Tax disaster for one of South Africa’s major employers
South Africa’s sugar industry, one of the country’s largest agricultural employers, is facing what industry leaders describe as a looming tax-driven disaster.
SA Canegrowers has warned that unless the government urgently changes course, the industry could face serious long-term damage, with major consequences for jobs, rural communities and food security.
The sugar sector supports more than one million livelihoods, directly and indirectly, mainly in KwaZulu-Natal and Mpumalanga.
This includes about 27,000 small-scale growers and 1,100 large-scale farmers who form the backbone of the industry.
According to SA Canegrowers, these growers have been under intense strain for more than a year due to rising input costs, unstable global prices and weak local demand.
The organisation said that the continued application of the sugar tax is making a bad situation worse.
Additionally, South Africa has seen a sharp increase in imported sugar. SA Canegrowers’ analysis of SARS data shows that 153,344 tonnes of sugar were imported between January and September 2025.
This is far higher than the 20,924 tonnes imported over the same period in 2020, and well above the previous high of 55,213 tonnes recorded in 2024.
The organisation said this surge is not because South Africa lacks sugar, but because global markets are distorted.
SA Canegrowers chairman Higgins Mdluli noted that much of the imported sugar entering the country is heavily subsidised in exporting nations.
“Imported sugar is often heavily subsidised in exporting countries, but the only people who benefit are the agents who import the sugar into South Africa,” he said.
“These people are often able to reap high short-term profits by selling the sugar at local market prices.” He argued that this puts local producers at an unfair disadvantage.
Globally, the sugar market is oversupplied, with major producers able to dump excess sugar at very low prices.
Subsidies, favourable exchange rates, and weak growth in demand all contribute to this problem.
Calls to scrap the sugar tax
Mdluli stated that in such an environment, South Africa requires robust protection for its local market.
Without them, local growers are forced to compete with cheap imports while also dealing with policies that reduce demand for their product.
“In this environment, protecting South Africa’s domestic market is critical. Without effective safeguards, local growers are forced to compete against dumped imports while facing policies that suppress local demand,” Mdluli said.
He warned that allowing imported sugar to replace locally produced sugar undermines food security, damages rural economies and threatens the future of a strategic agricultural sector.
South Africa’s sugarcane growers already produce enough sugar to meet local demand.
As a result, imported sugar does not fill a gap in supply, but instead replaces local sugar on supermarket shelves and in supply contracts with food and beverage manufacturers.
SA Canegrowers said this reduces the volumes processed by local mills and weakens the entire value chain, from farms to factories.
The organisation is also strongly critical of the sugar tax, which it stressed continues to punish local producers and manufacturers without delivering clear health benefits.
While SA Canegrowers noted it supports efforts to improve public health, it argued that there is no solid evidence that the tax has led to meaningful health improvements.
However, it said the economic harm is clear. When the sugar tax was introduced in 2018, the industry lost more than 16,000 jobs in its first year.
“The sugar tax is an unproven policy experiment with very real consequences for rural jobs and investment,” Mdluli said.
He added that future decisions should be based on proper health data and an accurate picture of how much sugar South Africans consume, while also taking into account the impact on jobs, the economy and local food production.
SA Canegrowers is calling on the government to act quickly to ensure fair trading conditions.
This includes properly enforcing existing import protection measures and engaging more closely with the industry on policies that affect its future.
The organisation said that a meaningful first step would be for Finance Minister Enoch Godongwana to scrap the sugar tax.
As SA Canegrowers has stressed, saving the sugar industry is not only about farmers, but about protecting jobs, supporting rural communities and maintaining South Africa’s ability to produce its own food.
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