Dynamics of Agrarian Change in the Sugar Industry and Implications for Land and Agrarian Reform¶
Alex Dubb (2012). Dynamics of Agrarian Change in the Sugar Industry and Implications for Land and Agrarian Reform. Paper presented at 'Towards Carnegie III', University of Cape Town, 3-7 September 2012. University of Cape Town (conference); based on MPhil research, PLAAS.
| Type | conference paper |
| Scope | Wider apartheid literature |
| Method | mixed |
| Period studied | 1936–2012 |
| Regions | KwaZulu-Natal, KwaZulu, KaNgwane, Umfolozi/Mtubatuba (Mpukunyoni) |
| Themes | agriculture land, bantustans removals influx, business and state, transition post apartheid, inequality poverty unemployment, labour markets wages |
| Citation key | dubb2012 |
Argument¶
The paper argues that the rise and later decline of black small-scale sugarcane growers (SSGs) must be explained by their changing structural relationship with millers, which was shaped by the sugar industry's regulatory framework. The growth of SSG production from the 1970s was driven by industry-subsidised, miller-supervised schemes (the Financial Aid Fund) that brought Bantustan land into cane. It was backed by KwaZulu state support and by cost-based Division of Proceeds and two-pool pricing rules that rewarded millers for SSG cane. Deregulation from 1989 to 2000 removed those incentives and opened registration, producing a 'bubble' of growth that was structurally unsound. Drought was therefore only the proximate cause of the later collapse. Survey data from 66-74 homesteads and life histories in two Umfolozi wards show that SSGs depend on off-farm income and grants, and that only contractor-growers accumulate. The paper concludes with proposals for differential pricing, transport and registration reform.
Evidence and method¶
Industry and state documents (South African Sugar Yearbooks, Board of Trade and Industries reports, the Van Biljon 1970 and Rorich 1982 commissions, DTI documents, SASA directory). Secondary studies (Vaughan, Cobbett, Rahman, Bates and Sokhela, Minaar). Original fieldwork in Madwaleni and Shikishela wards, 2010-12: a survey of registered growers' homesteads (66 analysed, described as 70/74 elsewhere), asset-quartile grouping, 22-23 life-history interviews, meeting observation and interviews with mill and SACGA staff.
Place in the debates¶
- Conventional industry narrative of SSG growth as success of micro-credit and independent 'yeoman' commercial farmers (see Agricultural policy, productivity, farm size and land reform). Rejects it as 'profoundly misleading'. FAF functioned as a miller-controlled forward-purchase system embedded in the regulatory structure and KwaZulu state support.
- Causes of the post-2000 SSG decline (drought and grower failings vs structural/regulatory change) (see Agricultural policy, productivity, farm size and land reform). Drought is proximate. The decline stems from the deregulation of registration and subsidies, which made the earlier growth a bubble. Industry blame of grower imprudence or fraud is called 'specious'.
- Customary tenure and small plot size as the main constraint on commercial smallholders (see Agricultural policy, productivity, farm size and land reform). Treats plot size as mainly a question of land redistribution. It stresses declining terms of exchange and dependence on off-farm income over tenure.
- Differentiation among smallholders / agrarian reform policy (see Agricultural policy, productivity, farm size and land reform). Differentiation is unstable and reversible and depends on non-farm income. Only contractor-growers show expanded reproduction. The paper argues for differential support and regulatory intervention rather than institutional fixes alone.
Findings¶
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The decline in SSG numbers and deliveries is large; by 2011/12 SSGs delivering cane were a small share of the crop. (p. 6)
By 2011/12 only 13,871 registered SSGs delivered cane, producing 8.59% of the total crop.
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FAF was founded in 1974 from miller interests in securing cane throughput as the homelands threatened cane lands. (p. 9)
the origin of FAF in 1974 was thus rooted in the miller’s ambition to augment the high throughput requirements of a capital intensive and concentrated milling sector
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KwaZulu infrastructure subsidy matched FAF lending, per the SASA chairman in 1982. (p. 11)
It is estimated that the infrastructure provided by KwaZulu has to date matched in value the loans advanced by the Fund.
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Cost accounting in the Division of Proceeds (DoP) let millers claim the costs of development companies and gain A-pool returns from SSG cane. (p. 11)
as the costs of operating the development companies were recorded as millers’ costs within the DoP, pursuing SSG production effectively increased millers’ claims on total industry proceeds.
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The 1994 DoP reform and the later dismantling of the two-pool system removed miller incentives to support SSGs. (p. 15)
The system of splitting total proceeds according to average costs and return on capital was hence replaced by a fixed proportional division between millers/refiners and growers (approximately 36%:64% respectively).
