Tongaat CEO Seeks South Africa Sugar Tariffs on Brazil Imports

South Africa should give better protection to sugar producers in the wake of low global prices caused by excess exports from Brazil, according to Tongaat Hulett Ltd. (TON), the country’s second-biggest producer of the crop.

“We’re asking for the duty to be uplifted to be more in line with the dynamics of today’s world,” Tongaat Chief Executive Officer Peter Staude said by phone today. Import tariffs in South Africa are activated when the sugar price reaches 13 cents a pound, he said. Prices reached a three-year low on July 16. They rose 0.2 percent to 18.11 cents on ICE Futures U.S. in New York, paring the 2013 drop to 7.2 percent.

Sugar has plunged 49 percent since reaching a three-decade high in 2011 after growers from Brazil to Australia raised output, leading to a global surplus. Producers in other countries are also looking to deal with lower prices. In India, the second-biggest grower, output will probably be 25.45 tons in the year that started Oct. 1, or 6.4 percent lower than the preceding 12 months, the U.S. Department of Agriculture’s Foreign Agricultural Service said in an Oct. 23 report.

Tongaat’s profit excluding one-time items rose 1.2 percent to 663 million rand ($64 million) in the six months ended Sept. 30 from a year earlier, the Tongaat, KwaZulu-Natal-based producer said in a statement. That was due to higher sugar production, lower costs and increased sales of farmland to developers, Staude said.

Output Forecast

Tongaat’s total raw-sugar production is “well on track” to rise to as much as 1.41 million metric tons in the year through March from 1.25 million tons 12 months earlier, it said.

The stock snapped seven days of declines, the longest streak of losses since August 2011, increasing 0.4 percent to 117.20 rand at 1:40 p.m. in Johannesburg.

The company sold 174 hectares in the period. Durban, the commercial capital of KwaZulu-Natal province, has been expanding onto farmland, making it more profitable to sell to property developers, Staude said. The company will probably sell about 13,000 hectares over the next 25 years, he said.

About 300,000 hectares of land in sub-Saharan Africa supply the company’s sugar and starch operations, according to its website.

To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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