KwaZulu-Natal Business 2016-17 edition

OVERVIEW
Sugar
Sugar production levels have been affected by the drought.
Illovo Sugar Limited has a presence in six African countries and is
the continent's biggest sugar producer. The group's head office is in
Umhlanga Rocks, close to the heart of South Africa's sugar industry
in northern KwaZulu-Natal.
Tongaat-Hulett's headquarters are about 50km north of Umhlanga,
close to the King Shaka International Airport.
The South African Sugar Association has offices, research laboratories
and sugar-cane testing facilities at nearby Mount Edgecombe. Various
divisions of SASA are housed in a building called Kwa-Shukela, as are
the following organisations: the SA Cane Growers' Association, the SA
Sugar Millers' Association, the National Bargaining Council for Sugar,
Grocane Fire Insurance, and TSB Sugar (Durban office).
The Sugar Milling Research Institute conducts research for each of
the 14 raw sugar factories in South Africa and the central refinery of the
Tongaat-Hulett Group, all of which are full members of the SMRI. The
Institute also provides technical services to some affiliated member mills
in Swaziland, Mozambique, Zimbabwe, Malawi, Zambia and Tanzania.
Neither of the Big Two companies relies exclusively on South African
sugar earnings: Tongaat-Hulett has a big property portfolio and Illovo
draws most of its profit from operations elsewhere in Africa.
Both companies reported reduced production volumes in 2015
because of the drought in South Africa. Tongaat-Hulett's Darnall mill
did not open for the season. The Illovo group reported a 10% downturn
in production in September 2015. Operating profit for the six months
dropped to R881-million, a fall of 36.7%.
About 40% of local production is exported. There are six sugar
producers who can collectively produce about two-million tons. The
general trend has for less sugar to be produced.
The South African Cane Growers' Association represents about
24 000 growers who produce about 20-million tons of cane.
Fluctuating weather conditions in recent seasons have contributed
to overall South African production of sugar declining, but the industry
has a strong infrastructure, particularly in KwaZulu-Natal, the province
where most of the country's sugar is grown, crushed and processed.
Mpumalanga is the other province with significant capacity.
Total saleable sugar production dropped below two-million tons
for the first time in many years in the 2010/11 season, but has since
recovered. Saleale sugar within South Africa fell from 1.649-million tons
in 2014/15 to 1.620-million tons in 2015/16.
SECTOR HIGHLIGHTS
The R14-million Qoloqolo
Sugar Cane project will
boost co-operatives in the
uMzumbe local Municipality.
• The SA Cane Growers'
Association represents
nearly 24 000 growers,
who produce in the region
of 20-million tons of cane.
• Illovo and Tongaat-Hulett
are the two giants in the
sugar sector.
The biggest challenge to
South Africa’s sugar industry is the
huge subsidies available to sugar
producers in the northern hemisphere.
In addition to this, the
countries of the Southern African
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