South Africa has raised its sugar import duty by roughly 44 percent after lifting the dollar-based reference price to $785 per ton, erecting a higher tariff wall around the entire Southern African Customs Union in a bid to halt an import surge that has grown more than seventy-fold in four years.
JOHANNESBURG, Sept. 1: Importers landing sugar at Durban this week face a sharply steeper bill. The South African Revenue Service on Friday implemented one of the largest single adjustments to the country’s sugar tariff in years, raising the customs duty on imported sugar from 483.72 cents per kilogram to 697.92 cents per kilogram, an increase of approximately 44 percent. In per-ton terms, according to Freight News, the charge climbs from R4,837.20 to R6,979.20 for every ton of sugar crossing the border from outside the customs union.
SARS gave effect to the change through Notice R.7864, published in Government Gazette 55269 on August 28. The amendment applies to sugar classified under tariff subheadings 1701.12, 1701.13, 1701.14, 1701.91 and 1701.99 in Part 1 of Schedule No. 1 to the Customs and Excise Act, and is based on Report 781 of the International Trade Administration Commission of South Africa, the body known as ITAC that administers the country’s trade remedies and tariff policy.
The mechanical trigger for the higher duty was an increase in the dollar-based reference price for sugar, the benchmark that anchors South Africa’s variable import tariff, from $680 to $785 per ton, SARS said. Bloomberg reported ahead of the gazetting that the government intended to lift the benchmark to $785 a ton to shield domestic growers from a wave of cheap shipments, particularly from Brazil.
Because South Africa sets the common external tariff for the Southern African Customs Union, the new duty applies not only at South African ports but across the five-nation bloc that also includes Botswana, Eswatini, Lesotho and Namibia. For global sugar traders, the practical effect is that the world’s oldest customs union just became a significantly more expensive destination for deep-sea sugar.
A Formula Built for Moments Like This
South Africa protects its sugar sector through a variable tariff formula rather than a fixed rate. The system rests on the dollar-based reference price, commonly abbreviated as the DBRP, which functions as a floor price for the domestic market. When world sugar prices fall below the reference price, a duty is applied to make up the difference, so that imports cannot undercut local producers and flood the domestic market, as SA Canegrowers explained in a statement carried by AgriOrbit. When world prices rise above the benchmark, the duty can fall away entirely.
The elegance of the mechanism is also its weakness: the level of protection depends entirely on where the benchmark is set, and the benchmark had been stuck at $680 per ton since 2018. Over the intervening eight years, production costs for growers and millers rose steeply while world prices slumped, a combination that hollowed out the protective effect of the formula. The South African Sugar Association argued in its tariff application that the benchmark had become outdated precisely because costs had risen sharply while the reference price remained largely unchanged, according to reporting by African Insider.
The formula has adjusted before, but in smaller steps. The previous duty of 483.72 cents per kilogram had been in effect only since February 13, when it was raised from 436.38 cents per kilogram under the variable tariff formula, according to Freight News. That earlier adjustment reflected currency and world price movements within the old $680 benchmark. What happened on August 28 is different in kind: the government moved the benchmark itself, resetting the entire protective architecture at a higher level.
ITAC did not simply grant the industry’s request. The commission reviewed competing proposals, ChiniMandi reported, citing The Star: the South African Sugar Association had applied in October 2024 for the reference price to be lifted to $905 per ton, while the Beverage Association of South Africa, representing some of the country’s largest industrial sugar users, argued for cutting the benchmark to between $552 and $650. ITAC concluded that neither proposal adequately balanced the interests of domestic sugar producers, downstream users, consumers and South Africa’s World Trade Organization commitments, and landed at $785, a figure that satisfied no one completely but moved decisively in the growers’ direction.
