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KZN riots: sugar industry losses over R84m

Half a million tons of cane burnt in arson attacks and thus cannot be crushed at sugarcane mill factories.
Image: Shutterstock

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.

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It has become so common to see phrases like “urgent intervention from government” and “immediate financial relief”. This while terrorists are responsible for all of this.

Too late now; what was needed was urgent and decisive police and military response the very moment this started.

People really under estimated the looting and riots.

R 120 Million was stolen from ATM(s), apparently 321 Bank branches.

This was like a war zone.

It will take many years to fix.

A friend of mine who is a farmer says “Farming is like having an affair or like a gambling habit, you know it is wrong, but you can’t stop”.

The credit manager at the bank and at the co-op knows that farming is not a profitable business, but try to tell that to the farmer. The average South African farmer is an arbitrageur. He trades the difference between the nominal value of his debt and the inflationary increases in the value of his land. When inflation tapers off, he is in deep trouble.

That is why farmers feel that the worst kind of child abuse is to hand the farm over to your son. What does that tell us about the political process of land redistribution? It is the worst form of ignorance and stupidity cloaked in populist politics.

Sensei. Arbitrage in agric is very difficult to execute. Perhaps no more so than in SA with all the “variables” at play. I attempted an arbitrageur play with a farm I bought in 2005. I developed it over 10 years and and had planned to exit it once fully developed…..preferably to a BEE group. As with all arbitrage plays, along with the ethics (credit) of the counter party, timing is a critical issue. Unfortunately the combination of an unethical BEE counter party – coupled to “poor timing” (drought / climate change of 2015 – 2019) proved fatal. Add to this the EWC debate, COVID & the recent riots and you can imagine the outcome ! With over 1000ha at play, it’s been a hard lesson that farming in SA (Africa?)- arbitrage or not – is definitely not for the faint hearted. I suspect that given the combination of the above determinants, that the opportunity for agric. arbitrage in SA has long passed. Most SA farmers are now sadly trapped and those brave souls that remain producing food, should be supported by all.

Thank you for your contribution to the debate Seito.

Just another proof of the world class ability to destroy things productive people built up by a certain segment of the South African society. Only masochists invest any further here.

End of comments.

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