South Africa increases import duties on sugar to protect local manufacturers

South Africa has raised import duties on sugar to $680 a tonne from $566 a tonne in a bid to protect the domestic industry against a rise surge in imports, Trade and Industry Minister Rob Davies disclosed on Tuesday.

This came following an application by the South African Sugar Association (SASA) to the International Trade Administration Commission (ITAC) in February, for an increase of the dollar-based duty. The association claimed, among other things, that $566 a tonne was inadequate and below cost of production.

After ITAC completed its investigation into SASA’s claims, it recommended the duty increase to the Department of Trade and Industry (DTI).

According to DTI, while the level is not at the maximum bound rate of $856 per tonne as initially requested by the industry in the application, the new rate will provide the immediate relief urgently required by the industry and protect it against rise in imports.

“The tariff forms part of a set of measures considered by government, in collaboration with the industry in order to improve the sustainability of the industry and future growth prospects,” the DTI said.

The sugar industry is a significant contributor to the South African economy, responsible for about R14 billion of gross domestic product (GDP) and 85,000 direct jobs, as well as a further 350,000 indirectly through food processing and other sectors.

The average annual value of sugarcane production in South Africa is R7.7 billion, which is more than 15 percent of the total gross value of annual field crop production. A surge in import threatens this, as well as the R96 million its support to the domestic value chain is estimated to be worth.

The move by DTI is expected to improve prospects in the South African sugar industry and reduce importation.

In Kenya, where sugar imports surged 226.8 percent in 2017, sugar makers are losing out. Mumias Sugar reported a net loss of Sh6.8 billion in the financial year ended June 30, 2017.