The sugar industry has lost over R84 million from tons of cane that were burnt in arson attacks during the riots that swept through parts of KwaZulu-Natal in July, the South African Canegrowers association reports.
During the riots, SA Canegrowers reported a running total of R300 million in potential damage to local canegrowers if mills could not crush the more than half a million tons of cane that were burnt in arson attacks. It says these fears are now materialising.
Mills in KZN have already rejected more than 135 000 tons of damaged cane, which amounts to more than R84.5 million. Almost a third of this rejected cane (38 000 tons) belongs to small-scale growers. SA Canegrowers says it is extremely concerned as these are growers who are at the most risk of not recovering from revenue losses of this magnitude.
“The majority of small-scale growers have no form of insurance,” says chairman Andrew Russell.
“While many await relief from fire insurance co-operative Grocane and the South African Special Risk Insurance Association (Sasria), they have also been notified that all cane that was burnt prior to mill closures will not be covered by these entities, even though many mills only closed down after a large amount of cane had already been targeted by arsonists.
“Furthermore, since industry transformation benefits are directly linked to the tonnage of cane delivered, small-scale growers whose cane is rejected stand to lose these benefits as well,” Russell added.
According to the association, the current sub-standard performance of some mills is also exacerbating grower losses. To minimise these losses, it says growers need mills to work optimally, however, this is not happening in many places.
“SA Canegrowers therefore expects that these losses will continue to mount as mills fail to process burnt cane quickly enough,” the association said in a statement this week.
The association believes that one of the ways the impact can be minimised on growers and communities that rely on the industry for their livelihoods, is via urgent intervention from government. This includes immediate financial relief which will allow growers to stay afloat, maintain operations and retain workers as the sector strives to rebuild itself.
SA Canegrowers says it has reached out to the government, requesting immediate financial relief to be paid directly to growers severely impacted by the riots.
It adds that priority will be given to small-scale growers as the impact of the damage has now placed thousands of rural jobs at risk.
SA Canegrowers has written to government entities including the Department of Trade, Industry and Competition, the National Agricultural Marketing Council, the Industrial Development Corporation’s (IDC) Agro Funding Unit and the Parliamentary Portfolio Committee on Agriculture, Land Reform and Rural Development.
“SA Canegrowers welcomes its engagements with some of these stakeholders. Notably, we were grateful to have the opportunity to shed more light on the devastation across the industry during oversight visits conducted by the Parliamentary Portfolio Committee last week to assess the scale of the damage in the province,” Russell says.
“SA Canegrowers’ leadership has also been meeting with the IDC to discuss possible bridging finance for affected growers.
“It is vital that plans to address the situation across the province include intervention for the sugar industry, which provides more than one million livelihoods where they are desperately needed in rural communities,” Russell added.
Although there is promising potential for funding, the damage sustained has the potential to cripple the industry as it was already struggling due to severe drought, the influx of cheap imports and the health promotion levy (or sugar tax).
However, SA Canegrowers says it will seek further opportunities to act as a facilitator between growers and the government.
It adds that it remains committed to working with government, growers and local communities to rebuild the industry. As the risk to lives has substantially reduced, its goal is to “protect and restore the livelihoods that depend on the sugar industry.”
Palesa Mofokeng is a Moneyweb intern.