Small-scale sugarcane growers get R176m boost

Sugar industry body the South African Sugar Association (Sasa) has offered a R176 million lifeline in transformation funding aimed at aiding the country’s black and small-scale sugarcane growers in the industry.

The first tranche of R60 million has already been disbursed to cane growers and was paid out at the end of July together with the payments for cane delivered during the prior month, SA Canegrowers said in a statement on Tuesday.

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SA Canegrowers added that R50 million will be paid out in November 2023, with the remaining balance scheduled to be paid out in January 2024.

The industry has already budgeted R125 million for black and small-scale growers delivering less than 1800 tons of cane in the 2023/2024 season, while an additional R51 million has been budgeted for black growers and joint ventures, predominantly land reform growers, the organisation said.

Funding for the initiative comes as the industry reels from a number of financial knocks brought on by a series of challenges in the 2022/2023 financial year, including the failures at troubled sugar group Tongaat Hullet which led to the entity entering business rescue.

As part of the rescue process, Tongaat’s Business Rescue Practitioners (BRPs), along with Gledhow sugar mills, decided to voluntarily default on their financial obligations to the tune of R1.5 billion to the industry last year.

The decision led to the reduction of the final recoverable value (RV) price of sugar for the season by more than R400 per ton and also resulted in legal action which is ongoing. The RV price is the price paid to growers for processed sugarcane.

Read:
Tongaat Hulett ‘has a future’ – rescue practitioners
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The latest Sasa funding also follows positive developments in Tongaat’s business rescue process. The troubled sugar group moved closer to securing a strategic equity partner in Tanzania’s Kagera Sugar last month, in a proposed deal for its sugar assets.

SA Canegrowers said while it welcomed the announcement of Kagera Sugar as a strategic equity partner to Tongaat, the final arrangements of the deal remain to be seen.

“In light of these challenges, the funding disbursed this month is vital to sustain growers in the interim. It will provide critical support in an environment marked by rising debt servicing costs and high input costs,” it added.

“This is especially important for small-scale growers, who face the greatest challenge in accessing operating and capital finance.”

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