Gledhow is the latest mill to enter business rescue after Tongaat Hullett announced its business rescue in October 2022.

This has caused concerns over thousands of job losses as well as what the future of the industry looks like in South Africa.

ALSO READ: Tongaat Hulett confirms civil claims against former executives

Slew of challenges

• 2014/2015: KwaZulu-Natal suffered a major drought which led to reduced crops in 2015/16;
• 2017: A massive uncontrolled import of cheap sugar had a negative impact on sugar sales in South Africa;
• 2018: The Health Promotion Levy was introduced and battered R2 billion of revenue from the sugar industry and 14 600 jobs in the first year alone. The levy continues to have a negative impact on the industry today;
• 2021: The unrest in KwaZulu-Natal in July 2021 resulted in 350 000 tonnes of sugar cane being torched and mills had to close;
• 2022: KwaZulu-Natal suffered severe flooding; and
• 2023: The Lowveld had further flooding which damaged crops, road and irrigation infrastructure as well as the sugar mills.

ALSO READ: SA cane growers granted R85 million in relief

The ongoing conflict in Ukraine also has an impact on the energy crises and other critical farming inputs, says Chairman of the SA Canegrowers Association Andrew Russell. “And now the business rescue of two of our big milling companies [Tongaat Hulett and Gledhow] has caused instability and uncertainty for 14 800 growers as well as countless farmworkers that produce the sugarcane crop."

Tongaat Hulett and Gledhow defaults cost growers R1 billion

Adding to the already struggling industry is the 8% drop in the final RV price for the 2022/23 season. Russell explains in a recently released statement that the RV price is the price that cane growers receive for the cane processed.

"This is mainly a result of the failure of Tongaat Hulett to pay more than R900 million due to the South African Sugar Association (SASA) at the end of March 2023, and a further default by the Gledhow mill which is also in business rescue.

"These defaults are in violation of the Sugar Act and Sugar Industry Agreement and have lowered growers’ revenue, placing thousands of small-scale and commercial growers in danger of losing their businesses."

This had placed small-scale growers under further threat, said Russell.

Government's intervention 

"SA Canegrowers has therefore written to the Department of Trade and Industry’s Minister Ebrahim Patel to request the government’s intervention in light of the business rescue practitioners’ decision not to pay the amounts owing to the industry. Even as the industry explores possible legal action, urgent action is needed to protect the industry’s small-scale growers, workers, and value chain partners from financial ruin.

"Urgent and decisive action is needed from all roleplayers to ensure that South Africa’s sugar industry is not fatally impacted. We will explore all options available to us to ensure that we protect the one million livelihoods the industry supports," adds Russell.

OFM News