Implementation of Sugar Master Plan: stakeholder engagement, with Deputy Minister

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Trade, Industry and Competition

11 May 2021
Chairperson: Mr D Nkosi (ANC)
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Meeting Summary

Video: Portfolio Committee on Trade and Industry

The Portfolio Committee on Trade and Industry met on a virtual platform for a briefing by the Department of Trade, Industry and Competition on the Master Plan for the Sugar Industry. Phase 1 had been implemented and the Department as well as the four key role players would present progress reports.

The Deputy Minister noted that it was an important meeting at a time when issues of Covid-19 had disrupted many value chains, including that of the sugar industry. She added that the damage to the industry had several causes and had begun a decade earlier when the global sugar price had dropped below production costs and sugar had been dumped in South Africa. The Department announced that ten task teams had been established to look at matters as diverse as harmonisation with Southern African Customs Union countries, particularly eSwatini which was flooding the South African market with sugar, to job retention, crop diversification, the health tax on sugar and biofuel for jet engines. The Committee was informed that the Department of Agriculture, Land Reform and Rural Development was working in conjunction with Trade, Industry and Competition on the Sugar Master Plan as it involved a combination of primary agricultural activities and agro-processing activities.

The South African Sugar Association was chairing three of the Master Plan Task teams and progress was being made in all three. Key areas to be addressed included the harmonisation matters with eSwatini as a sugar producer and with Botswana, Lesotho and Namibia as non-sugar producers that were demanding for tariff-free imports. Other issues were the future of the Health Promotion Levy and broader food policy as well as strategic trade protection.

The South African Millers Association reported on two sugar mills that had closed down. Certain input costs in sugar production continued to rise at well above inflation and so growth in volumes would have to sustain the industry and fund investments. A challenge was the rebuilding of skills and milling capacity following years of difficulty characterised by shrinking cane areas and reduced capital reinvestment. Transformation was supported but a more sustainable mechanism of supporting transformation had to be found.

The South African Canegrowers Association was working hard to retain and increase the remaining 80 000 workforce on the sugar cane fields and the 350 000 people employed in related industries. Aviation biofuel as in “ATJ “– Alcohol to Jet fuel - could be a game changer in the industry.

The South African Farmers Development Association noted the huge increase in the sugar industry in the recent months and said that growers were enjoying the spoils of the efforts to improve the industry but it still expected much pain as, despite all the promises, the small-scale farmers had not benefitted from the improvement in the industry. The main gripe was the distance from small-scale growers’ farms to the sugar mills and the fact that the growers bore the transport costs.

Members had many questions. What impact had the R1 billion set aside for transformation had on turning around the sugar cane industry? What new markets had been found for the sugar industry and what success had there been in searching for the value chain diversification? What impact had the irregularities at Tongaat-Hullet, which was touted as another Steinhoff, had on the industry? Had the challenge of distance from the mills been addressed? What impact had land claims had on sugar growers and how had that been dealt with? What plans had been made for black growers to sustain themselves beyond the grants?

When would the sugar industry stop talking about small-scale black growers and start talking about equal partners in an inclusive industry that spoke to the dynamics of what was happening in SA? What incentives was government putting on the table in the sugar cane industry? How far had the regulations on manufacturing biofuel from sugar cane progressed? What was being done about the continual dumping of sugar in SA by eSwatini? Was the Department engaging the SA Revenue Services on the sugar tax? Did the small-scale growers own the land on which they grew the cane?

 

Meeting report

Opening remarks
The Chairperson welcomed Members and everyone on the platform. He welcomed the Deputy Minister of Trade, Industry and Competition, Nomalungelo Gina, who had responsibility for the Sugar Master Plan.

The Secretary confirmed the attendance of Members.

The Chairperson noted that the Agenda indicated that the Committee would be receiving a briefing on progress made on the Sugar Master Plan by the Department of Trade, Industry and Competition (dtic) SA Sugar Association, SA Millers Association, SA Cane Growers Association and SA Farmers Development Association

In attendance were stakeholders National Empowerment Fund (NEF), represented by Mr Setlakalane Molepo, Divisional Executive: SME & Rural Development and the Independent Development Corporation represented by Executive Mr Kolobe Ramoroka and Economic Advisor, Riaan Coetzee.

Opening remarks by Deputy Minister
Deputy Minister Gina greeted the Committee and the large number of stakeholders in attendance on the virtual platform. She noted that it was a very important meeting at a time when issues of Covid-19 and so forth had disrupted many value chains, including that of the sugar industry.

