Business Reporter
South Africa’s sugar industry is facing mounting financial and operational pressure as producers battle rising imports, weak domestic demand and what industry players describe as years of delays in implementing government policies to support the sector.
According to a report by Bloomberg, the crisis is threatening an industry that generates about R24 billion (US$1.5 billion) a year and supports more than one million people across the country.
The sector also provides about 270 000 direct and indirect jobs, making its continued decline a significant economic concern, particularly for rural communities in KwaZulu-Natal and Mpumalanga.
The difficulties have been highlighted by the financial troubles facing Tongaat Hulett, one of South Africa’s largest sugar producers. The company, which accounts for more than 40% of the country’s refined sugar production, narrowly avoided liquidation after receiving a R2.5 billion loan package from the state-owned Industrial Development Corporation (IDC).
The funding, which is expected to be converted into equity, is intended to keep Tongaat operating until the end of September.
At the same time, Vision Group bought R11.7 billion of Tongaat’s debt, with a view to potentially negotiating control of the company at a later stage, according to reports.
However, sugar-cane growers say the rescue package addresses the immediate financial crisis without resolving the structural problems undermining the industry.
The sector is under increasing pressure from imported sugar, particularly from Brazil, India and Thailand.
Reports say sugar imports reached 124 594 tonnes in the first six months of 2026, compared with just 1 619 tonnes during the same period in 2022, citing the Congress of South African Trade Unions (Cosatu).
Cosatu has described the industry as being in crisis and called for measures including lower electricity costs, improved rail services and stronger action against imports.
RCL Foods, another South African sugar producer, said on August 31 that exceptionally high import volumes and a contraction in the domestic market were putting further pressure on producers’ margins. The company said it had been forced to sell sugar on international markets at less than half the price it could have achieved domestically.
Tariff relief offers limited breathing room
The government has taken some steps to protect local producers.
In August, it increased the dollar-based reference price used to calculate sugar import duties from $680 to $785 a tonne. The increase was the first since 2018, although it remains below the $905 a tonne sought by growers.
The Department of Trade and Industry said the government was committed to protecting the domestic sugar industry against unfair competition, noting that South African producers compete against countries with different cost structures, economies of scale and various forms of government support.
Industry participants, however, argue that tariff adjustments alone will not resolve the sector’s deeper structural problems.
One area repeatedly identified as a missed opportunity is biofuels.
South Africa adopted a biofuels industrial strategy in 2007 and announced fuel-blending targets, but the programme was never fully implemented. A new agreement between government and industry was signed in April with the aim of developing biofuel production.
Vision Group executive Rute Moyo said the country should now move ahead with its ethanol commitments and unlock the potential for sugar mills to generate electricity from sugar waste.
The South African sugar industry estimates that it could contribute about 700 megawatts of electricity to the national grid through cogeneration projects.
Rural economies feel the impact
The decline of sugar milling is also affecting communities whose economies have historically depended on the industry.
Reports say the closure of Tongaat’s Darnall mill in 2020 resulted in the loss of almost 400 permanent jobs, alongside seasonal employment opportunities. Local businesses and community institutions that depended on the mill have also struggled since its closure.
The country’s sugar production has declined from a peak of about 2.76 million tonnes in 2003 to roughly 2.2 million tonnes.
Industry observers warn that further mill closures could deepen the economic damage by affecting farmers, transport operators, workers, contractors and businesses that depend on the sugar value chain.
Jee-A van der Linde, a senior Africa economist at Oxford Economics, told Bloomberg that South Africa had repeatedly seen government action come only after industries had suffered significant damage.
For thousands of sugar-cane farmers and rural communities, the stakes extend well beyond the survival of individual companies. The future of the country’s remaining mills could determine whether an important agricultural value chain continues to support livelihoods or follows the path of industries that have already experienced large-scale plant closures.
