South Africa: Sugar Import Duty Benchmark Set at $785

• South Africa will increase its sugar import duty benchmark to $785 per ton from $680.
• Finance Minister Enoch Godongwana approved the measure, which will soon be announced in the Government Gazette.
• The adjustment aims to protect local producers from cheap foreign competition.
• The South African Sugar Association welcomed the change but expressed concerns about its sufficiency against subsidized imports.
• The industry previously lost R1.6 billion ($100 million) to imports and had sought a higher benchmark of $905 per ton.

The adjustment aims to bolster protection for local producers against inexpensive foreign competition, particularly when international sugar prices fall below the newly established benchmark.

South Africa is poised to significantly increase the benchmark price used for calculating duties on sugar imports, a move designed to bolster the domestic industry against inexpensive foreign competition. Finance Minister Enoch Godongwana has approved the adjustment, which will see the dollar-based reference price for sugar rise to $785 per ton, up from the current $680. This revised figure is expected to be formally announced in the official Government Gazette in the near future.

The adjustment aims to bolster protection for local producers against inexpensive foreign competition, particularly when international sugar prices fall below the newly established benchmark. This measure is a direct response to long-standing calls from local producers, including the South African unit of Associated British Foods Plc, who have been grappling with the impact of cheaper imported sugar on the domestic market.

The decision follows a comprehensive review initiated by the country's International Trade Administration Commission (ITAC) in January. This review was prompted by competing applications from the South African Sugar Association (SASA) and the Beverage Association of South Africa, highlighting the diverse interests within the sugar value chain.

SASA had advocated for a substantially higher increase, proposing a benchmark of $905 per ton. The association argued that the previous benchmark of $680 per ton, which had remained unchanged since 2018, no longer accurately reflected the rising costs of domestic sugar production. While the Department of Trade, Industry and Competition referred inquiries to the National Treasury, Minister Godongwana has indicated he cannot comment on the matter until its official gazetting.

The South African sugar industry has faced considerable financial strain due to the influx of cheap imports. The South African Sugar Association's Vice Chairman, Trix Trikam, welcomed the impending adjustment but cautioned that it might not be sufficient to fully shield local producers, especially from imports originating from subsidized countries like Brazil. SASA reported that the industry incurred losses amounting to R1.6 billion, equivalent to $100 million, during the 2025-26 season due to these cheaper imports.

Further illustrating the impact, data from June indicated that sugar shipments from abroad had reached 74,652 tons, costing the domestic sector R560 million. The current international market also underscores the challenge, with white sugar trading at $514.40 per ton in London on Thursday, significantly below the new South Africa sugar import duty benchmark.

Beyond the immediate issue of South African sugar tariffs, the sector is contending with broader pressures, including declining returns from cane production. A major producer, Tongaat Hulett, narrowly avoided liquidation through a rescue agreement involving the state-owned Industrial Development Corporation, underscoring the fragility of parts of the industry.

Looking ahead, the industry is pursuing longer-term strategies to enhance its competitiveness, extending beyond increased import duties. These initiatives include diversification into sugar-derived products and biofuels. South Africa's sugar master plan outlines key priorities for the sector, encompassing trade protection, pricing mechanisms, stimulating local market demand, industry restructuring, and diversification efforts to ensure its sustainable future.

Compliance officers and legal counsel for businesses importing sugar into South Africa should monitor the upcoming Government Gazette announcement to understand the effective date and implement revised costings and import strategies due to the increased benchmark price for import duties.

Source: Original reporting via Bloomberg