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The author characterises the 1990s-2000s growth as a bubble burst by drought, so the key question is what underpinned the growth. (p. 19)
was thus something of a ‘bubble’ not altogether different from those in financial markets, ultimately ‘popped’ by the harsh circumstances of drought
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In Umfolozi, FAF credit uptake was low, and millers say credit never reached more than a quarter of growers. (p. 27)
mill officials themselves estimate that credit was never extended to more than 25% of growers.
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Transport costs are a heavy burden on SSG revenue in the survey sample. (p. 29)
transport costs accounted for total average of 33% of revenue alone.
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Land ownership is highly concentrated among survey homesteads. (p. 24)
nearly 45% of land is held by 12 homesteads (about 18% total homesteads).
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Contractor-growers are the only group with expanded reproduction, and their success rests on extraction from other growers. (p. 37)
the contractor’s success is based less on sugarcane production than extraction from sugarcane producers
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Non-farm income and grants, not cane, underpin homestead reproduction, and grants do not themselves differentiate wealth. (p. 25)
non-agricultural income sources, particularly varying grades of employment, are a key determinant of relative affluence.
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| South African Sugar Yearbooks (SASYB) 1972/3, 1974/5, 1975/6, 1978/9, 1980/1, 1981/2, 1984/5 | company records or reports | 1972-1985 | Establishes FAF's origins, funding, lending terms, land fragmentation estimates, KwaZulu involvement and industry self-representation of the Fund. |
| Rorich Commission: Report of the Committee of Inquiry into the Sugar Industry (1982) | commission or official report | 1982 | Provides SSG grower and tonnage figures for 1973-80, expansion projections, miller/KwaZulu submissions and the recommendation to abolish transport subsidies. |
| Van Biljon Commission of Inquiry into the Sugar Industry (1970) | commission or official report | 1970 | Describes the regulatory pillars (freight absorption, marketing, small grower/miller subsidies, grade-2 sugar, 1968 loans) before FAF. |
| Board of Trade and Industries reports on the sugar industry (Report Nos. 66 [1926], 119 [1931], 298 [1947]; 1976 Investigation into division of proceeds) | commission or official report | 1926-1976 | Documents the structure of the regulatory framework: Sugar Act, Division of Proceeds, quotas, single-channel export, Price Stabilization Fund. |
| Sugar Act 1936 and Sugar Agreements / Sugar Industry Agreement 2000 (as described) | legislation gazette | 1936-2000 | Frames the statutory self-regulation of the industry and the successive de-regulatory shifts (1994 revision, SIA 2000). |
| Department of Trade and Industry, A discussion document on the review of the Sugar Act (2003?) | commission or official report | c.2003 | Source for the 1994 de-regulation measures and the features and reservations about SIA 2000 (notional price, flexible market shares, single channel export). |
| International Trade Administration Commission Report No. 308 (2009) | commission or official report | 2009 | Documents the flexible tariff / dollar reference price of $358 per ton. |
| South African Sugar Association, South African Sugar Industry Directory 2011/12 | employer association records | 2011/12 | Provides the 2011/12 count of registered SSGs delivering cane (13,871) and their 8.59% share of the crop. |
| SACGA records on SSG registration/deliveries in Umfolozi (2010) and individual production data | employer association records | 2000-2010 | Gives registered vs delivering SSGs in Umfolozi and individual growers' sucrose and production codes used to assess cane quality and transport costs. |
| Umfolozi Sugar Mill quality records | company records or reports | c.2010-2012 | Used to cross-check the sucrose content data from SACGA grower records. |
| Author's survey of SSG homesteads in Madwaleni and Shikishela wards (Mpukunyoni), 2010-2012 | author survey or fieldwork | 2010-2012 | Establishes the socio-economic profile, asset quartiles, land, income-source and credit-uptake patterns of SSG homesteads. |
| Life-history and semi-structured interviews with SSG homesteads, mill and SACGA staff; meeting transcripts | interviews oral history | 2010-2012 | Reconstructs trajectories of growers (stepping out/up/hanging in/down/dropping out) and mill staff accounts of retracted support. |
| Minaar (1992) UShukela statistics on registered SSGs by mill | secondary literature compilation | 1978-1989 | Supplies the registered SSG counts and tonnage at Umfolozi against other mills used to test gradual uptake. |
| Bates and Sokhela (2003) data on SSG growth | secondary literature compilation | 1950s-2003 | Used for the share of SSGs in national cane area, production, number of growers, SGDT finances, and concentration of output. |
| Rahman (1997) unpublished paper on deregulation in the sugar industry | secondary literature compilation | 1997 | Source for development company cost attribution in the DoP, rural versus urban mill practices and the 1994 DoP change. |
| Cobbett (1984), Vaughan (1991, 1992a, 1992b), Vaughan and McIntosh (1993), Munro (1996) case studies | secondary literature compilation | 1984-1996 | Provides earlier qualitative and survey evidence on SSG dependence on mills, off-farm income and contractors. |
| Armitage, Hurley and Gillitt (2009) paper on support for small-scale growers | secondary literature compilation | 2009 | Source for cost-price squeeze, SPF payment shares and returns per hectare, SGDT/SACGA support roles. |
| Nedbank (1974) Sugar and the South African Sugar industry: A Critical Assessment | company records or reports | 1974 | Supports the account of the early-1970s export price spike following the US embargo of Cuba. |
| Scoones et al. (2011) typology of land reform beneficiaries | secondary literature compilation | 2011 | Supplies the stepping out/up/hanging in/dropping out typology used to classify grower trajectories. |
New data¶
Author's survey of about 66-70 registered SSG homesteads (plus 4 contractors and cane-labouring homesteads) in Madwaleni and Shikishela wards, Umfolozi, 2010-2012; asset-quartile classification; 22-23 life-history interviews; mill/SACGA staff interviews; meeting notes; and grower production data from SACGA for 45 growers and transport receipts for 28 growers.
