhow Sugar Mill for defaulting to pay the association more than R1.5bn leading to an 8% fall, or a R424 per tonne decline, in the received price (R5 435.07 per tonne) for March.
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According to SA Canegrowers, these defaults violate the Sugar Act and Sugar Industry Agreement, leading to a significant decrease in growers’ revenue and endangering the livelihoods of numerous small-scale and commercial growers.
The drop is largely due to the failure of Tongaat Hulett (THL) to pay SASA more than R900m by the end of March 2023, and the default by the Gledhow Sugar Mill, which is also in business rescue.
In total, the defaults will cost the industry R1.5bn, of which R1bn is deducted from the growers’ proceeds (the RV price).
More than 20,000 small-scale growers will have to carry their share of the cost of these decisions, with the RV price (the final revenue determined for growers) dropping by R424 per tonne at the end of the season, SASA said.
The resulting decline in revenue now threatens the livelihoods of thousands of small-scale growers and the workers they employ.
“We believe that the industrial obligations set out in the Sugar Act and Sugar Industry Agreement are mandatory and apply to all members of the sector, including growers, millers, and refiners,” said Andrew Russel, chairperson of SA Canegrowers.
“The payments in question are levies and monies collected on behalf of the Grower Associations, SASA, and the other millers. The Grower Association and SASA levies are critical income sources for SASA and the Grower Associations in particular, while the millers’ redistribution is also important to all millers’ sustainability. Every section of the industry is therefore suffering immense hardship owing to the decision taken by the business rescue practitioners.”
He revealed that SA Canegrowers has written to Minister Ebrahim Patel to request the government’s intervention considering the business rescue practitioners’ decision not to pay the amounts owing to the industry.
Even as the industry explores possible legal action, urgent action is needed to protect the industry’s small-scale growers, workers, and value chain partners from financial ruin, Andrew highlighted.
“Urgent and decisive action is needed from all role-players to ensure that South Africa’s sugar industry is not fatally impacted. We will explore all options available to us to ensure that we protect the one million livelihoods the industry supports,” he explained.
Tongaat produces almost half of SA’s sugar and is one of the biggest employers in KwaZulu-Natal. It entered business rescue in October after lenders shot down its restructuring plan.
In March 2023, Gledhow also entered business rescue following a few years of difficulty the facility had to endure, which included, the forced closure of its factory due to the unrest in KwaZulu-Natal in July 2021 and catastrophic flood damage to its machinery and infrastructure in April last year.
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