Page iii

Contents

Notes, key abbreviations and competitors . iv

Sugar industry profile . v

1. Description of the industry. 1

2. Marketing structure. 4

3. Market value chain . 7

4. Empowerment issues and transformation in the sector. . . . . . 8

5. Local business opportunities and challenges. 9

6. Sugar millers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

7. Acknowledgements. 11

Page iv

Notes

• Usukhela Milling (Pty) Ltd is owned by Illovo Sugar Ltd, and has sold

shares to a black empowerment company.

• Sugar Milling Companies also own sugar estates that produce 12 % of

the total crop.

• Union Co-op Ltd also owns a maize mill and a saw mill.

• Three giant companies in this industry are Illovo, Tongaat-Hulett and

TSB.

• TSB owns five refineries that are known as white end mills, they produce

their own refined sugar.

• Raw sugar produced at remaining mills is routed to Durban where it is

refined at central refinery mills.

• In order to enter the industry, a potential grower must first come to an

agreement with a miller to mill their cane.

• Molatec and Voermol are two animal feeds operations that use byproducts

from cane.

• Ordering of raw cane led by Coca-Cola has greater influence on changing

of prices.

Key abbreviations

SACGA = South African Cane Growers’ Association

SAMA = South African Millers’ Association

SASA = South African Sugar Association

TSB = Transvaal Sugar Limited

COMPETITOR s

Brazil, Thailand, EU, Australia, India, China, USA and Cuba

Page

SUGAR INDUSTRY PROFILE

Cane production

• Area: 430 000 ha, 31 000 ha owned by blacks

• Commercial growers: 1 741

• Developing farmers: 47 344

• Total production: 27 million tons

Commercial delivered: 75 % of the total

Small scale: 13 % of the total

Sugar estates: 12 % of the total

Foreign earnings: R6 billion

Employment: 85 000 workers

Milling: 11 000 workers

Direct and indirect employment: 350 000 jobs

TSB TRANSVAA L

SU GAR LTD

Market share: 17 %

Operates 2 mills

TON GAAT -Hulett

SU GAR LTD

Market share: 31,7 %

Operates 4 mills

ILLOVO SU GAR

LTD

Market share: 45 %

Operates 5 mills

UCL COMPANY

LTD

Market share: 3–5%

Operates 1 mill

USU KHELA MILLIN G

(PTY ) LTD

Ownership: 65 %

black owned

Market share: 2 %

Operates 1 mill

UMVOTI

TRANS PORT

(Umfolozi Mill)

Operates on

mill

3 packaging plants 2 packaging plants 1 packaging plant

3 sugar refineries Refinery operation 1 refinery operation

Downstream

operations

Animal feed operation

(Molatec)

Animal feed operation

(Voermol)

Consumer products

White sugar

Brown sugar

Syrups and specialty

products

Industrial products

Bakers and biscuitmanufacture

Alcoholic beverages

Dairy and ice cream

Sweets and

chocolates

Pharmaceutical

Other products

Tobacco curing

Animal feeds

Guard crop

1 packaging plant

1 sugar refinery

Retailers

Consumers

Page

Commodity profile

Sugar

1. DES CRI PTION OF THE INDUSTRY

The South African sugar industry makes an important contribution to the national economy,

given its agricultural and industrial investments, foreign exchange earnings, its high

employment and linkages with major suppliers, support industries and customers. It is

a diverse industry combining the agricultural activities of sugar-cane cultivation with the

industrial factory production of raw and refined sugar, syrups and specialised sugars, and

a range of by-products. Based on revenue generated through sugar sales, in the SACU

region and world market exports, the South African sugar industry is responsible for generating

an annual average direct income of R6 billion. The South African sugar industry

contributes an estimated average R2 billion to the country’s foreign exchange earnings

on an annual basis. The industry is regulated in terms of the Sugar Act and the Sugar

Industry Agreement, which are binding on all sugar-cane growers and producers of

sugar products. The contribution of the sugar industry to the Gross Value of Agricultural