South Africa Signs Plan to Support $908 Million Sugar Industry

South Africa signed a plan to support its ailing sugar industry that was delayed by almost eight months due to the onset of the coronavirus pandemic.

The so-called Sugar Master Plan agreed by the government, farmers, industrial users and retailers in the 14 billion-rand ($908 million) industry seeks to stem a crisis caused by a flood of cheap imports and a tax on sugar-sweetened drinks that lowered demand from beverage makers.

Industrial users and retailers have agreed to a minimum offtake of sugar for three years, with at least 80% of consumption coming from local farms and millers in the first 12 months, the agriculture and trade and industry departments said in a joint statement. That will increase to 95% by 2023 and the industry has agreed to “price restraint” and a restructuring process to diversify its sources of revenue, the departments said.

Read more: S. African Sugar Master Plan to Allow for Biofuel Production

South Africa’s annual sugar production has dropped by almost 25% over the past two decades, with the number of sugarcane farmers falling by 60%, according to the statement. The tax on sugary beverages that came into force in 2018 as a health promotion levy has led to industry losses of more than 3.6 billion rand and a decrease in employment, according to South African Sugar Association data.

©2020 Bloomberg L.P.

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