The Portfolio Committee on Trade and Industry heard yesterday that the R12bn sugar industry is looking to diversification to increase its revenue.
This will further arrest the shrinking margins of growers and millers in the country.
The South African Sugar Association said the diversification plans included using sugar cane to produce bio-ethanol and to generate renewable electricity.
The Committee highlighted the issue of using food to generate energy that can lead to food insecurity.
Committee Chairperson, Ms Joanmariae Fubbs, said: “We cannot be producing for bio-fuels then only to find out we can’t produce enough sugar.”
Committee member, Mr Floyd Shivambu, wanted to know if food security will not be threatened by bio-fuels.
Natural resource manager Marilyn Govender reassured the Committee that that will not be the case. She said all indications are that local sugar supply will always be met. “It is the export sugar that will be diverted,” Govender said.
She said the 14 sugar mills currently produced renewable co-generated electricity for their own use with about six mills supplying about 11MW to the national grid.
With a minimum amount of investment this could be increased to about 78MW over three to five years and with an investment of R20bn over 10 years about 712MW could be supplied to the grid. This would only become possible, however, with the launch of the national co-generation programme.
Chairman of the South African Sugar Association, Mr Rolf Luumltge, said in his presentation to the Committee this would also improve the long-term viability of the industry. He emphasised that before this could happen, government must begin to lay down the regulatory environment for ethanol.
He noted that there had been a significant decline in sugar cane production since 2000. Mr Luumltge noted there had been a 51% or about 47 000ha decline in the area under cane farmed by small growers who currently number about 21 000.
Some factors contributing to the decline were the number of farms abandoned, the climate, ineffective elements of land reform and rising input costs such as transport and fuel.
The Department of Trade and Industry said its agro-processing unit was working closely with the industry to ensure sustainability. Mr Luumltge said the industry relied heavily on protection policies and thanked the government for interventions to curb cheap imports that undermine local production.
Source : Parliament of South Africa