Wednesday, January 19

KZN riots: sugar industry losses above R84m

The sugar industry has lost more than R84 million per tonnes of cane that was burned in arson attacks during the riots that hit parts of KwaZulu-Natal in July, reports the South African association Canegrowers.

During the riots, SA Canegrowers reported a cumulative total of R300 million in potential damage to local cane growers if the mills were unable to crush more than half a million tons of cane that were burned in arson attacks. Says tThese fears are now materializing.


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KZN’s mills have already rejected more than 135,000 tonnes of damaged cane, which is equivalent to more than R84.5 million. Almost a third of this rejected cane (38,000 tons) belongs to small producers. SA Canegrowers says it is extremely concerned as these are the producers most at risk of not recovering from revenue losses of this magnitude.

“Most small-scale producers don’t have any kind of insurance,” says President Andrew Russell.

“While many expect relief from the Grocane fire insurance cooperative and the South African Special Hazard Insurance Association (Sasria), they have also been notified that all the cane that was burned before the mill closed will not be covered by these entities. , although many mills only closed after the arsonists had already attacked a large quantity of cane.

“In addition, since the benefits of industry transformation are directly related to the tonnage of cane delivered, small producers whose cane is rejected may also lose these benefits,” added Russell.

According to the association, the current sub-standard performance of some plants is also exacerbating grower losses. To minimize these losses, producers need mills to function optimally, however this is not happening in many places.

“SA Canegrowers, therefore, expects these losses to continue to increase as the mills do not process the burned cane quickly enough,” the association said in a statement this week.

The association believes that one of the ways in which the impact on producers and communities that depend on the industry for their livelihoods can be minimized is through urgent government intervention. This includes immediate financial relief that will allow producers to stay afloat, maintain operations and retain workers as the sector struggles to rebuild.

SA Canegrowers says it has contacted the government, requesting that immediate financial relief be paid directly to producers who were severely affected by the unrest.

He adds that priority will be given to small producers, since the impact of the damage has put thousands of rural jobs at risk.

SA Canegrowers has written to government entities such as the Department of Commerce, Industry and Competition, the National Council for Agricultural Marketing, the Agricultural Financing Unit of the Industrial Development Corporation (IDC) and the Parliamentary Portfolio Committee on Agriculture, Agrarian Reform and Rural development.

“SA Canegrowers appreciates your commitments to some of these stakeholders. In particular, we are grateful to have the opportunity to shed more light on the devastation in the industry during the monitoring visits made by the Parliamentary Portfolio Committee last week to assess the extent of the damage in the province, ”says Russell.

“SA Canegrowers leadership has also been meeting with IDC to discuss possible bridge financing for affected growers.

“It is vital that plans to address the situation across the province include an intervention for the sugar industry, which provides more than a million livelihoods where they are desperately needed in rural communities,” added Russell.

Although there is promising potential for funding, the damage suffered 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 fee (or sugar tax) .

However, SA Canegrowers says it will look for more opportunities to act as a facilitator between growers and the government.

He adds that he remains committed to working with the government, producers and local communities to rebuild the industry. Since the risk to life has been substantially reduced, it aims to “protect and restore the livelihoods that depend on the sugar industry.”

Palesa Mofokeng is a Moneyweb intern.

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