Inference¶
Quantification: Descriptive tables.
Historical-structural case study of the sugar industry's regulatory regime (periodization 1936-2000s) built on commission reports and yearbooks, combined with a small local survey (asset-quartile descriptive tabulations with a few Pearson correlations) and purposively sampled life-history interviews; claims are argued by interpretive inference and typological comparison of trajectories, with no causal identification.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| SSG growth after 1974 was not simply the product of micro-credit but was driven by industry subsidy, miller incentives and KwaZulu state support, since FAF was funded from export windfalls and development-company costs were claimed within the Division of Proceeds. (p. 14) | SASYB yearbooks on FAF funding, BTI/Van Biljon reports on DoP, Rahman (1997) on cost attribution, SASA chairman's 1982 statement via yearbook; interpretive. | Partial data |
| The 1990s-2000s deregulation (open registration, fixed DoP, end of two-pool and quotas) removed miller incentives, prompting withdrawal of extension while SSG numbers rose, producing a structurally unsound 'bubble' later popped by drought. (p. 19) | DTI discussion document, Rahman (1997), Vaughan and McIntosh (1993) for registration counts, Bates and Sokhela (2003), SASA Directory; argued by chronology. | Partial data |
| SSG numbers and output grew rapidly after FAF's inception and then collapsed, with registered SSGs falling to about 29,000 and only 13,871 delivering cane by 2011. (p. 5) | Rorich Report figures for 1973-80, Bates and Sokhela (2003), SASA Directory 2011/12. | Systematic data |
| In Umfolozi, sugarcane is subordinate to non-farm income and social grants; asset wealth is linked to employment income rather than grants, and land ownership is highly concentrated. (p. 25) | Author's survey of 66 homesteads, asset quartile tables and Pearson correlations. | Partial data |
| Contractor-growers are the only homesteads showing expanded reproduction, cross-subsidising cane and contracting, while their profit derives from claims on SSG surplus. (p. 36) | Life-history interviews with four contractor homesteads and a mill official's remarks; no financial records. | Illustrative or anecdotal |
| Drought alone does not explain the decline since comparable 1980s droughts did not stop SSG growth, and declines were preceded by shifts in production relations, cost squeezes and withdrawn services. (p. 29) | Comparison of 1980s and 2000s droughts, grower interviews, 45 growers' SACGA sucrose data, 28 growers' transport receipts (33% of revenue). | Partial data |
| FAF/UAF credit reached a minority of growers, and uptake in Umfolozi was low and gradual. (p. 21) | Author's survey (19 of 66 homesteads ever received credit), mill official estimates, Minaar (1992) statistics. | Partial data |
The author's caveats¶
The author notes that homesteads gave only rough estimates of land sizes, that land rights are contested, that one large landholder (about 20 ha) distorts the results, that survey results cover 66 homesteads and are not yet adjusted for the additional 8, that income data were unavailable or untrustworthy so asset proxies were used, that official registered-grower numbers underestimate actual growers, and that oral recollection is prone to reconstruction bias.
Gaps in the evidence¶
The argument that deregulation and miller incentives drove the SSG boom and bust would need systematic mill-level time series of SSG registrations, deliveries, extension staffing and DoP claims, which existed in SASA and mill records but are not used beyond a few figures. The key claim of cost-claiming by development companies rests on Rahman's unpublished paper rather than DoP cost submissions to the BTI. A single-ward, small-sample, non-random survey cannot support generalisation across the industry; comparative surveys across mill areas, rainfall data tied to production, and UAF loan and default records would test the drought-versus-structure argument better.
Replicability: Data described but not public.