Tongaat liquidation threat puts thousands of growers at risk

The imminent liquidation of Tongaat Hulett threatens to topple the livelihoods of thousands of small- and large-scale growers across KwaZulu-Natal and Mpumalanga, with ripple effects that could shake the entire sugar value chain. According to Thomas Funke, CEO of SA Canegrowers, an unfunded liquidation would have immediate and severe consequences. Growers supplying Tongaat’s three mills would face nonpayment for cane deliveries, statutory levies and other legislated industry obligations.

Funke warned milling operations would halt almost instantly, cutting off growers in Tongaat-serviced areas from the only available facilities capable of processing their crop. Because sugarcane must be milled shortly after harvesting to maintain quality, and alternative mills are often too far away, vast volumes of this season’s cane could go unprocessed. Liquidation could prevent Tongaat from selling its existing stock of refined sugar to manufacturers and retailers, choking off critical cash flow and eroding the company’s underlying asset value, he said.

Tongaat operates three sugar mills and is the country’s only refiner of white sugar. Higgins Mdluli, chair of SA Canegrowers, said the crisis comes at a particularly fragile moment for the industry when local producers were already grappling with a surge of sugar imports that are displacing South African sugar from retailers and food and beverage manufacturers. “In such a fragile environment, the loss of three of South Africa’s 12 remaining sugar mills would be a death knell for the industry,” Mdluli warned. Agriculture Minister John Steenhuisen said the sector is on the brink of crisis and if the Tongaat Hulett impasse continues, about 15 500 cane growers could be unable to deliver their crop ahead of the April crushing season.