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South Africa: Misunderstood Sugar Farmers Seek Their Place in the Sun
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Business Day (Johannesburg)
ANALYSIS
29 October 2007
Posted to the web 29 October 2007
Neels Blom
Johannesburg
AT THE release last week of the sugar industry's report on its socioeconomic impact on SA, the author of the report, Jeff MacCarthy, began by saying that despite the industry's track record, sugar production's contribution to society remained misunderstood and undervalued. The report was unveiled at Mount Edgecombe in KwaZulu-Natal.
MacCarthy, who conducted the study on behalf of the South African Sugar Association (Sasa), the millers' and growers' organisation, refers specifically to key stakeholders in the government as having "limited understanding and appreciation of the socioeconomic contributions made by the industry within the rural communities".
This raises the question: why should this be so, if it is indeed true?
Neither MacCarthy nor the industry offers a direct explanation. MacCarthy, senior consultant to the Centre for Development and Enterprise and an acclaimed specialist in urban and economic geography, speculates that agriculture is often seen as a static or declining contributor to economic growth. But those closer to the sugar industry, he writes, know that its backward and forward linkages are quite extensive.
If the answer is to be found in MacCarthy's report, it is more likely to be revealed by what is not said, than in the way MacCarthy and the industry portray sugar's corporate social investment.
MacCarthy's report focuses on these backward and forward linkages to assess the sugar industry's socioeconomic effect and to provide the context for its corporate social investment. The extensive literature on the subject is reviewed, and six case studies of sugar-mill towns and their surrounds were carried out.
The report concludes that, comparatively speaking, the sugar industry "has been a leader in corporate social investment initiatives, especially with regard to health, work creation, environment and, above all, education and training".
To illustrate, MacCarthy shows that sugar cultivation is a relatively small land user. The total land area under sugar cane in SA is about 430000ha, which is 0,35% of SA's total acreage, or 2,6% of the potentially arable area. Given that sugar contributes about 6% of the value of SA's agricultural output, this shows that in terms of land area to output value, sugar generates more than twice the average economic output of arable land elsewhere in SA and nearly 20 times the economic output of land in general in SA.
He also shows a clear history of development associated with the industry. There has been long-term scientific and transport infrastructural investment by private investors, often at little or no cost to the state.
The review finds that the sugar industry contributes between 0,5% and 0,7% of gross domestic product, accounting for 0,9% of exports by value, 0,5% of total income tax, 3,6% of total fixed capital stock of business enterprises, and 0,3% of salaries and wages.
The report finds that the sugar industry supports 136671 jobs directly, and indirectly supports another 110000 jobs, accounting for 10,9% of all agricultural employment, and 1,3% of total national employment.
Directly and indirectly, the industry contributes 2,5% to total national employment.
These are impressive statistics, but they are of limited value. In the first instance, they rely on the assumption that the land under cane is being put to the best possible use.
Second, the report neglects to provide the perspective that the area is not only part of SA's 13% of arable land, but part of the mere 3% of the country's high-potential agricultural land.
A different perspective may be gained by assuming that almost any agricultural enterprise conducted in areas where cane is grown is fated to succeed and to generate the economic multiplier effects that sugar claims.
Cane farms and mill towns are, indeed, economic drivers, but not necessarily because their output is sugar.
Nevertheless, the contribution the sugar industry makes to the economy generally and to local economic development is incontrovertible. As MacCarthy points out, his study is comparative, and in South African agriculture, the sugar industry is above par.
Whether it is beyond criticism is not clear, though MacCarthy maintains that the study has found nothing negative in the way the industry discharges its responsibilities.
In pared-down terms, corporate social responsibility amounts to development, the environment and human rights.
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For the sugar industry, this has meant taking responsibility for training its workforce, providing jobs, developing infrastructure and social structures, and doing the groundbreaking research from which all sugar-producing countries in southern Africa benefit.
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