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Sugar Industry South Africa

The Sugar Industry in South Africa 2020

Yasmin Mahomedy | South Africa | 29 June 2020

The Sugar Industry in South Africa 2018

Yasmin Mahomedy | South Africa | 19 January 2018

The Sugar Industry in South Africa 2015

Belinda Clatworthy | South Africa | 09 November 2015

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Report Coverage

This report focuses on the manufacture of sugar in South Africa, with information on the state and size of the sector, major players and their brands and performance, and factors influencing the sector. There are profiles of nine companies including notable players such as Tongaat Hulett, Illovo and RCL Foods and mills such as Umfolozi

Introduction

This report focuses on the manufacture of sugar in South Africa, which is a major sugar producer on the continent. The industry, which generates an estimated revenue of R14bn per annum, contributes 0.6% towards South Africa’s GDP. The country’s crippled economy, cheap imports, changing consumption patterns, low international sugar prices, and the tax on sugar-sweetened beverages are some of the factors that have caused the industry to decline over the past few years. According to the Department of Trade, Industry and Competition (DTIC), the local sugar industry needs to consider diversifying its products if it is to remain viable and create jobs. The government has pledged to work with sugarcane growers and millers “to develop sustainable solutions for the industry” and in February 2020, president Cyril Ramaphosa said that a Sugar Master Plan would be finalised to save jobs in the industry.

Strengths

• Significant contributor to economic growth and development.
• South Africa is a producer of high-quality sugar.

Weaknesses

• Negative export conditions due to high tariffs and lack of subsidies.
• Reliance on favourable weather conditions.
• Skills shortages.
• The decline in the area under cane farmed as more farmers plant other crops.
• The global sugar price is affected by subsidy-induced overproduction in some major sugar-producing countries.

Opportunities

• Expansion into Africa.
• Sugar Master Plan.
• The generation of renewable electricity.
• The production of bioethanol.

Threats

• Competition from sweeteners.
• Global oversupply of sugar and low sugar prices.
• Increasing imports.
• Rising input costs.

Outlook

South Africa’s sugar industry is struggling due to growing tariff-free imports mainly from Eswatini, higher input costs, and the effects of the sugar tax, which has had a major impact on local production and market demand. Decreased milling is causing severe pressure on milling companies and while the closure of some mills could increase the through-put of the remaining mills, this means additional transport costs. It can be expected that many hectares will be lost in regions where mills close permanently, should they do so. In August 2019, the Bureau for Food and Agricultural Policy said that while the International Trade Administration Commission of South Africa’s increased allowance in the import tariff from $566/t to $680/t helped slow the industry’s decline, the industry is still “projected to contract for the next five years until a more sustainable equilibrium is achieved with less surplus sugar”. KwaZulu-Natal premier Sihle Zikalala said the sugar industry is central to the economic development of the province and that the Sugar Master Plan would ensure the industry is revitalised, save and create more jobs, and seek to protect the industry against cheap imports and dumping. “Our sugar industry will enjoy significant rejuvenation with the imminent implementation of a new regulatory framework around biofuels generally, and ethanol in particular.”

Read More..
The Sugar Industry in South Africa
The Sugar Industry in South Africa 2020

Full Report

R 1 900.00(ZAR) estimated $103.00 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 72.10 (USD)*

Historical Reports

The Sugar Industry in South Africa 2018-01-19

R 1 900.00(ZAR) estimated $103.00 (USD)*

View Report Add to Cart

The Sugar Industry in South Africa 2015-11-09

R 1 900.00(ZAR) estimated $103.00 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 4
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 7
4. STATE OF THE INDUSTRY 7
4.1. Local 7
4.1.1. Corporate Actions 15
4.1.2. Regulations 15
4.1.3. Enterprise Development and Socio-Economic Development 17
4.2. Continental 20
4.3. International 22
5. INFLUENCING FACTORS 23
5.1. Economic Environment and Input Costs 23
5.2. Coronavirus 24
5.3. Government Initiatives 25
5.4. Land Reform 25
5.5. Health Concerns 25
5.6. Technology, Research and Development (R&D) and Innovation 26
5.7. Labour 27
5.8. Cyclicality 28
5.9. Environmental Concerns 28
6. COMPETITION 30
6.1. Barriers to Entry 31
7. SWOT ANALYSIS 31
8. OUTLOOK 32
9. INDUSTRY ASSOCIATIONS 32
10. REFERENCES 33
10.1. Publications 33
10.2. Websites 33
APPENDIX 1 34
Summary of Notable players 34
COMPANY PROFILES 36
A J PRODUCTS (NATAL) CC 36
A J PRODUCTS (WESTERN CAPE) CC 38
CROOKES BROTHERS LTD 40
GLEDHOW SUGAR COMPANY (PTY) LTD 44
ILLOVO SUGAR AFRICA (PTY) LTD 46
RCL FOODS SUGAR AND MILLING (PTY) LTD 48
TONGAAT HULETT LTD 52
U C L COMPANY (PTY) LTD 57
UMFOLOZI SUGAR MILL (PTY) LTD 60