The presentation by Acting DDG Phele would show what everyone knew, which was that the annual sugar production in SA had declined by nearly 25% 2.75 million tons p.a. to 2.1 million tons p.a. over the past 20 years. The number of sugar farmers had declined by 60% during that period and sugar industry-related jobs had declined by 45%. That was bad news to the sector but the Master Plan intended to revive the industry to its former strengths. The presentation would look at causal effects on the sugar industry, including global sugar prices that were below SA production costs, the import of cheap sugar, the health promotion levy and the Covid-19 pandemic.

R1 billion had been put aside for the transformation Plan and R400 million had already been spent. The presentations would indicate whether the role players were satisfied with progress. The Master Plan for Sugar was immense but there would be a focus on the transformation of the industry and the impact on the workers and small-scale growers.

The Master Plan was exciting, particularly the Project Office that would ensure transparency via quarterly reports on the dashboard that had been created and which would be updated weekly. The role players would be taking the sugar industry to greater height as they implemented the Sugar Master Plan.

The Deputy Minister introduced the team lead by Ms Thandi Phele, Acting DDG.

Presentation by dtic
Ms Thandi Phele, Acting DDG: Industrial Development Division, dtic, introduced the presentation, noting that the Sugar Plan was a social compact. The presentation would show what had been achieved since the stakeholders had endorsed the Plan.

Ms Ncumisa Mcata-Mhlauli, Chief Director: Agro-Processing Unit, dtic, explained that the Master Plan was intended to address the decline in the industry driven mainly by distorted global prices that were below South Africa’s cost of production and the increasing volumes of low-priced tariff-free exports from eSwatini into the Southern African Customs Union (SACU) market. The Health Promotion Levy (HPL) or tax on sugar and the impact of Covid-19 had added to the devastation of the industry.

Ten task teams had been set up between government, labour and the private sector, strongly driven by the sugar associations, to work on developing implementation plans to support the Master Plan:
Task Team 1: SACU Harmonisation
Task Team 2: Job Retention and mitigation strategy
Task Team 3: Small-scale grower support
Task Team 4: Transformation
Task Team 5: Crop Diversification
Task Team 6: Value chain diversification
Task Team 7 : Product Tax Policy
Task Team 8: Managed industry restructuring
Task Team 9: Restore Local Market And Offtake Commitments
Task Team 10: local sugar convertors and sugar-intensive confectionary

Targets for the next three months were as follows:
1. Finalise targets and milestone for next two years.
2. Accelerate and upscale inter-governmental co-ordination and participation.
3. Finalise work-plans for all task teams.
4. Cadence of joint programme management structures. (Done)
5. Formalise the PMO.
6. Quarterly reports produced.

Ms Mcata-Mhlauli informed the Committee that the dtic needed the support of the Portfolio Committee to bring the five major food retailers in SA onboard.

In conclusion, Ms Thandi added that the Master Plan had been co-developed and was being implemented by the dtic and the Department of Agriculture, Land Reform and Rural Development (DALRRD) because the Plan involved a combination of primary agricultural activities and agro-processing activities.

(See Presentation)

Presentation by the South African Sugar Association (SASA)
The Chairperson of SASA, Sindi Mabaso-Koyana, introduced her Deputy Chairpersons Ms Joanmariae Fubbs, Mr Suresh Naidoo and Mr Hans Hackmann.

Ms Mabaso-Koyana presented the task teams that the Master Plan had set up under herself and the Deputy Chairperson. She herself chaired the Transformation Task Team (TT4) and had been working hard on ensuring an alignment of the vision of transformation in the industry. She also chaired TT5- Managed Industry Restructuring. TT3 was the Small-Scale Grower Master Plan and was chaired by SASA Vice-Chairperson Joanmariae Fubbs. SASA management served on all Task Teams excluding TT2 (job retention) and TT5 (crop diversification).

Progress in the three task teams was reported.

Key areas to be addressed included SACU harmonisation matters with eSwatini as a sugar producer and with Botswana, Lesotho and Namibia (BLN) as non-sugar producers that were demanding tariff-free imports. Other issues were the future of the Health Promotion Levy (HPL) and broader food policy as well as strategic trade protection.

