the south african sugar industry - farmer's weekly
TRANSCRIPT
The South African Sugar Industry
Contribution to the South African Economy
Dependent Rural Livelihoods 1 million
Direct Jobs 65 000
Indirect Employment 350 000
Gross Industry Revenue R 14 billion
Annual Sugar Production 2.1 million tons
Annual Cane Production 19.8 million tons
Hectares under cane 362 000
Support to Domestic Value Chain R 400 million p.a
83.8%
8.3%7.9%
Production by Grower Category
Large-Scale Growers Small-Scale Growers Miller Farms
±20 500 growers
±1 300 growers
Ave. Farm Size = 180 Ha
0.1 – 25 Ha
Grower Profile
SA Typical Farms
Current Situation
0
5 000
10 000
15 000
20 000
25 000
0
50
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'00
0 t
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0 h
ecta
res
Area and production - Dec 2020 Baseline
Sugarcane production Sugarcane area harvested Area in sugarcane
Farm Costs
Farm Staff %30%
Contractors %7%
Buildings %1%Chemicals %
5%
Fertiliser %13%Fuels and Lubricants
%8%
Services %3%
Administration %7%
Irrigation Costs %5%
Sundry Items %3%
Cane Transport %9%
Mechanical Maintenance %
9%
2019/20 Cost Breakdown
Farm Costs
Farm Costs
0,00
5000,00
10000,00
15000,00
20000,00
25000,00
30000,00
Rea
l To
tal a
nd
Op
erat
ing
Co
sts
(R)
per
Ha
Seasons
Real Total Costs and Real Revenue (R/ha)
Real Total Costs (incl.depreciation)
Real Revenue
Farm Costs
0
1000
2000
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4000
5000
6000
7000
8000 Real Farm Costs (R/ha)
Real Farm Staff
Real Fertiliser
Real Fuels and Lubricants
Real Cane Transport
Real Contractors
Impact of National Minimum Wage
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15 000
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25 000
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Area under cane and total production - Dec 2020 Baseline vs. 16% wage increase scenario
Sugarcane production Production - Wage scenario
Sugarcane area harvested Area Harvested - Wage scenario
Impact on Growers as Employers
• Reduced profitability and unable to make returns oncapital
• Turn to alternative crops, diversification intoMacadamias, Avos, Citrus, Forestry
• Much lower overall labour requirement per hectarefor diversified crops
• SSG contractor costs increase making their operationsunsustainable
Impact of National Minimum Wage • Under a 16% wage increase (assuming sugar farmers’ total cane wage bill increased
with 16%)• Projected area under cane will decrease by 36.8 thousand hectares (10.2% of national
area).• That is an additional 13.5 thousand hectares loss on top of the 23.3 thousand hectares
that is projected to be lost.• Due to the cane area loss, cane production is expected to decrease by 1.99 million
tonnes.• It is projected that:
• 3 099 permanent jobs and 4 893 seasonal jobs are already under threat• With a 16% wage increase an additional 1 796 permanent and 2 835 seasonal jobs
could be lost• A total of 4 894 permanent jobs and 7 728 seasonal jobs will come at risk over the
next 10 years.