Report Coverage

The report on the South African sugar industry examines current conditions, the difficulties faced by producers and the factors that influence the success of the sector. Profiles for nine companies active in the sugar industry are provided. These include RCL Foods Sugar and Milling (Pty) Ltd t/a TSB Sugar, which has sugar estates and three sugar mills, and Gledhow Sugar Company (Pty) Ltd which produces 1.55 million tons of sugar cane and 132,000 tons of sugar per annum. The company in partnership with the Ithala Development Finance Corporation has supported farm ownership by small-scale farmers, which has resulted in increased agro-processing activity. Between 45% and 50% of Gledhow’s sugar cane is sourced from these land reform growers, who are also shareholders in the mill.

Introduction

This report focuses on the manufacture of sugar in South Africa, which is a major sugar producer on the continent. In general the industry contributes 0.6% towards South Africa’s GDP, is responsible for 85,000 direct and 350,000 indirect jobs and has export earnings of R2.5bn annually. The sugar industry is emerging from the worst drought since the early 1990s, which has impacted on the last two seasons and is expected to continue to hamper production in the 2017/18 season. According to the South African Cane Growers’ Association (SACGA) and the South African Sugar Millers’ Association (SASMA), more favourable economic conditions for sugar cane production and processing need to be fostered in South Africa to protect and grow the sector, which contributes more than R12bn to the economy.

Strengths

• Cutting edge Research and Development resulting in new technologies contributing to the sustainability of the industry.
• Significant contributor to economic growth and development.
• South Africa is a globally competitive producer of high-quality sugar.

Weaknesses

• Negative export conditions due to high tariffs and lack of subsidies.
• Reliance on
• The global sugar price is affected by subsidy-induced overproduction in some major sugar-producing countries.

Opportunities

•  favourable weather conditions.
• Skills shortages.
• The decline in the area under cane farmed by small growers.

Threats

• EU sugar market is under-supplied.
• Expansion into Africa.
• The generation of renewable electricity.
• The production of bioethanol.

Outlook

South Africa’s sugar industry, which has witnessed decreased profitability in cane production, is expected to continue to face job losses and mill closures. Various unfavourable conditions, partly owing to the drought, but also driven by policy issues are hampering the sector’s sustainability and global competitiveness. Role players believe that the import crisis resulting from insufficient tariff protection needs to be addressed by government to prevent business closures and job losses, particularly in rural areas. In addition to this, manufacturers of sugar-sweetened beverages fear that the new sugar tax may add to the current difficulties and potentially lead to declined profitability and job losses.

Read More..
The Sugar Industry in South Africa
The Sugar Industry in South Africa 2018

Full Report

R 1 900.00(ZAR) estimated $103.00 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 72.10 (USD)*

Historical Reports

The Sugar Industry in South Africa 2020-06-29

R 1 900.00(ZAR) estimated $103.00 (USD)*

View Report Add to Cart

The Sugar Industry in South Africa 2015-11-09

R 1 900.00(ZAR) estimated $103.00 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.2. Geographic Position 4
3. SIZE OF THE INDUSTRY 4
4. STATE OF THE INDUSTRY 7
4.1. Local 7
4.1.1. Corporate Actions 12
4.1.2. Regulations 12
4.1.3. Enterprise Development and Social Economic Development 15
4.2. Continental 17
4.3. International 19
5. INFLUENCING FACTORS 20
5.1. Economic Environment and Rising Operating Costs 20
5.2. Government Initiatives 21
5.3. Land Reform 21
5.4. Health Concerns 22
5.5. Technology, Research and Development (R&D) and Innovation 22
5.6. Labour 24
5.7. Cyclicality 25
5.8. Environmental Concerns 25
6. COMPETITION 27
6.1. Barriers to Entry 28
7. SWOT ANALYSIS 28
8. OUTLOOK 29
9. INDUSTRY ASSOCIATIONS 29
10. REFERENCES 30
10.1. Publications 30
10.2. Websites 30
COMPANY PROFILES 31
A J PRODUCTS (NATAL) CC 31
A J PRODUCTS (WESTERN CAPE) CC 32
CROOKES BROTHERS LTD 34
GLEDHOW SUGAR COMPANY (PTY) LTD 38
ILLOVO SUGAR AFRICA (PTY) LTD 40
RCL FOODS SUGAR AND MILLING (PTY) LTD 43
TONGAAT HULETT LTD 47
U C L COMPANY (PTY) LTD 51
UMFOLOZI SUGAR MILL (PTY) LTD 54