(See Presentation)

Presentation by the South African Millers Association (SAMA)
Mr Rolf Lutge, Chairperson, SASMA, presented. SAMA was representative of six milling companies and the Sugar Refinery. The immediate focus area for sugar millers was to sustain growth in the domestic market. Sugar prices into the market were capped by the CPI but certain input costs continued to rise at well above inflation and so growth in volumes would have to sustain the industry and fund investments. The millers had to ensure that sugar stock levels were adjusted to meet the 10% increase in the size of the SACU market in 2020/21. A challenge was the rebuilding of skills and milling capacity following years of difficulty characterised by shrinking cane areas and reduced capital reinvestment. Transformation had to be sustainable. Currently millers contributed R105 million per annum through SASA to black small-scale and land reform sugar cane growers. Over and above this commitment, sugar milling companies had their own transformation programmes. That was unsustainable.

(See Presentation)

Presentation by the South African Cane Growers Association (SACGA)
Mr Rex Talmage, Chairperson, SACGA, introduced the presentation which was made by Dr Tomas Funke, CEO. Vice-Chairpersons Ms Dipuo Ntuli and Mr Andrew Russell were in attendance.

An important Task Team for SACGA was TT2 which dealt with Job Retention and Mitigation. SA Cane Growers had conducted a census of employment in the cane growing sector. The data indicated that thousands of jobs had been lost during the crisis in the sugar sector and all growers were still under pressure. The cane farming sector employed 80 000 people on farms.

SA Cane Growers was working on Task Team 3: Small-Scale Grower Retention and Support to design a premium price for sugarcane grown by small-scale growers; define the universe of growers who would qualify for the premium sugarcane price; develop an array of additional support interventions aimed at small-scale sugarcane growers.

SACGA was also working on TT 4, 5, 6, 8, 9. Crop diversification was a major issue but it had been found that there was no simple replacement crop and that sugarcane employed the most people per hectare of all possibilities. However, aviation biofuel as in ATJ – Alcohol to Jet fuel – could be a game changer.

Ms Ntuli made the closing remarks, thanking BuySA for partnering with Canegrowers in the “Home Sweet Home” marketing campaign. She was also grateful to the President for referring to the Sugar Master Plan in the State of the National Address. She noted the improvement in the industry of late which was welcomed after the heavy job losses of previous years.

(See Presentation)

Presentation by the South African Farmers Development Association (SAFDA)
Dr Siyabonga Madlala, Chief Executive Officer, SAFDA noted the huge increase in the sugar industry and said that growers were enjoying the spoils of the efforts to improve the industry but he still expected much pain as, despite all the promises, the small-scale farmers had not benefitted from the improvement in the industry. In the beginning of the process, SAFDA had been requested to come up with transformation plans. The initial R1 billion from the sugar industry had had a minimal effect. The premier price for small-scale farmers had not changed and they were told it was unaffordable to increase the price. The haves simply would not share with the have-nots. Whenever there was a meeting in the industry, there was a challenge of insufficient funds and he wanted to lay that bare before the Portfolio Committee.

Mr Thandokwakhe Sibiya, Strategic Support Executive, SAFDA, made the presentation. Intervention 6 of the Transformation Programme looked at institutional capacity building for new emerging black sugar cane grower associations but stopped at year 3. SAFDA called for Intervention 6 to continue supporting its capacity building needs.

The Master Plan had started delivering through securing the local market demand. The sugarcane price had been good for farmers at above R5000 per RV ton.

(See Presentation)

Discussion
Mr W Thring (ACDP) thanked all the presenters for the exhaustive presentations on the sugar industry. He asked about the R1 billion set aside for transformation and R400 million had been spent. What impact had that had on turning around the sugar cane industry? What new markets had been found for the sugar industry and what success had there been in searching for the value chain diversification as presented in one of the slides? What impact had the irregularities at Tongaat-Hullet, which was touted as another Steinhoff, had on the industry? Had those challenges previously outlined by the small-scale farmers been addressed? Had the challenge of distance from the mills been addressed?

What was the level of engagement with the sugar health tax, the Health Promotion Levy (HPL) and what had the impact been on the industry? He noted that beverage manufacturers had moved to less healthy sweeteners which had a negative impact on the population.

Mr Thring asked for details of some of the successes in the sugar industry. What had been some of the challenges? What were the successful interventions in the restructuring process? The transformation process engaged the sugar grower and the miller, but what about the labourer? Had there been any engagements with the labourers? A figure of 85 000 labourers had been touted.

Regarding the millers, Mr Thring stated that his family had been involved in the Darnall, Amatikulu and Felixson mills. He had had the privilege of visiting those mills when he was growing up but what impact had land claims had on sugar growers and how had that been dealt with? He also noted that sugar prices had been kept at CPI prices. What effect had that had?

