South Africa Sugar Industry Demands Sugar Tax Removal to Protect Jobs

 

SA SUGAR INDUSTRY IN CRISIS

South Africa's Sugar Industry Demands End to Sugar Tax as Thousands of Jobs Face Pressure

By SA360 NEWS | 10 October 2026 | Business & Politics

South Africa's sugar industry is calling on the government to abolish the controversial sugar tax, warning that declining production, cheaper imports and mounting financial pressures are threatening farmers, workers and businesses across the country.

DURBAN, SOUTH AFRICA — South Africa's sugarcane growers have intensified their campaign for the removal of the Health Promotion Levy (HPL), commonly known as the sugar tax, ahead of Finance Minister Enoch Godongwana's Medium-Term Budget Policy Statement scheduled for 21 October 2026.

Industry organisation SA Canegrowers argues that the tax is placing additional pressure on an already struggling agricultural sector and discouraging investment.

The appeal comes as growers report falling sugarcane deliveries, declining recovery rates and growing competition from imported sugar.

Sugar Industry Warns of Job Losses

SA Canegrowers says South Africa's sugar industry supports more than one million livelihoods, including farmers, agricultural workers, mill employees, transport operators and businesses connected to sugar production.

The organisation has pointed to research commissioned by the National Economic Development and Labour Council (Nedlac), reporting that approximately 16,000 jobs were lost across sugarcane farming and milling by 2019.

Industry representatives associate these losses partly with the introduction of the sugar tax in April 2018.

However, the sector also faces other economic pressures, and the precise contribution of the levy to employment losses remains part of the wider policy debate.

Sugarcane Deliveries Fall by 18%

The industry's latest figures highlight the scale of its difficulties.

According to SA Canegrowers, sugarcane deliveries to mills have declined by approximately 18% during the current harvesting season compared with the previous season.

The recoverable value extracted from the harvested cane has also fallen by around 17%.

Lower deliveries and weaker recovery rates can reduce the volume of sugar available for processing, potentially affecting growers' revenue and milling operations.

The industry says that without an improvement in production, some farmers could face further financial losses.

Foreign Sugar Imports Increase Competition

Competition from imported sugar is another major concern.

Local growers argue that foreign sugar has increasingly displaced South African products in the domestic market.

The sector has called for stronger trade protection and more effective enforcement to ensure that domestic producers can compete fairly.

Meanwhile, uncertainty surrounding Tongaat Hulett, one of the country's major sugar producers, has added to concerns about the industry's long-term stability.

These challenges are particularly significant for KwaZulu-Natal, where sugarcane farming and milling provide important employment opportunities.

What Is South Africa's Sugar Tax?

The Health Promotion Levy was introduced on 1 April 2018 as part of the government's efforts to reduce excessive sugar consumption and address health problems such as obesity and diabetes.

The levy applies to qualifying sugary beverages rather than directly taxing every kilogram of sugar sold.

According to the South African Revenue Service, the tax is calculated at 2.1 cents per gram of sugar exceeding four grams per 100 millilitres of a beverage.

The policy was designed to encourage manufacturers to reduce sugar content and consumers to make healthier choices.

Public-health advocates support taxation as one measure to discourage excessive consumption of sugary drinks.

Sugar industry representatives, however, argue that the economic consequences for producers and workers have become too severe.

Farmers Demand Government Intervention

SA Canegrowers chairman Higgins Mdluli has urged the government to reconsider the levy, arguing that growers are facing several challenges simultaneously.

The organisation believes removing the tax would improve policy certainty, support investment and help the industry diversify into other products.

Potential opportunities include renewable energy, bio-based materials and other products derived from sugarcane.

However, industry diversification requires capital investment and stable production conditions.

The South African government has already been working with industry stakeholders through the Sugarcane Value Chain Master Plan, which aims to strengthen the sector and protect employment.

The Debate: Public Health or Economic Survival?

The proposed removal of the sugar tax presents policymakers with a difficult decision.

Supporters of the levy argue that reducing sugary-drink consumption can contribute to better public health.

Industry representatives argue that the measure weakens demand for locally produced sugar and places additional pressure on an important agricultural value chain.

Both concerns are relevant to the policy debate.

Removing the tax would not automatically resolve the industry's problems with imports, production costs, declining harvests or financially distressed mills.

Equally, maintaining the levy raises questions about how the government intends to support affected farmers and workers.

What Happens Next?

Attention now turns to Finance Minister Enoch Godongwana's Medium-Term Budget Policy Statement, expected on 21 October 2026.

SA Canegrowers wants the government to announce the removal of the Health Promotion Levy.

As of 10 October, the government has not announced that the sugar tax will be abolished.

The upcoming budget statement will therefore be closely watched by farmers, millers, agricultural organisations and businesses connected to the sector.

For South Africa's sugar industry, the outcome could influence future investment decisions and the direction of a sector that remains important to rural communities and the national economy.

SA360 NEWS will continue following developments in South Africa's sugar industry, agricultural policy and the government's upcoming budget decisions.