The Surge That Forced the Government’s Hand
The numbers behind the decision describe a market transformed in the space of four seasons. Duty-paid sugar imports for the January to June period rose from just 1,619 tons in 2022 to 124,594 tons over the same period in 2026, a more than seventy-fold increase, according to SA Canegrowers. The organisation attributes the surge to low international sugar prices, the rand-dollar exchange rate and what it describes as inadequate tariff protection.
Other data points sketch the same picture from different angles. Business Day reported that South Africa imported 94,984 tons of sugar between January and May 2026, compared with 55,213 tons during the same period in 2025, a near doubling in a single year. Looking at full seasons, Illovo Sugar South Africa said 213,322 tons of sugar from outside the Southern African Customs Union entered South Africa during the 2024/25 season, according to ChiniMandi. And SA Canegrowers said in March that almost 200,000 tons of refined sugar entered the country during calendar 2025, as reported by Freight News.
The commercial damage has been substantial. SA Canegrowers estimates that displaced local sugar sales cost the industry about R1.5 billion during the 2025/26 season. The South African Sugar Association puts its own figure for that season at R1.6 billion, and says that in the current 2026/27 season, imports had already reached 74,652 tons by June, with industry losses of roughly R560 million, according to KZN Industrial Business News.
The displacement effect works through a peculiarity of the South African sugar market. The industry produces more sugar than the domestic market absorbs, and whatever cannot be sold locally must be exported at world prices that typically sit well below domestic realisations. Every ton of imported sugar that captures a domestic sale pushes a ton of local sugar onto that loss-making export channel. SA Canegrowers says the export burden, the proportion of saleable sugar the industry is forced to sell offshore at a loss, has risen from 22 percent to 37 percent, while local sugar sales have fallen by 35 percent, or some 188,000 tons, in just three seasons. Grower proceeds have fallen by R1.33 billion over the same period, the organisation says.
Growers Welcome the Move, With Reservations
The reaction from the cane fields of KwaZulu-Natal and Mpumalanga was relief tempered by caution. SA Canegrowers, which represents 28,000 small-scale and 1,250 large-scale sugarcane growers, welcomed the adjustment as critical to the sustainability of the domestic industry.
“We thank Minister Tau, Minister Godongwana and Commissioner Cawe for listening to the industry and acting on the evidence we have presented over the past two years,” said Higgins Mdluli, chairman of SA Canegrowers, in the organisation’s statement, referring to Trade, Industry and Competition Minister Parks Tau, Finance Minister Enoch Godongwana and ITAC’s chief commissioner. “This adjustment shows the government understands the severity of the crisis facing sugarcane growers.”
But the organisation was explicit that it does not regard the matter as closed. It cautioned that the adjustment, while welcome, may not go far enough to fully close the gap that has allowed subsidised imports to displace locally produced sugar. “We are encouraged that government has acted, but we will be watching closely over the coming months to see whether this adjustment translates into a genuine reduction in the volume of imported sugar entering the country,” Mdluli said.
The stakes, as the growers frame them, extend well beyond balance sheets. “Every tonne of locally produced sugar displaced by an import is a direct hit to a grower’s income, a mill’s viability and a rural community’s stability,” Mdluli said earlier in the tariff campaign, according to Business Day. His chief executive, Thomas Funke, had warned during the long wait for the review that every additional month under the old benchmark increased the risk of further mill closures, job losses and growers exiting the industry permanently, African Insider reported.
Mdluli also directed a pointed message at the industry’s own value chain. All major stakeholders are signatories to the Sugarcane Value Chain Master Plan, the government-brokered compact designed to stabilise the industry, and SA Canegrowers called on all signatories, including retailers and food and beverage manufacturers, to recommit to sourcing locally produced sugar. “Growers need certainty, not another partial fix,” Mdluli said.
Millers Say the Number Is Still Too Low
If growers offered qualified applause, the milling side of the industry was blunter. Illovo Sugar South Africa, one of the country’s largest millers, said the revised benchmark was “materially short” of what was required to protect the industry from continued losses, ChiniMandi reported. The company, which puts combined industry losses from the 2024/25 import wave at about R1 billion for growers and R500 million for millers, has called for short-term safeguard measures against deep-sea imports, a further review of the reference price, and a tariff mechanism capable of responding more quickly to international market swings.