Mr Thring asked whether the number of  livelihoods dependent on the sugar industry was one million or 11 million as both figures had been touted, and how was that figure quantified? What success had there been in converting sugar into biofuels, particularly ethanol and aviation fuel? He noted that Brazil had been doing that for decades. SA and Brazil were said to be developing economies, but SA seemed to be decades behind Brazil. Regarding sustainability, grants from government might be necessary in the interim but they were not sustainable, so what plans had been made for black growers to sustain themselves beyond the grants? What was the premium price that was being asked for and what was that related to the capped CPI prices?

The Chairperson requested Members to note the stakeholder he or she was addressing.

Ms Y Yako (EFF) noted the high sugar imports and the high tariffs. She asked what the plan was for mitigating those, especially in the unfavourable economy. She always asked how the milling industry was being diversified in terms of black owners but never really received an answer. The Tongaat-Hulett closure of Darnall would have been a great opportunity for the dtic to have gone in there and facilitated a black-owned milling company.

She asked Mr Lutge how many black growers he had in his own milling area. When would they stop talking about small-scale black growers and talk about equal partners in an inclusive industry that spoke to the dynamics of what was happening in SA? One could not still talk in 2021 of small-scale black growers as if black people had to be spoon-fed in how to “partake” in an industry that they had been involved in for many years.

She informed Dr Madlala that she was very, very glad to see he was happy with the improvements because the previous time he had been very frustrated with the way in which canegrowers in his organisation were being treated. That was an improvement and made her very, very happy.

Mr D Macpherson (DA) asked the dtic what incentives government was putting on the table in the sugar cane industry – financial and non-financial incentives. He was amazed that the costs of the Master Plans had to be borne by the private sector. Government put very little skin in the game. Government was simply presenting regulations, but no cash on the table.

Regarding the diversification of fuel into ethanol, he asked for an update on how far those regulations had progressed. He had been told that that was not in the ambit of dtic but the dtic was part of one government and had to work with the Department of Mineral Resources and Energy to make progress in that regard.
Did the dtic support the HPL? If it did not, what was it doing about engaging government on the sugar tax?
What was being done about the continual dumping of sugar in SA by eSwatini? What had dtic done about that?

Mr Macpherson stated that he wished to address a most serious racially-based attack by SAFDA on a DA MP because the MP was doing her job and asking questions about how government money was being spent through grants and allocations. SAFDA saw fit to march to the DA offices in KwaZulu-Natal with signs and banners calling the MP a racist, with her name dripping in blood on the banner and demanding that the DA get rid of her for doing her job. He said that those actions should be rejected by every person on the call.

If organisations wanted to muzzle MPs and prevent them from asking questions and doing their job, he could assure them that it was not going to happen. There had been a worrying trend of organisations wanting to take on individuals, mostly the members of the DA, for doing their job - and that included Mr Cuthbert who was being taken to court by a man who wanted to be the Chairperson of the National Lottery Commission. He stated that that was an assault on democracy and parliamentary democracy in the country. He wished that the Committee to be appraised that that sort of behaviour was totally unacceptable. If an organisation disagreed with MPs doing their work, they were perfectly entitled to do so, but to make it into a racially-charged incident, bordering on inciting violence was unacceptable. The actions taken by SAFDA were unacceptable.

Mr S Mbuyane (ANC) began speaking but his line was very indistinct. [He would begin a sentence relatively clearly but his voice immediately faded away and presenters generally requested that his questions be submitted in writing.]

Mr Z Burns-Ncamashe (ANC) re-affirmed the Committee’s commitment to the values of transformation and encouraged the SCGA and the SAMA to ensure that their outlook of ownership and management was reflective of the demographics of SA. It had to be clear that part of the key tenets of transformation was to de-racialise and de-colonise the status quo so as to have an inclusive and integrated economic growth trajectory.

He commended the approach of SAFDA and committed to all initiatives that sought to create an equal society for all citizens. It would be a travesty for the democratic dispensation if the Committee did not dissociate itself from any form or tendency to promote a sense of superiority. The Committee should say that it was a new country and a business that had been a historical beneficiary of both racial and colonial opportunity had to be prepared to say it. Those people had had an advantage and access to opportunities because of the colour of their skin, so out of the historically gained proceeds, they should work together with government to close the gap. He said that they must all be committed.

