40,000 jobs in sugar industry at risk as Tongaat Hulett liquidation hearing looms

South Africa’s embattled sugar industry has become the focus of urgent high-level engagement, with cane growers calling for immediate government intervention as possible provisional liquidation of Tongaat Hulett Limited looms.

A provisional liquidation hearing is set for February 27 for Tongaat Hulett, a development that growers say threatens the stability of the entire value chain.

SA Canegrowers, which represents 27,000 small-scale and 1,100 large-scale sugarcane growers, has formally written to President Cyril Ramaphosa as well as key Cabinet ministers, calling for coordinated and urgent action to stabilise the sector.

The organisation thanked Agriculture Minister John Steenhuisen for engaging with the industry over the past week, but said no concrete solution has yet emerged.

“The cost of stabilising and preserving these operations is materially lower than the long-term social, fiscal and industrial cost of rebuilding a collapsed value chain, if rebuilding proves possible at all,” said Higgins Mdluli, chairman of SA Canegrowers.

“For this reason, Tongaat Hulett’s operational continuity has become a matter of systemic economic stability. Urgent, coordinated government intervention is required to prevent a failure whose consequences would extend far beyond a single company. We call on the president to coordinate a response to save rural jobs and livelihoods.”

Growers warn that Tongaat Hulett’s milling operations are critical infrastructure. Of South Africa’s 28,000 growers, 18,000 depend solely on Tongaat’s mills, with no viable alternative milling options available.

If the company’s operations fail or enter unfunded liquidation, growers say the consequences will be immediate and severe. An estimated 40,000 directly employed workers could face unemployment, with ripple effects across rural communities in KwaZulu-Natal and Mpumalanga.

The impact would extend beyond individual farms. Under the Sugar Industry Agreement, millers and growers share revenue from sugar sales. An unfunded liquidation would halt Tongaat’s levy payments, forcing remaining millers and growers to cover the shortfall. The sale of Tongaat’s existing refined sugar stock would also affect industry revenues.

SA Canegrowers further cautioned that the collapse of Tongaat’s operational footprint would increase South Africa’s reliance on imported sugar, exposing the country to volatile global prices and exchange rate risks.

Among its calls to government are:

• A review of the sugar import dollar-based reference price by the Department of Trade, Industry and Competition (DTIC) and ITAC;
• Intervention by the DTIC and IDC to ensure Tongaat’s mills and refinery remain operational;
• Scrapping of the Health Promotion Levy by National Treasury; and
• Recommitment to the Sugarcane Value Chain Master Plan 2030, including local procurement and green industrialisation projects such as sustainable aviation fuel derived from sugarcane ethanol.

Meanwhile, Democratic Alliance MP Mlondli Mdluli said recent amendments gazetted by Trade, Industry and Competition Minister Parks Tau to the governance arrangements of the South African Sugar Association and the sugar industry agreement were “an overdue development”.

“The Democratic Alliance (DA) will monitor the implementation of these amendments to ensure that households do not bear the costs of the DTIC's slowness to act,” Mdluli said.

He welcomed the inclusion of the South African Farmers Development Association (SAFDA) in decision-making structures alongside SA Canegrowers, describing broader participation as essential for inclusivity and resilience.

However, he cautioned that reforms must not undermine competition or shift costs onto consumers.

“While mechanisms such as the reinstatement of carry-over stock and adjustments to local market redistribution may offer improved finances in the short term, they must not come at the expense of healthy competition and the welfare of consumers,” he said.

“Any measures that influence the industry's supply or prices must be carefully scrutinised to ensure they do not shift undue costs onto South African households and downstream industries, or subsidise inefficient processes.”

Mdluli also warned that allowing industry cooperation on prices requires strong oversight.

“While collaboration in distressed sectors can be justified in crises, safeguards must be maintained to prevent anti-competitive outcomes that hurt consumers and disrupt the market.”

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