The South African Sugar Association, the umbrella body for growers and millers, took a similar line. Its vice-chairperson, Trix Trikam, thanked Minister Tau, Deputy Minister Zuko Godlimpi and officials at the trade department and National Treasury for finalising the tariff matter, but made clear the association views $785 as inadequate. In its October 2024 application, SASA had calculated that a benchmark of $905 per ton would provide adequate protection against subsidised imports. The gazetted figure, Trikam said in comments carried by KZN Industrial Business News, “falls short of what constitutes an adequately calibrated tariff.”
Organised labour, by contrast, leaned toward endorsement. The Congress of South African Trade Unions welcomed the higher benchmark, with parliamentary coordinator Matthew Parks saying the measure could help protect an industry that directly employs more than 70,000 workers and supports around 11,000 emerging farmers, according to ChiniMandi. But Parks argued that tariff protection alone would not rescue the sector, calling for lower electricity costs, improved rail and logistics, stronger enforcement against illicit imports and greater support for emerging farmers.
The Other Side of the Ledger
Not everyone in the South African economy wanted a higher wall. The Beverage Association of South Africa argued during the ITAC process for a lower benchmark, in the range of $552 to $650 per ton, ChiniMandi reported, reflecting the interests of soft drink makers and other industrial users for whom sugar is a major input cost. Those users already operate under the Health Promotion Levy, the sugar-content tax introduced in 2018 that has pushed many beverage producers to reformulate and has weighed on domestic sugar demand.
For consumers, the arithmetic of the new duty is straightforward in direction if uncertain in magnitude. A duty of nearly R7,000 per ton on imported sugar raises the ceiling under which domestic prices can move, and in a country where food inflation is politically sensitive, the trade-off between protecting rural livelihoods and containing grocery bills is real. ITAC’s own framing acknowledged the tension: the commission said the new $785 benchmark is intended to help domestic producers recover production costs and manage international price volatility while limiting the impact on downstream sugar users, according to ChiniMandi.
The commission also built in a review clause. ITAC plans to reassess the reference price after three years, though it indicated an earlier review could be considered depending on international sugar prices and developments in the domestic industry. That timetable gives both sides a horizon: growers will push for the next review to reach toward $905, while beverage makers and importers will argue that three years of higher duties is long enough.
One Duty, Five Countries
The decision reverberates beyond South Africa’s borders because of the architecture of the Southern African Customs Union. SACU operates a common external tariff, which means the duty gazetted in Pretoria applies equally to sugar entering Botswana, Eswatini, Lesotho and Namibia from outside the bloc. The smaller members did not set this duty, but they will live under it, and their consumers and food processors will face the same higher landed cost for any third-country sugar.
The most interesting position inside the union belongs to Eswatini. The kingdom is a substantial low-cost sugar producer in its own right, and its output moves into the South African and wider SACU market free of duty as internal SACU trade. A higher external wall therefore tends to work in Eswatini’s favour: it prices Brazilian, Indian and Thai sugar out of the regional market while leaving Eswatini’s own mills with privileged access to South African buyers. For Swazi growers, the new duty is protection they did not have to lobby for. For South African growers, it means that even a perfectly sealed external border would not eliminate competition, since SACU-origin sugar will continue to flow into their home market.
For Botswana, Lesotho and Namibia, which produce little or no sugar, the calculus is different. They import their sugar needs, whether from South Africa, Eswatini or the world market, and the common external tariff raises the cost of the world-market option. Their compensation comes through the SACU revenue-sharing formula, under which customs duties collected at the bloc’s borders are pooled and distributed, meaning higher sugar duties, to the extent imports continue at all, feed a revenue pool on which the smaller members are heavily dependent.