Mr Burns-Ncamashe was aware that the small-scale growers were mostly growing in communal areas. He asked whether they owned the land on which they grew the cane. They had to own their assets. One could not continue to massage those who were not ensuring that black people owned the land. The growers should not just lease the land. Through inter-government relations, tenure of land had to be fast-tracked as those who were doing business could find themselves in a precarious situation. Government could not apologise that all small-scale farmers did not own the land and the Committee had to create an enabling situation for the African players in the sugar industry. A regional and continental framework had to be created in terms of the African Continental Free Trade Area ( AfCFTA) agreement. African farmers had to understand the agenda. He had just wanted to make that emphasis.

The Chairperson requested the presenters to respond to the issues and said that the Department would conclude the responses.

Response by SASA
Mr Hackmann responded as the Chairperson of SASA had been called away.

Regarding the R1 billion commitment by the industry and whether the R400m had had an impact, he told Mr Thring that the funds had had an impact. It had provided for an 18% premium in cane price for small-scale growers plus some transformative incentives such as the employment creation programme, especially of young black women.

SASA was looking for new markets which would probably come through the Harmonisation Programme in the Master Plan. The irregularities at Tongaat-Hulett had done a lot of damage to the reputation of the industry but the new leaders had addressed that relatively well. He could not comment further; only Tongaat-Hulett could respond fully to the question.

Regarding successes in re-structuring, he said that the milling companies had already spoken about some of the restructuring that the milling companies had gone through. The industry’s make-up had been restructured by bringing SAFDA on-board and SADFDA had had a major impact on small-scale growers.

One million livelihoods depended on the sugar industry, not 11 million. There was no real science behind the computing of that figure. It was an estimate taking into account the amount the number of jobs on the farms, those working in the relevant service industries and families.

Regarding the biofuel issues, Mr Hackmann recalled that an earlier speaker had spoken of how, for the past 10 to 15 years, the industry been struggling to find a dispensation for the industry to invest in biofuel production as per Brazil. The industry had come to the conclusion that the cost of energy or fuel in SA was very economical and a subsidy would be needed for sugar to enter that field and that was currently unaffordable, but the Master Plan had plans to address that in the Diversification Task Team. He could speak authoritatively on that point as he chaired the Sugar Renewable Committee.

Mr Hackmann believed that the presenters had spoken at length about what had been done for the small-scale growers. SAFDA had indicated that the R1 billion was insufficient for small-scale growers’ sustainability but Mr Hackmann had no doubt that the industry would come up with a solution.

The premium price referred to was that price paid to the small-scale growers and was 18% higher than that paid to other farmers. That would be re-looked at as SAFDA believed that more money should be paid but the industry was saying that there was insufficient money. It was a debate that would rage on.

Mr Hackmann responded to Ms Yako’s question regarding high import prices. He said that with the import tariff having been raised upwards two years earlier to a dollar-based reference price of $680, in conjunction with the exchange rate and the global price of sugar, the industry had managed to keep imports at bay and there had been a massive drop-off in deep sea imports from Brazil, but the industry had not been able to address eSwatini sugar imports, although there were to be discussions with eSwatini. SASA would be engaging with International Trade Administration Commission of South Africa (ITAC) to keep the level of protection at a level that would avoid damage to the industry and job losses. He noted that Ms Yako was very happy about Dr Madlala being a little more contented with the work of his organisation.

Mr Hackmann requested that the questions of Mr Mbuyane be submitted in writing as he had been unable to hear Mr Mbuyane. He informed Mr Burns-Ncamashe that his comments were relevant and the purpose of all the engagements over the past two years had been entirely about transformation in the industry. He noted the points and they would guide the processes that the industry was engaged in.

Response by SAMA
Mr Lutge responded to the question regarding the impact of land claims. On the positive side land claims were being worked on as it brought land and opportunities to the previously disadvantaged and brought them into the sugar industry. Sadly, most of the early farms transferred to black farmers had not been successful and had gone out of business completely and no sugar cane was being produced. On other farms that had been transferred to black growers, there had been a significant drop in production. There were some great success stories. He believed that the Master Plan would work towards increasing production. It had already delivered some increases in yield.

SAMA was putting money to R & D, etc. but the limited increases in production might not allow for sufficient funding to sustain the industry. It might be necessary to negotiate an alternative price. Growth was being sustained at the moment by the increased sugar yield.

He said that each milling company had to respond to questions about its own transformation processes but he could say that Tongaat-Hullet Sugar had said that a range of transformation initiatives would be implemented at its mills. How many small-scale growers were serviced by RCL? Mr Lutge said RCL had lost all the black growers when they moved to other mills and so the UCL had shifted its focus to wattle growers and had 420 small-scale wattle growers sending bark for processing. UCL was supporting those growers and was hoping to expand that sector.

