Allowing liquidation of Tongaat Hulett will roll back the gains of the Sugar Value Chain Master Plan  

While the sugar industry has shown green shoots amid the introduction of the Sugar Value Chain Master Plan, parliamentarians have warned that allowing Tongaat Hulett to collapse would undermine the gains.

During the portfolio committee on trade, industry and competition meeting on Tuesday, it emerged that the first phase of the plan has seen sugar sales increase from 1.25 millions tons to 1.55 millions tons. This augured well for the proportion of purchases by downstream users.

“In addition, there have been expanded efforts to support the 12 000 small-scale growers and increase transformation funding available to them. It also welcomed the finalisation of amendments to the sugar industry regulations in 2025,” the committee noted.

The South African Sugar Association and the delegation from the department of trade, industry and competition were briefing the committee on the implementation of the plan.     

At the heart of the Sugar Value Chain Master Plan, which was signed by stakeholders in the sugar sector on 16 November 2020, is a focus on diversification. The industry stakeholders  should go beyond traditional sugar production to include other products such as bio-ethanol and bio-fuels. 

The plan also emphasises sustainability, such as the inclusion of small-scale growers in the sugar value chain. The move aims to protect jobs and livelihoods, particularly among small-scale producers while promoting growth and new employment opportunities. 

The first phase of the plan, which ended in March 2025, identified stabilising the industry, job retention, trade protection, small-scale grower support, transformation and market restoration. 

The second phase, signed in April this year, centres on the long-term competitiveness of the sugar sector, diversification, employment retention, structural reforms, transformation and inclusive growth.

Mzwandile Masina, the committee chairperson, said that given the Tongaat Hulett contribution to the economy of KwaZulu-Natal, both the private sector and government should work together to save the entity.

“We welcome the Industrial Development Corporation’s (IDC) financial support for the sugar mills. The support must, however, be provided in an accountable, responsible and transparent manner. Flexibility within the sugar value chain is essential to ensure its long-term sustainability,” Masina said.

The KZN sugar giant is battling the liquidation application process in the Durban High Court after the business rescue process, which began in 2022, failed. 

The company, the backbone of the rural economy, faces potential liquidation after losing in excess of R12 billion in share value. 

If the provisional liquidation filed by the company’s business rescuers sees the light of day, it will spell disaster for the hundreds of thousands of indirect and direct jobs in Tongaat Hulett’s value chain. It will also impact heavily on small-scale farmers who rely on Tongaat-owned mills for crushing sugar cane.

The matter reconvenes in court on 17 and 18 June. While the case was set for argument in April, a Post-Commencement Funding Funding facility, backed by the IDC, saved the day. It allowed the Tongaat operations to continue up until 30 June after the IDC committed to increase funding from an initial R2.3bn to R2.5bn. The funds cover the company’s daily operations in the interim while a long-term rescue plan is being devised.

The committee said that despite some improvements, the sugar sector continued to face pressure from cheap sugar imports. That included the funding uncertainty that would enable the implementation of the master plan, as well as the Tongaat Hulett legal tussle.