As the aviation industry accelerates its shift toward sustainable fuel alternatives, sugarcane waste is emerging as a promising feedstock for Sustainable Aviation Fuel (SAF). This innovation could create significant economic opportunities for South Africa, a country with a well-established sugar industry. However, the Health Promotion Levy (sugar tax) threatens to derail these efforts by pushing sugarcane growers out of business before they can tap into new markets.

SA Canegrowers Urge Government to Scrap Sugar Tax

Industry body SA Canegrowers, which represents 24,000 small-scale and 1,200 large-scale sugarcane growers, has urged Finance Minister Enoch Godongwana to scrap the sugar tax entirely. In a letter to the minister, the organisation warned that maintaining the levy could cripple efforts to transition sugarcane from traditional sugar production to high-value biofuels, including SAF.

Industry-funded research from 2021 revealed the vast potential of sugarcane-based biofuels. By diverting 50% of South Africa’s annual 19 million-tonne sugarcane harvest into ethanol production, the country could generate:

• 700 million litres of ethanol annually for local and international biofuel markets.
• 433 million litres of sustainable aviation fuel.
• Enough fuel to power 34,000 return flights between Cape Town and Johannesburg on a Boeing 737-800.

This shift aligns with South Africa’s Sugar Value Chain Master Plan 2030, designed to revitalise the industry after a decade of declining hectares, rising input costs, and competition from cheap sugar imports.

A Threat to Rural Economies

SA Canegrowers CEO Dr. Thomas Funke warned that the sugar tax adds unnecessary pressure to an industry already struggling with high production costs and adverse weather conditions.

“Should sugarcane growers leave the industry, the viability of alternative projects such as biofuels and sustainable aviation fuel is threatened, as these projects rely on a stable supply of sugarcane as a feedstock,” Funke said.

Beyond aviation fuel, Funke highlighted the broader economic impact, especially in rural communities in KwaZulu-Natal and Mpumalanga, where sugarcane farming is often the only source of employment. He argued that sustainable aviation fuel could protect existing jobs while creating new opportunities in agriculture and fuel production.

Sugar Tax: A Proven Job Killer

A Nedlac study found that the sugar tax destroyed 16,000 jobs and wiped out R2 billion in income in its first year alone (2018). While Godongwana paused tax increases last year, citing economic and inflationary concerns, the government has yet to deliver on its promise to conduct a full economic impact study.

“The only concrete evidence we have about the tax is that it led to job losses,” Funke said. “Yet foreign-funded activists demand an increase based on conjecture, with no regard for the rural economies it could destroy.”

He emphasised that the tax was implemented based on a single academic modelling study with no real-world evidence backing its effectiveness.

The future of South Africa’s sugarcane growers—and a greener aviation sector—depends on it.