He had been unable to hear Mr Mbuyane but he assumed the question was regarding retrenchment. The highest number of retrenchments in the milling industry had been at senior levels, not much retrenchment was taking place at the lower levels. The retrenchments were probably not yet over. Companies were looking to relocate persons, where possible, but there had been many retrenchments of senior staff. It was, however, a confidential matter to each of the milling companies. The most obvious casualties had occurred with the closure of Amatikulu and Darnall mills. A lot of people had lost their jobs when those mills had closed. In the future, he assumed that there would be some pooling of resources. It was an ongoing process as the millers were currently looking at restructuring proposals. It was difficult to say exactly where the industry would end up. He promised to update the Committee on the matter at the next meeting.

Regarding the engagement with labour, Mr Lutge said that dtic was attempting to engage the labour organisations. Centrally, the millers engaged with the Milling and Refining Bargaining Council.

Response by SACGA
Dr Funke responded on behalf of SACGA. R1 billion of the Transformation Fund had resulted in a premium price for small-scale growers. It was intended as a short-term intervention. The Fund had also created jobs. Youth and women empowerment had been driven hard using the Fund and SACGA had successfully placed previously unemployed youth on farms as managers. A ladies’ group was led by Mrs Ntuli and the Women Empowerment Fund was supporting the empowerment of young women with funds from the R1 billion. The fund had been more far-reaching than just paying for a premium price on sugar for small-scale growers.

Mr Thring had asked about transportation from the distant farms of small-scale growers. That was being addressed by Task Team 3. The industry had strong views about the use of artificial sweeteners by the soft drinks industry, but the facts were that more research should be done. SACGA opposed the health tax because of the devastating impact it had had on the industry and specifically on sugar cane growers.
SACGA provided a funeral benefits scheme and a provident fund for small-scale growers and labourers on commercial farms. SACGA had done investigations into the dynamics of farming communities and was working hard to improve the lives of farm labourers.

The correct figure for industry-related livelihoods was one million jobs. That figure had come from a professor who had studied the industry and calculated 80 000 direct jobs, 350 000 indirect jobs and livelihoods, including the surrounding towns, stood at one million.

Ethanol in SA was hampered by an oil price that had not been at high enough prices for ethanol to be produced at that price, so a subsidy would always be needed to make ethanol viable. The cost of the production of sugar in SA was too high. Brazil was the lowest cost sugar cane producers in the world which had made it more viable for them, and their ethanol programme had started in the 1970s. The demand for ethanol had grown as the industry had developed in Brazil. However biofuel was for aircraft and not road transport and it was more expensive and that was the fuel that SA sugar was targeting because governments and air lines around the world were looking for green alternatives to aviation fuel. That was an opportunity that the Master Plan was addressing and he believed that if SA reacted quickly, there was a gap there.

Whether the price paid to small-scale growers could be linked to CPI was under discussion and only when those discussions were concluded, would the industry be able to give an answer.

He responded to Ms Yako regarding the Darnall mill closure and whether it had been an opportunity for black owners. It had closed due to many factors and it was probably related to a lack of sugar in the area, amongst other reasons, and those reasons would have to be taken into consideration if one wanted to re-vitalise the mill for black owners. In response to Ms Yako’s question about references to black small-scale growers, he would share the SACGA documents about the extensive transformation that would be taking place in the industry with Ms Yako and even the Committee.

Dr Funke apologised but he could not hear Mr Mbuyane’s questions. He would respond in writing if given the questions in writing.

Ms Ntuli, Deputy Chairperson of SACGA, expressed her gratitude to Mr Burns-Ncamashe for touching on the crucial issue of land as most growers farmed on Ingonyama Trust land and had no rights to the land. They could not even get loans from banks because they did not have ownership rights. He trusted that government would provide assistance in that regard.

SAFDA Response
Dr Madalala stated that the small-scale growers’ greatest challenge was cane transport and they had received very little help. The small-scale growers were given about R11/R12 per ton but that was a drop in the ocean in comparison with the cost of transport. There were issues with transport as the small-scale farmers were located very far from the mills. Why did the growers have to pay for the transport when the millers were buying from them? That was where the inequality gap came in. SAFDA had acquired trucks so that haulage was now non-profit-making and transport was at a reduced cost. He believed that government should provide them with more trucks to transport their sugar. The farmers had enjoyed support from Coco-Cola which had sponsored trucks and provided interest-free loans for them to acquire trucks to transport their cane to the mills.