What Is Actually at Stake in the Rural Economy
The intensity of the lobbying that preceded Notice R.7864 reflects the sugar industry’s outsized footprint in two provinces. The South African Sugar Association says the sugarcane growing and milling sectors support the livelihoods of at least one million people in KwaZulu-Natal and Mpumalanga, with 65,000 direct and 270,000 indirect jobs, according to KZN Industrial Business News. SA Canegrowers puts the number of small-scale growers at 28,000, a constituency of rural, largely Black farmers whose economic alternatives are limited and whose viability was central to the government’s case for acting.
The industry has been through a decade of compounding shocks: drought, the 2018 sugar tax, the collapse of two major millers into business rescue in earlier seasons, the 2021 civil unrest that burned cane fields in KwaZulu-Natal, and now the import wave. The Sugarcane Value Chain Master Plan, signed by government, growers, millers, unions and downstream users, was designed to hold the industry together long enough to diversify into products such as biofuels and sustainable aviation fuel feedstock. Its first commitment was always the defence of the domestic market, which is why the erosion of the tariff since 2018 was felt by the industry as a breach of the plan’s core bargain.
The Department of Trade, Industry and Competition signalled through the winter that relief was coming but had to clear fiscal review. Department spokesperson Kaamil Alli confirmed in August that the revised benchmark required concurrence from National Treasury before gazetting, according to IOL reporting cited by African Insider. That concurrence arrived in time for the August 28 gazette.
Reading the Trade Flows: Brazil, India, Thailand
For the global sugar trade, the new duty redraws the map of one of Africa’s more attractive destination markets. The import surge into South Africa has been driven above all by Brazil, the world’s largest sugar exporter, whose mills have shipped record volumes in recent seasons; ITAC itself noted that imports, particularly from Brazil, had increased while domestic production and profitability declined, ChiniMandi reported. India and Thailand, the other heavyweight exporters serving African and Asian markets, compete for the same deep-sea business into Durban.
At the old duty of 483.72 cents per kilogram, traders could still work the arithmetic when world raw and white sugar prices sagged, as they have through much of the past two years. At 697.92 cents per kilogram, the margin for that trade narrows sharply, which is precisely the intent. Whether it closes entirely will depend on the same variables that drove the surge: world prices, freight rates and the rand. A further slide in the world price or a strong rand appreciation could reopen the window even under the higher benchmark, because the variable formula responds to the gap between world prices and the $785 anchor rather than imposing an absolute barrier. That sensitivity is why Illovo is pressing for a faster-reacting mechanism and why SASA wanted the anchor at $905.
For regional supply chains, the more immediate question is substitution. Traders who have built businesses landing Brazilian whites at South African ports may pivot to routing sugar toward other Southern African markets outside SACU, or to testing the enforcement of the new duty through misclassification and transshipment, a perennial concern in the regional sugar trade that Cosatu’s call for action against illicit imports acknowledges. South African refiners and food manufacturers that had come to rely on cheap imported whites will need to renegotiate supply with domestic mills and Eswatini producers, likely at higher prices.
The Test Ahead
The government has now done the thing the industry spent two years asking for, if not at the level it requested. The measure’s success will be judged on a simple metric: whether the monthly import statistics turn down in the final quarter of 2026 and whether domestic sales recover toward their pre-surge levels. SA Canegrowers has promised to watch exactly that number, and ITAC has left itself room to revisit the benchmark early if conditions warrant.
The wider lesson for trading partners is about the direction of South African trade policy. Pretoria has shown it will use its variable tariff machinery assertively when a politically significant rural industry comes under import pressure, even at a cost to downstream users and even amid broader efforts to deepen ties with suppliers such as Brazil within the SACU-Mercosur framework. Exporters in Brazil, India and Thailand now face a customs union whose sugar wall is roughly 44 percent higher than it was a week ago, and whose farm lobby has made clear it regards $785 as a floor for the argument, not the end of it.