The ZAR12 billion sugar industry is looking to diversification to increase its revenue and arrest the shrinking margins of growers and millers, MPs heard on 13 May. The diversification plans included using sugar cane to produce bio-ethanol and to generate renewable electricity.
Chairman of the South African Sugar Association Rolf Lütge in a briefing to Parliament’s trade and industry portfolio committee stressed though that before the industry could move ahead it needed government to lay down the regulatory environment for ethanol. He noted that there had been a significant decline in sugar cane production since 2000. Factors contributing to the decline include the number of farms abandoned, the climate, ineffective elements of land reform and rising input costs such as transport and fuel. Lack of access to affordable finance and infrastructural constraints were other factors.
The association’s natural resource manager Marilyn Govender said the 14 sugar mills currently produced renewable co-generated electricity for their own use with about six mills supplying about 11 MW to the national grid. With a minimum amount of investment this could be increased to about 78 MW over three to five years and with an investment of ZAR20 billion over 10 years about 712 MW could be supplied to the grid. This would only become possible, however, with the launch of the national co-generation programme.