In 2018/19, R133 m and R18m had been provided to small-scale farmers by the Department of Agriculture to acquire fertilisers after the small-scale farmers had applied for assistance from the Department for fertiliser when prices had been very low. That fertiliser had contributed to the increase in production in 2019/20. 30 000 farmers had gone out of business because they had not received help in time. Another government intervention was needed to help those 30 000 farmers re-establish their cane. Government had to be involved. Government had been involved in the past when it had given hundreds of millions of Rand to the industry. The money had been administered by SAMA and SACA and although the money had been for small-scale growers, it had not been given to them. That was why SAFDA had been formed.

Dr Madalala said that he wanted to respond to accusations about the small-scale farmers receiving money from government when many white organisations had received money and there had been no noise made around them receiving hundreds of million Rand. Now that SAFDA was receiving money, it was being accused, and it had been accused without any consultation with SAFDA or the Department to ask what the money was for. SAFDA was unapologetic that it had asked for money to assist the farmers. SAFDA had been formed because the former organisation had refused to accept money for small-scale farmers.

It was unfortunate that an honourable Member had met with a splinter group of former land owners that had received R1 billion from government but still wanted to continue to own the land and to farm. The Member had put out a statement that was defamatory to his organisation. She had accused SAFDA of unlawfully and illegally occupying that land. She had accused SAFDA of looting government money that had been publicly launched and properly reported on. SAFDA had taken the initiative to give the Member a proper presentation and she had been happy when she had walked away. SAFDA had even invited her to come back and ask if she had any further questions, but she had disregarded all of that and had published yet another defamatory statement stating that SAFDA had unlawful and illegal arrangements with government officials and was looting government money.

SAFDA had given her the benefit of the doubt the first time so that was why they had taken her to court. SAFDA had marched to the DA offices to ask what the problem was with the member of the DA upsetting the balance of SAFDA. The issue of land was very moody. Why did she not listen to others? People could lose their lives if they believed what she said. She could have heard the right truths from SAFDA but she did not listen and that was plain racist. She was racist. She had never asked about irregular expenditure in another, white, organisation that the Auditor General’s report had picked up on. She had not addressed that concern because it was a white organisation. SAFDA would not take it lying down but would have a media briefing to demystify the situation. Black organisations were being pushed over by political powers. All South Africans had the right to march. They would be putting the facts on the table in the Portfolio Committee on Agriculture, Land Reform and Rural Development.
 
Farmers had been left destitute in Jozini and SAFDA had gone to government and the transport of sugar had been moved from road to rail. The Member had accused them and they had kept quiet but they could not allow the first black organisation to have clean audits and with tangible development to be driven into the ground. The organisation could not be apologetic. They could not be bullied.

Dr Madlala admitted that it was not the platform on which to respond but the Chairperson had indulged him. The small-scale growers needed hundreds of millions of Rand to re-establish cane. They needed roads and warehouses. That was why the money from government was coming in handy.

Mr Macpherson raised a point of order.

The Chairperson refused to hear as he was busy talking and there was no point of order.

Mr Macpherson stated that in terms of parliamentary rules, the Chairperson had to take the point of order.

The Chairperson responded that it was not a point of order and he would not take it. He called on SAFDA to continue to respond.

Ms Yako requested that the Chairperson take the point of order once and for all and that it be dealt with once and all.

The Chairperson stated that he would not hear the point of order as that meeting was not the place to discuss that matter.

The Chairperson continued, saying that he would hear the point of order but that it was for noting only as the topic was not on the table.

Mr Macpherson stated that a member of the public could not come into Parliament and call a person a racist.

Ms Yako raised a point of order. She stated that Mr Macpherson could not gag a member of the public who had been invited to speak to the Committee. She said that Mr Macpherson was opening up a whole can of worms in the Portfolio Committee on Trade and Industry that belonged in the Portfolio Committee on Agriculture, Land Reform and Rural Development.

Several Members interjected and there was some disorder.

Mr Macpherson asked whether the Chairperson’s ruling was that anyone could call a Member of Parliament a racist.

Ms Yako responded that anyone could say someone was racist.

The Chairperson stated that Mr Macpherson’s issue was out of order. Members could discuss the matter in the Committee at an appropriate time. He requested SAFDA to continue with its comments.

