4 minute read
Speaking power to sugar
from The Ridge 119
SUGAR THRIVING SA COMPANIES ARE THOSE WHO’VE SEEN THE FUTURE, AND ACTED UPON IT. ILLOVO SUGAR SA IS ONE SUCH COMPANY. THEY REINVENTED THEMSELVES, DIVERSIFIED THEIR OFFERING, ALL THE WHILE FOSTERING AND SUPPORTING TRANSFORMATION OF THE VITAL SA AGRI-PROCESSING SECTOR, WRITES ANNE SCHAUFFER
Illovo Sugar SA accounts for around a third of the total sugar industry production in South Africa, making it the largest sugar producer in the country. The industry has undergone seismic challenges in the past few years, and Illovo’s foresight and ability to diversify, has put it on a solid footing in both the domestic and export market.
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Illovo has not only diversified its product and service offering. It’s about empowering and investing in people. Today, Illovo buys 93% of its sugarcane from local independent farmers. Its land redistribution initiative has resulted in the sale of over half its owned land portfolio – 28 000 hectares – to mainly black people. This has facilitated the establishment of 55 black commercial growers. In addition, Illovo works with 3 000 out-growers, 2 258 of which are small scale farmers. Importantly, it has provided these growers and farmers with extensive, hands-on technical, financial and capacity-building support, with the goal of increasing their yield.
This strong focus on, and massive support for the livelihoods of rural farmers, their families and local communities, is reflective of Illovo’s commitment to investment in rural economies.
Mamongae Mohlare is not only the first ever female managing director of Illovo Sugar SA, but the first black female MD to lead a sugar business in the industry. She’s very clear: “We set ourselves the goal of ensuring that everything we do and deliver today will contribute to economic benefits of the rural communities.”
Illovo has a long history, embedded in the deep rural areas of KwaZulu-Natal. Illovo Sugar Estate was the forerunner to Illovo Sugar SA, and was founded in the little village of Illovo in 1889. From that day to now, a series of mill acquisitions and establishments was followed by a South African first – the first SA company to operate a refinery. In 2004, one of Illovo’s mills, Gledhow, was sold to Ushukela Milling (Pty) Ltd, a black-owned consortium. This was a milestone, and as Mamongae says, “It was through that, that we contributed to the national goal of creating and developing black industrialists, giving them significant shareholding and enterprise control, and impacting on job creation and skills development.”
Illovo was formed in 2010, and by 2018, had acquired a Level 1 B-BBEE status.
Around one million people or two percent of South Africa’s population depend on the sugar industry for a living, and direct and indirect employment is estimated at 350 000 jobs. The industry is often referred to as the “invisible economic backbone” of the rural areas in which it operates. It has shoes in infrastructure in areas where cane is grown and processed, and its demand for services and goods supports jobs in towns as well as on-farm. Why is its impact deemed invisible? Because it’s only visible when a mill closes down and cane demand drops.
Illovo has a total workforce of 3 500 people. Of that, 25% are female. The executive team consists of 83% black people, 30% females. Transformation is part of the ethos, and it underpins their business model. In recent years, the sugar industry »
ABOVE: Mamongae Mohlare is the first ever female managing director of Illovo Sugar SA.
ABOVE: Inside the sugar mill at Eston.
ABOVE: Illovo Development Riders – an initiative to develop community talent.
revenue has been severely impacted: “The Health Promotion Levy (Sugar Tax), as well as cheap deep sea sugar imports into South Africa, are having a significantly negative impact on industry revenues, including those generated by Illovo,” says Mamongae. “The sugar levy alone took an estimated 250 000 tons of sugar out of the market, translating to a R1,2-billion revenue loss.”
Illovo responded by diversifying, and so remains a strong, viable, profitable business. Its diversified business operations include its downstream businesses in furfural and ethyl alcohol. The opportunities currently being investigated include cogeneration of electricity, production of biofuels, and production of biogas for electricity production. “Little doubt,” says Mamongae, “in order to be sustainable, the industry needs to focus on renewable energy-related diversification opportunities that will assist in harnessing the full value of sugarcane.”
Collaboration and public-private partnerships are considered key to creating prosperity. The handshake between Illovo’s mentorship programme and the SA Government’s Job Fund, is proof of the pudding: “We have been working with the National Treasury on the Jobs Fund initiative which provides capital for a project to develop 3 000 hectares of uncultivated small-scale grower cane land on the KZN South Coast,” explains Mamongae. “It’s an investment of R63-million.” To date, Illovo has invested over R4,2-billion towards supporting small and developing local enterprises.
As MD for Illovo Sugar SA, Mamongae Mohlare is convinced, “Our business represents a workable model for the industry. Equally, investment in downstream diversification offers an opportunity to increase black ownership in the sugarcane value chain.”
