Cuts could cost sugar industry over R700m

The sugar industry could lose more than R700m in 2023 due to load-shedding, according to SA Canegrowers.

On Thursday the organisation appealed to Eskom and the government to urgently put short-term measures in place to mitigate the effects of rolling blackouts on the industry.

“With milling giant Tongaat Hulett in business rescue, and the destructive health promotion levy (sugar tax) already hampering the industry, these losses are potentially catastrophic for growers and the industry’s workers,” SA Canegrowers chair Andrew Russell said.

Load-shedding affects 1,135 irrigated growers who employ more than 10,000 workers, Russell said.

An estimated 34% of SA’s sugar cane is produced in irrigated areas including Komatipoort and Malelane in Mpumalanga, and Pongola in KwaZulu-Natal.

“Growers are expected to incur more than R189m in additional energy costs in 2023 on account of the disruption to irrigation schedules. Most irrigated growers in KwaZulu-Natal and

Mpumalanga operate on a Ruraflex system, which allows them to pay a lower tariff for operating during low-demand times,” Russell said.

“But the converse also applies growers pay a significantly higher rate for pumping during peak demand times. As a result of load-shedding, growers have been forced to irrigate whenever electricity is available, regardless of demand.”

Russell said growers faced yield losses as they had fewer hours of continuous energy supply. “Growers need a minimum of six hours of continuous energy for proper irrigation.

“As a result of the intermittency of the power supply disrupting irrigation, irrigated growers will lose up to 40% water capacity.”

SA Canegrowers’ scenario modelling shows that continuous load-shedding at stages 4-6 will cost growers more than R723m in 2023.

“An escalation to stages 6-8 could cost the industry more than R1.8bn. Anything beyond stage 8 could cost the industry more than R2.4bn,” Russell said.

SA Canegrowers has asked the government to consider restricting load-shedding to stage 4 in irrigated cane-growing areas during peak watering season; diesel rebates for growers using generators; and tax rebates for those investing in alternative energy sources.

“We will continue to engage with all industry stakeholders as we work to save the 1-million livelihoods the sugar industry supports,” he said.

THESE LOSSES ARE POTENTIALLY CATASTROPHIC FOR GROWERS AND THE INDUSTRY’S WORKERS