Response by SAFDA cont..
Mr Sibiya responded to Mr Thring on the impact of the R400m. There was an impact but he wanted to inform the Committee that sometimes there was a huge tussle in deciding on how the money was to be spent. SAFDA had to ensure that there was no delay in the money reaching the small-scale farmers.

He explained the difference between premium price and CPI price: the premium price was a price differential to assist the small-scale farmers because the pricing structure favoured those with economies of scale, facilities, etc. The premium price was to ensure that small-scale farmers were cushioned from all the value-eroding macro-processes. The other price referred to the price that millers charged the customers. The price that millers charged customers in the market place was different from the premium price.

He added that land availability was a huge issue and the farmers only occupied a very small portion of the land and the production of small-scale growers had to increase to reach 51% by the end of the Transformation Plan. They could not achieve that if the small-scale farmers did not have enough land.  Big farmers had about 80% of the acreage. He agreed that the Portfolio Committee on Agriculture, Land Reform and Rural Development could assist in the unlocking the land and assisting the farmers, especially where people had received land but did not farm the land.

The Chairperson requested the Deputy Minister and the Department to conclude.

Response by dtic
Ms Mcata-Mhlauli stated that she was beginning to see the impact being made by dtic in the implementation of the Master Plan and the policy direction of the industry.

She responded to questions about subsidies. It was an important part of the Master Plan. The subsidies were not only required for the growers’ side but also downstream producers would require subsidies for products such as biofuel. R7 million had been received from the Department of Science and Innovation to undertake research into the diversification of the downstream products in the industry. They were looking a subsidy for manufacturing biofuel and a subsidy for those growing for biofuel. National Treasury had to allocate that money. Some of the proposals were unaffordable, from a government point of view as investments of billions of Rand were required - hence the engagements with National Treasury which was part of the Master Plan process. The Minister of Agriculture, Land Reform and Rural Development had launched the Agri-industry fund in March 2021 which would support the growing of cane for biofuels. The Agro-processors division of dtic would also support agro-processing in the industry.

There had been no increase in HPL as a result of the dtic engagement with SARS. SARS had halted the incremental increase of the health tax. That was one of the policy interventions of the Master Plan that would continue. The dtic was also looking at non-financial support. The dtic was looking at increasing sales both locally and externally. The dtic was also looking at the fuel regulations to make sure that the appropriate regulations were in place to support the industry.

Ms Mcata-Mhlauli responded to questions on eSwatini. The formal engagements with eSwatini and the task team had been escalated to a political level to get eSwatini on board. The issue around land belonged to DALRRD but the Committee was co-chaired by both Ministers. Ownership of the land was a key issue.
She assured the Committee that government was committed to supporting the industry together with social partners and labour.

Closing remarks by the Deputy Minister
Deputy Minister Gina explained that the issue of land had been elevated to the Deputy President and the Inter-Ministerial Committee on Land would respond to the issues of land and land tenure systems as those issues were discussed at that level and that was where agreements would be reached on land for the people.

She appreciated the good relationships with the Sugar industry and the task teams that had been put in place and how hard those teams were working and how the industry was considerate of all the sectors and the hard work that had gone into transforming the sector. Even the labour sector was supportive of the process. She was convinced that they were on the right track. She was grateful to all the role players for working so hard and being so supportive.  She appreciated the Portfolio Committee for applying the pressure to keep progress happening. She was not saying that there were no challenges but she was really encouraged by the way in which everyone had responded to the situation as that approach would enable a positive outcome.

Concluding remarks
The Chairperson suggested that the dtic could follow up on any questions that had not been answered. He noted that Mr Mbuyane’s questions, in particular, were unclear and he was invited to submit them in writing to the stakeholders through the secretariat.

Cane, alcohol, jet fuel was of interest. There was a fertiliser opportunity and even an opportunity for looking at alternate crops, such as avocado. The situation had to be looked at in a balanced light. For the dtic and the ministry, the Committee was looking at the interventions and the way forward was programmed and the workstreams and how those were moving forward. He was happy that the foundation had been laid. There was an excellent opportunity to take the process forward. He thanked the stakeholders but he would encourage more cooperation between stakeholders.

He thanked everyone for attending and sharing. Their time was most appreciated.

The Committee Secretary had requested parties to submit input on the remitted Bills at the previous meeting, but only the ANC had submitted and he asked that other parties submitted their input by the close of business. The first draft of the budget vote report had been sent Members. Final draft would be sent later and he requested input by 08:00 of the following day.

The following day, the Committee would look at the first draft of the Budget Report and the Remitted Bills.

The Chairperson adjourned the meeting.

 

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