The government has rejected claims from sugarcane millers that it does not have the authority to determine the revenue-sharing ratio between farmers and millers, as reported by The Herald.
Industry and Commerce Minister Mangaliso Ndlovu stated that he is responsible for implementing the Sugar Production Control Act, which grants him the power to set sugarcane prices and oversee sugar production and distribution.
Tongaat Hulett fully owns Triangle and holds a 51% stake in Hippo Valley Estates.
The newly established Division of Proceeds (DoP) favors farmers with an 80.5:19.5 ratio, an increase from the 77:23 ratio suggested by Ernst & Young (EY) in 2016.
Farmers have sought confirmation of the new DoP, while millers have requested a reassessment.
Baker Tilly carried out a preliminary validation and recommended the new DoP after EY withdrew due to a conflict of interest, as it became the millers’ auditor in 2021.
Millers contend that Minister Ndlovu does not have the unilateral authority to set such ratios and claim that the validation process was flawed, leading to an inequitable recommendation.
Minister Ndlovu stated:
“The DoP validation process was justified, fair, and within my authority. I acted lawfully as the Minister of Industry and Commerce in determining the Division of Proceeds. Section 10 of the Sugar Production Control Act [Chapter 18:19] allows me to set the price paid to farmers for delivered sugarcane. Allegations of bias towards farmers are unfounded, as validation was necessary prior to any review.”
The review is scheduled to occur as specified in the memorandum of understanding between the parties, with a timeline leading up to March 31, 2025, and implementation set for April 1, 2025.
Millers argue they were not given adequate opportunities to submit detailed information for validation, but Minister Ndlovu maintained that the submissions originally provided to EY were utilized by Baker Tilly.
The technical working group, which included representatives from milling companies, decided that no new information would be introduced during the validation process.
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Both farmers and millers were required to submit the same data they had previously provided to EY. Farmers resubmitted their unchanged information in March 2024, with the only difference being a later date on the cover letter.
Ndlovu noted that there has been a long history of disputes between millers and farmers, often requiring the ministry’s intervention when conflicts arise. These ongoing disputes stem from the conflicting interests of both groups, with each often viewing unfavorable decisions as unjust.
