The SA Canegrowers cost survey

Sugar cane has been grown in South Africa for over 154 years. It was first planted by Morewood at Compensation, north of Durban, in 1848. The first official grower organisation came into being in 1877 (Osborn, 1964).

Over the next 50 years as the sugar cane growing and milling sectors grew, so too did grower organisations to serve the interests of growers in their milling areas. There were some efforts to consolidate the various grower associations and this resulted in two major unions emerging, the Zululand Planters Union and the Natal Planters Union. There were efforts to unite the two unions into the South African Planters’ Union in 1917. This union can be seen  as the precursor to SA Canegrowers.

Issues in the South African Planters Union came to a head in 1926 with the Fahey Conference. What led to the Fahey Conference and the subsequent agreement reached at the conference, was the dissatisfaction of growers with differential and unfair cane supply agreements with millers.

A record world production of sugar in 1924/25, which forced world prices into a downward spiral, was also a cause for despair. The South African sugar industry was faced with an export volume of 70 000 tons of sugar at reduced values. Therefore, the sugar industry appealed to the government to assist it in finding a solution.

The then Board of Trade and Industries was authorised to investigate the economic position of growers and millers. Its findings, Report No.66 tabled in Parliament in 1926, showed that the Miller-Planter Agreement of 1905 was inequitable to growers (Huntley, 1966).

Report No.66 provided the first formal investigation into the costs of producing sugar cane and sugar for the industry and provided the basis for the Fahey agreement.

Based on the report, the Fahey conference of 1926 set out to renegotiate the sugar industry and its structure, the agreements regarding delivery contracts and pricing – that changed from weight of cane to sucrose content – between growers and millers and also set the new tariff applied to imported sugar.

The Fahey conference agreement was signed on 4 September 1926. The conference also seemed to have a unifying effect on growers. This was to come to fruition when a year later, on 9 August 1927 the Zululand Planters Association and the Natal Planters Association signed an agreement to form the South African Cane Growers’ Association (South African Canegrowers Association, 1977).

The costs of growing sugar cane and milling costs have formed the basis of grower miller negotiations, since 1926. The first official investigation into the cost of growing cane was executed by the then Board of Trade to form the basis of negotiations between growers and millers at the Fahey conference.

Following on from that starting point, SA Canegrowers implemented the LSG cost survey in 1932/33 and recorded costs retrospectively to 1926/27.

The first survey comprised 72 returns from growers. The sample size and method of analysis was a concern initially, auditing procedures were put in place in 1932/33 by SA Canegrowers and the auditors Crocket, Wendt & Fletcher. As a result, the appropriate methodology to determine the average cost of cane production was resolved.

Although the South African Sugar Association was in existence before the Fahey conference as well as the Natal Millers Association, the Fahey Agreement formalised the entire industry under one set of rules or conditions for the first time. These rules were never promulgated into law.

Further investigations by the then Board of Trade into industry issues in 1934 led to the development of the Sugar Act No.28 of 1936 and the Sugar Industry Agreement 1936. The main issues that the act dealt with were production controls and import protection. This, as Huntley (1966) put it, was the most important milestone for the industry and since then the industry has operated under a sugar industry agreement enabled by the Sugar Act which has been amended from time to time, the latest one being the Sugar Act of 2000.

This insight into history shows that it is crucial for SA Canegrowers to collect data to accurately represent growers – both at an industry and at other levels.

The small-scale grower cost survey

Although the LSG cost survey is used by SA Canegrowers’ Economic Research department to establish the VAT flat rate for non-VAT vendor small-scale growers (SSGs), there was a need to investigate the SSG costs of growing cane.

The Association therefore recently re-implemented the SSG cost survey to gain a better understanding of the costs incurred by SSGs. This survey provides very useful information to the association and other stakeholders on SSG production systems. Appropriate programmes of work can be identified to assist SSG with the production and management efficiencies.he SA Canegrowers cost survey 1

he SA Canegrowers cost survey 2


Advertise in the Shukela Plus Tech Edition

Advertise in the Shukela Plus Tech Edition

The next edition of Shukela Plus - aptly titled Shukela Tech - which is due for publication early in July, will reflect the growing trend in the sugar industry towards production diversification and technology innovation. Renowned sugar industry scientist, Dr Kathy...

read more
Tongaat Hulett banks on the Masterplan

Tongaat Hulett banks on the Masterplan

As Shukela Plus delves into the innovation and diversification options available to South Africa’s sugar industry, Tongaat Hulett’s Managing Director: Sugar Operations, Simon Harvey responds to questions on the development of the Sugar Industry Masterplan, how it will...

read more
Communities and farmers benefit from macadamia prosperity

Communities and farmers benefit from macadamia prosperity

Profit from South Africa’s booming macadamia industry offers massive benefits for rural areas and communities as well as a more than viable alternative for the country’s embattled sugar growers. As one of the world’s most lucrative crops, macadamias are not only an...

read more