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Load shedding could cause major losses in the sugar industry

Estimated reading time: 3 minutes

Data compiled by SA Canegrowers shows that the South African sugar industry is set to lose R723 million in 2023 due to load shedding. With milling giant Tongaat Hulett in business rescue, and the destructive Health Promotion Levy already hampering the industry, these losses are potentially catastrophic for growers and the industryā€™s workers. SA Canegrowers is therefore appealing to government to put short-term measures in place to mitigate the impact of load shedding on growers while long-term solutions are considered.

Load shedding affects 1 135 irrigated growers who employ more than 10 000 workers. An estimated 34% of South Africaā€™s sugarcane is produced in irrigated areas, including Komatipoort and Malelane in Mpumalanga, and Pongola in KwaZulu-Natal. 

Growers are expected to incur more than R189 million 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. But the converse also applies ā€“ 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. 

In addition to the increased cost of energy, growers also face yield losses as they have 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. The resulting loss of yield could amount to more than R723 million.

SA Canegrowersā€™ scenario modelling shows that continuous load shedding at stages four to six will cost growers more than R723 million in 2023. An escalation to stages six to eight could cost the industry more than R1,8 billion. Anything beyond stage eight could cost the industry more than R2,4 billion.

 The continuation of load shedding without any arrangement to enable irrigation will also have long-term implications. Sugarcane stalks left in the ground can produce cane for up to 10 years. Insufficient irrigation not only reduces cane quality and causes yield losses, but it will also lead to increased stool mortality, significantly shortening the lifespan of the cane. 

Growers already face significant headwinds. The milling giant Tongaat Hulett was placed under business rescue in October 2022 and remains in that process. Meanwhile, the industry faces an increase to the destructive Health Promotion Levy (the sugar tax) when minister Godongwana delivers his budget speech next month.

Read more about sugar tax here.

A desperate plea to Eskom

SA Canegrowers is therefore appealing to Eskom and government to help the industry in particular, as well as the broader agricultural sector, to find urgent solutions to mitigate the impact of load shedding. Some of the short-term measures SA Canegrowers has asked government to consider include restricting load shedding to stage four in irrigated cane growing areas during peak watering season, implementing diesel rebates for growers utilising generators, and granting 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 that the sugar industry supports. ā€“ Press release, SA Canegrowers Association

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