Tomorrow, Minister of Public Enterprises, Pravin Gordhan will be delivering his department’s 2022/2023 budget speech in Parliament.
The Citrus Growers’ Association (CGA) hopes that Minister Gordhan will use this opportunity to provide an urgent update on government’s plans to address the ongoing challenges at South African ports over the short and longer term.
This follows an Indaba held by CGA in Pretoria last week, which was attended by citrus growers from across the country. The meeting focused on the many serious challenges currently facing the sector, which threaten the longer term sustainability and profitability of the industry and, in turn, the 130 000 jobs it sustains and R30 billion in export revenue it brings in annually.
The main challenges raised by growers were the significant increases in a number of input costs, including fuel, fertilizer and electricity prices. However, their biggest concern was the surge in freight costs over the past year, which has seen some shipping lines hiking their prices by as much as 150%. At these levels, it now costs between 2 and 2.5 times as much to ship the fruit, as it does to produce it over the course of an entire year. It was therefore agreed at the Indaba, that the CGA would investigate the feasibility of collaborating with other fruit sectors to take control of their shipping in order to guarantee some price stability in the future.
The other serious challenge raised was the ongoing operational issues at the country’s ports as a result of aging and out of service equipment and staff shortages. The perennial productivity problems at Durban port, which handles 60% of the country’s citrus exports, was further compounded by the recent rain and flooding in KwaZulu-Natal. Despite the impressive efforts by Transnet and the eThekwini municipality to ensure the damage to port access roads and the port itself was repaired in record time, it still interrupted the start of the season with many growers having to delay their harvesting and packing of fruit.
The citrus industry is expected to export 170 million cartons this season, which will result in billions more Rands in revenue for the country and more jobs being sustained. However, if current issues at the ports continue to hamper citrus reaching key markets, it will have a severe impact on fruit quality and grower sustainability.
It is therefore critical that Minister Gordhan provides a progress update on the short-term interventions, announced by President Ramaphosa in his SONA in February, which Transnet was planning to implement including: procuring additional equipment and implementing new systems to reduce congestion at the ports.
It is also crucial that he provides an update on the Request for Qualification (RFQ) published by Transnet earlier this year with regard to introducing Private Sector Participation (PSP) in the Durban Port Container Terminal Pier 2 and Nqura Container Terminal. Critical to the success of this process is for it to include realistic ownership provisions for private operators. We would also appreciate an update on the planned R100 billion infrastructure development project at Durban port that was announced last year.
The CGA remains committed to working with government and stakeholders across the value chain to address issues affecting the ports. In this regard, it has established a Logistics Response Committee that identify risks in the logistics chain, including problems at the ports, and then develop plans to tackle the highest priority items. We will continue working with all role players so our industry is able to export quality fruit across the globe during the current season and remain a key contributor to the economy and jobs.
: Government must honour its commitments under the Sugar Masterplan
When Minister Patel delivers the budget for the Department of Trade, Industry and Competition on Friday 20 May 2022, SA Canegrowers hopes he will use it as an opportunity to provide an update on government’s action to implement its commitments under the Sugarcane Value Chain Masterplan, which was developed to address a number of serious challenges facing the industry and to ensure its long-term sustainability and profitability.
The first three-year phase of the Masterplan was signed by Ministers Ebrahim Patel, Thoko Didiza, sugar industry stakeholders, retailers and social partners on 17 November 2020, which means the budget will be delivered at the half-way mark of the plan’s implementation.
The signatories to the plan committed to taking action on the following priorities:
- Increasing demand for locally grown and manufactured sugar;
- Industry price restraint;
- Improving import protection;
- Strengthening small-scale growers support;
- Increasing transformation in the industry;
- Creating a diversified sugarcane-based industry; and;
- The potential restructuring of the industry.
As part of the commitment to increasing demand for locally produced sugar, a number of stakeholders agreed to varying offtake levels. Under this commitment, government undertook to promote the use of locally produced sugar by all government departments and state-owned entities. The DTIC also undertook to investigate appropriate ways of designating sugar and sugar-containing products under the Preferential Procurement Policy Framework Act. SA Canegrowers therefore calls on Minister Patel to provide an update on progress made on both these commitments.
In fulfilment of its commitment to encourage consumers to purchase locally produced sugar, SA Canegrowers launched its Home Sweet Home campaign in December 2020. Since its launch a number of partners have come on board to support the campaign, including Proudly South African and retail giant Shoprite Checkers. Yet, this effort must be complemented by government action to stem the inflow of cheap sugar imports, which is costing the industry R2 billion a year. SA Canegrowers hopes to hear Minister Patel speak to the work being done in this regard.
The industry has also taken steps to honour the Masterplan’s commitment to supporting Small-Scale Growers and promoting the transformation of the industry. In January 2022, the industry paid out R60 million as an additional premium price to qualifying Small-Scale Growers. This figure was over and above the R165 million paid out to Small-Scale Growers as part of a commitment to invest R1 billion in the industry’s transformation over five years.
However, critical for the survival of large and Small-Scale Growers is government fulfilling its commitment when it comes to a review of the socio-economic impact of the Health Promotion Levy (HPL or sugar tax). While no evidence has been produced to date that the tax has had a positive impact on obesity levels in the country, it has had a devastating impact on growers and the livelihoods they support resulting in 16,621 jobs and R2,04 billion in revenue being lost during the first year of its implementation alone. We therefore call on the Minister to commit government to conducting much needed research into the impact of the HPL.
Finally, the acceleration of the diversification of the sugarcane value chain is also crucial to the industry’s long-term sustainability. In May 2021, SA Canegrowers and the Roundtable on Sustainable Biomaterials announced the findings of a joint study on the viability of using South African sugarcane to manufacture sustainable aviation fuel. This study was presented to the Value Chain Diversification Task Team established under the Masterplan. SA Canegrowers therefore hopes to hear Minister Patel make a meaningful announcement about the progress of work underway to establish an enabling framework for this promising industry.
SA Canegrowers remains steadfast in its commitment to the successful implementation of the Masterplan, and to working with government to acheive this so we can safeguard the one million livelihoods the industry supports.
