SUGARcane farmers are lobbying for a chance to sell 100% of their raw sugar, moving away from the current arrangement, which compels them to sell part of their product to large scale millers.
Farmers claim they are losing US$310 per tonne through the arrangement where they sell 30% of their product to millers.
The remaining 70% of raw sugar produced is then sold as ‘sun sweet sugar’ or brown sugar.
The current sugar value chain compels sugarcane farmers to sell part of their raw sugar to be refined at local millers with a production capacity of 640 000 metric tonnes (MT) and an installed milling capacity of 4,8 million MT per annum.
However, owing to the average size of farms owned by sugarcane farmers, the US$610 per tonne that they get leaves farmers with little profit, a representative of the farmers noted.
The farmers have also said production costs are as high as US$920 per tonne.
“There are about 1 200 out growers and these are people holding average plots of about 15 to 20 hectares,” sugarcane farming associations and miller groups representative Langton Chivasa said this week.
“Cumulatively, that hectarage comes to about 20 000 plus hectares. Then we have a miller come planter which is Tongaat Hulett. They are the sole millers and when we harvest our sugar, we take it to them.
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“It costs about US$920 to produce a tonne of sugar but that is raw sugar,” he added.
This, according to Chivasa, has been a born of contention since exports have been failing to offset costs.
“Our suggestion is the small 30-hectare farm holders, and below, be exempted from raw sugar sales. If we are exempted from that we will be selling sun-sweet sugar only and that sun-sweet sugar sells at almost US$1 100 per tonne,” Chivasa said.
For years, both millers have been accused of exhibiting monopolistic tendencies.
As a result, an amendment to the Sugar Production Control Act was crafted to break down monopolies in the sector.
“If you have 30 hectares and below, from our calculations, you are breaking even and you cannot make a profit,” Chivasa said.
He said from the 70% direct sun-sweet sugar made from their products they are making a profit of about US$100 per tonne on average although the figure is subject to costs including marketing and packaging.
The monopoly in the sugar industry is reflected by controls of the sugar value chain from the growing of sugar cane, milling and marketing, Chivasa added.