Government Stands Firm On Sugar Pricing Mandate
The Government dismissed claims by sugarcane millers that it lacks the power to set the revenue-sharing ratio between farmers and millers, reported The Herald.
Industry and Commerce Minister Mangaliso Ndlovu asserted that he is mandated to administer the Sugar Production Control Act, which includes setting sugarcane prices and regulating sugar manufacturing and delivery.
Tongaat Hulett owns 100% of Triangle and 51% of Hippo Valley Estates.
The new Division of Proceeds (DoP) favours farmers with an 80.5:19.5 per cent ratio, up from the 77:23 ratio recommended by Ernst & Young (EY) in 2016.
Farmers sought validation of the new DoP, while millers wanted a review.
Baker Tilly conducted an interim validation and recommended the new DoP after EY declined due to a conflict of interest, having become the millers’ auditors in 2021.
Millers argue that Minister Ndlovu lacks the authority to set such ratios unilaterally and that the validation process was flawed and resulted in an unfair recommendation.
Said Minister Ndlovu:
The DoP validation exercise w
as well-founded, regular, reasonable and just.
My actions were intra vires. As the Minister of Industry and Commerce, I acted within the scope of my authority in determining the Division of Proceeds.
Section 10 of the Sugar Production Control Act [Chapter 18:19] empowers me to set the price paid to farmers for delivered sugarcane…
Claiming that the ministry favoured one party (the farmers) is unfounded, as validation was essential before proceeding with the review.
The review will be conducted in due course as the MoU between the parties indicated that the review was to take place within a period leading up to March 31, 2025, and will be implemented on April 1, 2025.
Millers claimed they weren’t given a chance to provide detailed submissions for validation but Minister Ndlovu argued that the same submissions initially given to EY were used by Baker Tilly.
EY declined to conduct the validation due to a conflict of interest.
The technical working group, including milling companies, decided no new information should be introduced for the validation process.
Both farmers and millers had to submit the same data they had previously provided to EY.
Farmers resubmitted their information in March 2024, unchanged from October 2023, except for a later cover letter date.
Ndlovu deposed that millers and farmers have a long history of disputes over various issues, often turning to the ministry for mediation when they are unable to reach an agreement.
These ongoing conflicts arise from the competing interests of both parties, who frequently view decisions that do not favour them as unjust.
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