No increase in sugar tax: a small reprieve for a sector in crisis
SA Canegrowers welcomes the decision to keep the Health Promotion Levy (HPL or sugar tax) unchanged in the 2026 Budget.
“While we welcome the fact that no further increase has been introduced at this time, the levy continues to place significant strain on South Africa’s sugarcane growers, at a time when the industry requires coordinated efforts to save thousands of rural livelihoods supported by a sector in crisis,” said Higgins Mdluli, chairman of SA Canegrowers.
The South African sugar industry is currently facing a severe structural crisis driven by the potential liquidation of Tongaat Hulett and an unprecedented surge in imported sugar, caused by out-of-date tariff protections and unfair practices on the global sugar market.
“We call on all government, from Treasury to the Department of Trade, Industry and Competition, to align in a moment when the industry is at a real risk of collapsing,” said Mdluli.
Tongaat Hulett is a cornerstone miller and the country’s only standalone white sugar refinery. Business rescue practitioners have filed for provisional liquidation. Should an unfunded liquidation occur, Tongaat Hulett’s assets would immediately cease production, leaving 18,000 of South Africa’s 28,000 sugarcane growers without functioning sugar mills as we draw closer to the start of the 2026 milling season in April. The hearing for provisional liquidation is set for Friday, February 27, 2026.
This uncertainty comes against a backdrop of rising sugar imports that have flooded the domestic market, undercutting local producers and eroding prices and revenues, exacerbating financial pressures on growers and mills alike. Between January and December 2025, just shy of 200,000 tons of sugar imports came from countries like Brazil, India and Thailand. In 2021, this figure was only 7,113 tons – an indicator that South Africa’s sugar industry is more than able to fully serve the demands of consumers and food and beverage producers in South Africa.
The combination of Tongaat’s operational instability and increased imports risks undermining rural economies, destabilising the domestic sugar value chain, and heightening South Africa’s reliance on foreign sugar, with broad socio-economic implications for employment and agricultural sustainability.
“Considering the crisis facing the sugar industry – and sugarcane growers specifically – we call on Treasury to move to scrap the sugar tax,” said Mdluli.
In this environment, the HPL has had unintended consequences for the sugar industry, destroying 16,000 jobs in the industry and R2 billion in revenue in the first year of its introduction alone. Yet since then, there has been no credible evidence to show that the tax has had any impact on obesity or non-communicable diseases in the country.
SA Canegrowers remains committed to constructive dialogue with government to secure a more balanced and sustainable policy approach.