Report Coverage

This report on the local sugar industry examines the current conditions and describes how despite its comparative production efficiencies, the South African sugar industry finds it difficult to export profitably to the world market. Factors influencing the success of the industry are also discussed and seven sugar milling companies are profiled. These include market leader Illovo Sugar Ltd, which has an estimated 30% share of the domestic sugar market and manufactures 70 million litres of ethanol per annum.

Introduction

This report focuses on the manufacture of sugar in South Africa. Sugar is one of the most common yet complex of commodities. It is produced from two plants; sugar cane and sugar beet, and grown on small or medium sized farms and large industrial plantations. South Africa rates as one of the world leaders in the production of high quality sugar, grossing an annual turnover of R12bn. As a cost-competitive producer it is ranked with the top 15 global producers out of approximately 120 sugar producing countries. The industry generates approximately 79,000 direct jobs. This represents over 11% of the total agricultural workforce in South Africa, according to the South African Sugar Association (SASA). Globally, the sugar industry is developing an environmental awareness and the South African sugar industry, which has recognised the need to diversify, is well-positioned to be a much needed contributor to the production of renewable energy, biofuels and bio-plastics in South Africa.

Strengths

• Cutting edge Research and Development resulting in new technologies contributing to the sustainability of the industry.
• Leading cost competitive producer of sugar.
• Significant contributor to economic growth and development.

Weaknesses

• Decline in the area under cane farmed by small growers.
• Export challenges due to high tariffs and lack of subsidies.
• Reliance on favourable weather conditions.
• Skills shortages.

Opportunities

• EU sugar market is undersupplied.
• Expansion into Africa.
• The generation of renewable electricity.
• The production of bioethanol.

Threats

• Competition from the alternative sweeteners market.
• Global oversupply of sugar.
• Potential introduction of a sugar tax.
• Rising input costs.

Outlook

The recent drought, which severely affected the 2014/2015 production cycle, is also likely to negatively impact the 2015/2016 cycle. In addition the future prediction of increased global warming in South Africa and the resultant decrease in rainfall is expected to significantly impact on the long-term productivity of the sugar industry. On the positive side the South African sugar industry is poised to capitalise on its ability to generate renewable electricity and produce biofuel which will significantly increase the potential for increased revenue and create numerous jobs.

Read More..
The Sugar Industry in South Africa
The Sugar Industry in South Africa 2015

Full Report

R 1 900.00(ZAR) estimated $103.00 (USD)*

Industry Landscape

R 1 330.00(ZAR) estimated $ 72.10 (USD)*

Historical Reports

The Sugar Industry in South Africa 2020-06-29

R 1 900.00(ZAR) estimated $103.00 (USD)*

View Report Add to Cart

The Sugar Industry in South Africa 2018-01-19

R 1 900.00(ZAR) estimated $103.00 (USD)*

View Report Add to Cart

Table of Contents

[ Close ]
PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 2
2.2. Geographic Position 4
3. SIZE OF THE INDUSTRY 5
4. STATE OF THE INDUSTRY 8
4.1. Local 8
4.1.1. Corporate Actions 11
4.1.2. Regulations 12
4.1.3. Enterprise Development and Social Economic Development 14
4.2. Continental 16
4.3. International 18
5. INFLUENCING FACTORS 21
5.1. Government Intervention 21
5.2. Labour 21
5.3. Economic Environment 23
5.4. Land Reform 24
5.5. Cyclicality 24
5.6. Health Concerns 24
5.7. Research and Development (R&D) and Innovation 25
5.8. Environmental Concerns 26
6. COMPETITION 27
6.1. Barriers to Entry 28
7. SWOT ANALYSIS 28
8. OUTLOOK 29
9. INDUSTRY ASSOCIATIONS 29
10. REFERENCES 29
10.1. Publications 29
10.2. Websites 30
COMPANY PROFILES 31
CROOKES BROTHERS LTD 31
GLEDHOW SUGAR COMPANY (PTY) LTD 35
ILLOVO SUGAR LTD 38
RCL FOODS SUGAR AND MILLING (PTY) LTD 42
TONGAAT HULETT LTD 48
UCL COMPANY LTD 52
UMFOLOZI SUGAR MILL (PTY) LTD 54