Johannesburg – South Africa’s competition authorities have given a lifeline to black sugarcane farmers after granting a variation to conditions imposed on two Coca-Cola mergers, which include obligations relating to localisation and procurement commitments.
Sugarcane is a strategic crop for KwaZulu-Natal and Mpumalanga, where sugarcane production is located, comprising a substantial percentage of field crop gross farming income across the two provinces.
There are 22 949 registered sugarcane growers who annually produce on average 20-million tons of sugarcane at 14 mills extending from southern Kwa- Zulu-Natal to the Mpumalanga Lowveld.
Currently, growers are represented by the South African Cane Growers’ Association and the South African Farmers Development Association. Competition Tribunal spokesperson Gillian de Gouveia said the watchdog had granted Coca-Cola Beverages South Africa (CCBSA) variations to conditions imposed on the merger of three bottling plants into one operation.
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“CCBSA will collaborate with its sugar suppliers in South Africa to increase the volume of sugar procured by CCBSA from black sugarcane farmers subject to such arrangements being commercially reasonable and practical,” he said.
“In terms of this new commitment, CCBSA will contribute a specified amount to localisation initiatives agreed upon by the Department of Trade, Industry and Competition [DTIC] and CCBSA.
“An appropriate structure, to agree on and monitor this commitment, will be established by CCBSA and the DTIC and will have suitable representation from CCBSA and the DTIC.”
In 2014, Coca-Cola and SABMiller reached an agreement with the majority shareholder of a company that bottled Coca-Cola’s products to combine the bottling operations of their non-alcoholic beverages businesses in Southern and East Africa, which led to the creation of CCBSA’s parent company.
“We have also undertaken to collaborate with our sugar suppliers to increase the volume of sugarcane procured from black farmers,” said Velaphi Ratshefola, managing director of CCBSA.
In a separate development, CCBSA’s B-BBEE ownership will be increased to a revised 20% target, with a significant worker ownership component.
“This updated agreement will result in employees increasing their current holding of around 5% in CCBSA to an approximate 15% shareholding in CCBSA,” Ratshefola said. DTIC Minister Ebrahim Patel said he was pleased by the developments at the company because they directly benefit employees and assist the government with localisation initiatives.
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“The commitment from CCBSA to increase the level of worker ownership in the company deepen the level of transformation in the sugar value chain and support the broader localisation drive in the economy as important steps in our efforts to create a more inclusive economy in South Africa,” Patel said.
“It’s an example of what companies can do and we look forward to others following their lead as we drive an enhanced model of broad-based transformation through worker empowerment in our country,” he added.
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