SA Canegrowers hopes new Tongaat ownership will honour R526 million of outstanding levies

SA Canegrowers takes note of the Competition Commission’s recommendation that Vision consortium’s bid for Tongaat Hulett be approved and hopes now that the consortium commits to honouring the almost R526 million in outstanding obligations to the sugar industry. 

In May this year, the Durban High Court confirmed that the outstanding levies are due to be paid by Tongaat Hulett to the sugar industry. The overdue payments of these obligations are putting all canegrowers and many livelihoods in the sugar industry at risk. The sugar industry supports the livelihoods of one million people.

In order to get approval for the deal, the consortium agreed to buy cane from historically disadvantaged individuals and increase the land under sugarcane cultivation within six years.

“The consortium’s commitment to procure cane from small-scale growers, as well as provide financial support for such growers, will bring welcomed stability,” says Higgins Mdluli, chairman of SA Canegrowers. “But the industry also hopes that the new owners will honour the outstanding levies and put the matter to rest.”

The levies form part of the obligations that are due under the sugar legislation which is legally binding on all members of the industry and that serves to ensure that growers, millers and refiners each receive equitable treatment under the law, such as the provisions that determine the sharing of the proceeds from sugar production.

During 2022 and 2023, Tongaat suspended paying the statutory levies for a few months up until March 2023, claiming that it did not have to pay whilst in business rescue. It applied to the courts to have the payment of the levies suspended under the Companies Act, but the Durban High Court in 2023 confirmed that the SIA must be honoured and that the Companies Act did not override the sugar legislation. This means payments due under the provisions of this legislation must be honoured by the millers even if the find them in business rescue. In May, the Durban High Court dismissed the leave to appeal brought by Tongaat’s business rescue practitioners.

The Vision consortium consists of various South African and international partners, including Guma Agri and Food Security Limited, Almoiz NA Holdings Limited, Remoggo (Mauritius) PPC, and Terris AgriPro Limited. The Competition Tribunal will make the final decision based on the Commission’s recommendation.