Enhancing the sustainability of Tongaat Hulett Sugar through assessing logistics costs, sugar taxes, and tariffs.

Abstract

Globally, sugar-producing companies have been faced with rising production costs in recent years. The majority of these costs are related to logistics costs, sugar taxes, and import tariffs. The association of sugar with health problems like diabetes and obesity has compelled governments including South Africa to impose taxes to manage the supply and intake of sugar. Moreover, the South African government imposed no import tariffs on sugar to improve the supply of sugar. As a result, sugar from countries like India, Brazil, and Swaziland has flooded the local market creating uneven competition for local producers. This has negatively affected the revenue, market share, and success of local companies like Tongaat Hulett Sugar. Against this backdrop, this study investigated how logistic costs, sugar tax, and tariffs influence the sustainability of Tongaat Hulett Sugar. The study utilised a qualitative explorative research method design to collect data. Upon investigation it was established that Tongaat Hulett Sugar utilizes different companies providing logistics services which means they have to absorb all the overhead costs from different logistics providers. It is important to have a logistic strategic partner who will have a greater understanding of the business. This helps companies partnering to collaborate in seeking innovative methods that provide competitive advantage thus handling logistics rising costs. The Master Sugar Plan played a critical role in addressing the issue of high imports. Since the introduction of The Sugar Master Plan, import duties and tariffs have significantly increased, decreasing the number of sugars imported. TPNA can also play a crucial role in helping Tongaat Hulett Sugar and other sugar-producing companies by imposing lesser charges when exporting sugar globally. This will increase their revenue stream consequently allowing them to reinvest in improving their processes making them more efficient making them more sustainable. Introducing the sugar tax led to job losses in the sugar market. The introduction of The Sugar Master Plan will address this element. They need to be more transparent about the revenue collected from the sugar tax. This tax portion of the tax collected should be invested in research and development that will improve the production processes and come up with more healthier options that can be substituted for sugar, opening other streams of revenue for Tongaat Hulett Sugar and other sugar-producing companies.