South Africa's decision to raise the benchmark price to protect local sugar producers from cheaper imports was met as a significant relief for the industry. However, producers and one of the largest sugar companies warn that the new level may be insufficient to halt the growth of imports that are displacing local products.
The Dollar-Based Reference Price (DBRP) was increased from $680 to $785 per ton following an analysis of applications from sugar and non-alcoholic industry producers. The South African Sugar Association (SASA) had previously applied in October 2024 for this rate to be raised to $905.
The International Trade Commission (ITAC) reviewed both the SASA application and a proposal from the South African Non-Alcoholic Beverages Association to lower the benchmark to a level between $552 and $650. ITAC concluded that neither proposal adequately balanced support for local producers with the competitiveness of downstream industries, consumer interests, and South Africa's obligations to the World Trade Organization.
According to the ITAC review, the industry has faced volatile sugar prices, rising production costs, and declining profitability, while imports, particularly from Brazil, have increased. Users of sugar in downstream industries have also experienced increases in operating and input costs. ITAC opposed the increase due to concerns about increased costs, reduced competitiveness, and potential price hikes for consumers.
Under the DBRP mechanism, a variable import duty is applied, which is activated when the international reference price falls below a set threshold, and this duty changes based on global sugar prices. ITAC's initial calculation sets the duty at approximately 6,979 Rand per ton, or 697.92 cents per kilogram.
SA Canegrowers welcomed the increase but warned that it might not be enough to reverse the surge in imports. According to SA Canegrowers, duty-paid imports rose from 1,619 tons in 2022 to 124,594 tons in the current year. Furthermore, the organization reported that local sugar sales fell by approximately 188,000 tons, or 35%, over three seasons, and producer revenue decreased by 1.33 billion Rands.
SA Canegrowers represents 28,000 small and 1,250 large sugarcane producers in the KwaZulu-Natal and Mpumalanga provinces. SA Canegrowers Chairman, Higgins Mdluli, stated: 'We are pleased that the government has taken action, but we will closely monitor in the coming months whether this adjustment leads to a real reduction in the volume of imported sugar in the country.'
Illovo Sugar South Africa was more critical, noting that the $785 benchmark 'significantly does not meet' the necessary conditions to protect the industry. Illovo stated that 'the effective DBRP is insufficient to protect the local industry from ongoing losses.' The company added that 'without urgent short-term assistance, the industry will face a deteriorating cycle of revenue losses.'
Illovo reported that in the 2024/25 season, 213,322 tons of sugar were imported into South Africa from outside the Southern African Customs Union, costing producers approximately 1 billion Rands in revenue, and processors around 500 million Rands. The company demanded the introduction of short-term protective measures against deepwater imports, a review of the DBRP, and the implementation of a tariff mechanism that reacts faster to changes in market conditions. Illovo warned that without further intervention, ongoing revenue losses could jeopardize jobs and businesses in sugar communities.
Organized trade unions also supported the increase, calling it a vital relief for the sector, which is economically significant in KwaZulu-Natal and Mpumalanga. Matthew Parks, coordinator for the Congress of South African Trade Unions (Cosatu) parliament, noted that the increase would help mitigate the situation in the industry and protect jobs. He emphasized that 'we cannot afford to lose this industry, as it directly employs over 70,000 people and indirectly supports more.'
Parks also pointed out that the sector provides income to approximately 11,000 emerging farmers, highlighting its importance to rural communities. However, he cautioned that the tariff itself would not solve all the industry's problems, stating: 'It will not solve the whole problem,' and called for reduced electricity costs, improved rail and logistics infrastructure, stronger combating of illegal imports, support for emerging farmers, and the resumption of local product purchasing campaigns.
ITAC explained that the goal of setting the benchmark at $785 was to enable domestic producers to recover production costs, manage price volatility, and remain competitive compared to imports, while minimizing the impact on end-users. The Commission plans to review the DBRP three years after its introduction, although an earlier review is possible depending on the development of international sugar markets and the conditions faced by the domestic industry. For producers, the immediate test will be whether the higher benchmark rate leads to a decrease in the volume of imported sugar in the South African market. Mdluli concluded: 'Producers need certainty, not another partial solution.'