By Gaynor Paradza
[First published in Daily Maverick]
The sugar giant’s threat of closure not only risks thousands of jobs, but leaves a diabetic hole in land tenure, environmental rehabilitation and food security for host communities to resolve. It urgently highlights the need for tighter regulations governing large-scale land-based investments.
On 27 October 2022, Tongaat Hulett Limited and Tongaat Hulett Development Proprietary Limited announced that it had entered voluntary business rescue proceedings. The company, a dominant stakeholder in the southern African sugar value chain, reported that it was facing viability problems and needed state rescue, failing which it would go under.
Although the report assured that damage was limited to South African investments, the message of insecurity no doubt reverberated through Tongaat Hulett’s regional concerns in Zimbabwe, Mozambique, Zambia, Botswana and Mauritius.
The closure of the company, established in 1892, will implode employees, subcontractors, farmers and service providers’ livelihoods, sending a shock through their food security, land tenure and financial assets.
Tongaat Hulett supports more than 15,000 employees, of whom 3,185 are full-time. A further 1,074 people are employed as seasonal and casual workers. The business also supports 855 contractors.
Although smallholder farmers in South African sugar cane production peaked at 50,000 in the 2000s and the numbers declined significantly since then, Tongaat Hulett – which produces 43% of South Africa’s sugar – had about 4,300 growers made up of smallholder farmers and 300 commercial farmers on its stakeholder base in 2022. Tongaat Hulett also supports education, health, training and research and is venturing into renewable energy potentials.
Tongaat Hulett’s mammoth sugar operations cover 119,000 hectares in South Africa. The company owns and farms 8,400ha – 49,300 of those are owned and farmed by smallholder farmers and 61,500ha are farmed by commercial farmers. The monopolistic nature of the sugar industry means these farmers have been producing sugar cane solely to sell to the sugar giant for more than 50 years.
The company’s dissolution, an abrupt weaning, would leave farmers with no market for their crop and nowhere to shelter from the knock-on effects on their livelihoods, food security and land tenure.
Sugar cane – a crop to which most of the smallholder farmers converted their land – is not a food yield. Ultimately, farmers have first to dispose of the cane and from the returns, procure food and household subsistence. The closure will mean the end of sugar farmers’ household food security. Coupled with surging food prices, this will seriously hamstring South Africa’s efforts to reach UN Sustainable Development Goal 2 – to end hunger, achieve food security, improve nutrition and promote sustainable agriculture.
Land tenure security will also shake at its foundations as the Tongaat Hulett closure promises to reverse hard-won land reform gains. A substantial number of sugar cane farmers – land-reform beneficiaries – will be left servicing debts which may force them to dispose of their land and condemn them to landlessness and/or to become tenants on their land. Commercial farmers may have to make adjustments to maintain their tenure.
