Sugar tax strain, jobs losses and foot-and-mouth crisis frame cautious trade on the JSE
The sugar fairy can start to relax, as South Africa’s mandated sugar tax, introduced in 2018, has increasingly proven the saying about cutting off your nose to spite your own face.
While the levy was intended to improve public health, industry data now highlights growing economic strain, with rising imports, declining local production and significant job losses across the sugar value chain.
At the same time, fresh labour market data shows formal employment has fallen to its lowest level in more than a decade, while the agricultural sector faces mounting disruption from a widespread foot-and-mouth disease outbreak that has spread across seven provinces. All three developments pointed to mounting pressure in the economy, which was reflected in a more restrained session on the JSE.
JSE pauses after record highs as investors rotate defensively
South African equities edged lower after reaching fresh highs earlier in the week, with the All Share index closing 0.09% lower at 120,857. The pullback followed a strong rally that pushed the market above the 120,900 level on Tuesday, with Wednesday’s move reflecting consolidation rather than a broad reversal.
Losses were concentrated in domestically exposed sectors. The All Share Industrials index declined 0.65%, while the Industrial 25 fell 0.66%, as investors trimmed exposure to consumer-facing and interest-rate-sensitive shares. Tiger Brands, Pepkor, and Pick n Pay were among the notable laggards, alongside property stocks such as Growthpoint.
Financial shares also softened, with the Financial 15 index down 0.36%. Banks and insurers struggled to extend recent gains in the absence of new catalysts on interest rates or economic growth. The rand traded largely flat at around R16.41 to the dollar, offering limited support to the sector.
Resource stocks provided the main offset. The Resource 10 index rose 0.8%, supported by gains in Sasol, Glencore, and platinum group metal producers, including Implats and Northam. Continued support for industrial commodities underpinned the sector, although softer, precious metal prices overnight limited broader upside.
Global markets provided a mixed backdrop. Offshore indices remained near record levels, but sentiment was selective, with uneven trade across Asia and weaker prices for oil and gold. Bitcoin also retreated, slipping back below $100,000, contributing to a more cautious risk environment.
Formal employment falls below COVID-19 levels
Labour market data released alongside the market move highlighted continued pressure on the domestic economy. Analysis by the South African Reserve Bank shows that formal non-agricultural employment declined for a fourth consecutive quarter, falling to 10.53 million jobs.
This level is lower than during the Covid-19 lockdowns and represents the weakest reading since the fourth quarter of 2010. Job losses were recorded across both the public and private sectors, with private sector employment declining by 28,900 to 8.3 million in the second quarter of 2025.
The Reserve Bank said firms remain cautious about hiring amid subdued domestic activity and ongoing global uncertainty. While manufacturing recorded marginal gains, most private subsectors experienced job losses.
The data also shows that unemployment is increasingly driven by new entrants to the labour market. In the third quarter of 2025, new entrants accounted for 43.4% of all unemployed individuals, highlighting the economy’s inability to absorb the roughly 600,000 people who enter the workforce each year.
Sugar industry warns of rising imports and job losses
The sugar industry has renewed calls for urgent policy intervention, warning that the continued application of the sugar tax is worsening pressure on growers and processors.
SA Canegrowers said the sector supports more than one million livelihoods directly and indirectly, primarily in KwaZulu-Natal and Mpumalanga.
SA Canegrowers said the increase reflects global oversupply and heavy subsidies in exporting countries rather than a shortage of local production.
Industry representatives argue that imported sugar displaces locally produced volumes, reduces mill throughput, and weakens the broader value chain. When the sugar tax was introduced in 2018, more than 16,000 jobs were lost in the industry during its first year.
SA Canegrowers has called for stronger enforcement of import protection measures and renewed engagement with the government, including a review of the sugar tax’s economic impact.
Foot-and-mouth disease spreads across seven provinces
Pressure on the agricultural sector has been compounded by a widespread outbreak of foot-and-mouth disease, now active in seven provinces.
Outbreaks have since been confirmed in KwaZulu-Natal, Gauteng, Free State, Mpumalanga, Northwest, Limpopo and the Western Cape. Export markets have been restricted, and reduced production is expected to push meat and dairy prices higher.
He later announced plans to vaccinate the entire national cattle herd from February 2026.
Experts have raised concerns about the feasibility of the plan, citing cost estimates of around R5.4 billion, logistical challenges, and traceability issues.
Farmers are prohibited from vaccinating their own livestock, as foot-and-mouth disease is classified as a state-controlled disease.
Calls for national disaster declaration intensify
Farmer organisations, including the Southern Africa Agri Initiative and Saai, are calling for the outbreak to be declared a national disaster under the Disaster Management Act.
The organisations said a national disaster declaration would support vaccination efforts, improve enforcement, and provide clearer communication to farmers, helping to limit further economic damage.
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