HARARE – Zimbabwe's sugar producers are seeking government’s intervention in restricting imports of the commodity, Hippo Valley Estates (Hippo) said.
The group — 50 percent owned by South Africa-based agricultural commodities processor Tongaat Hulett — said “local market sales were being lost to imports as a result of the current low world price.”
“The sugar industry in Zimbabwe is in a receptive engagement with government to restrict imports,” said Hippo’s chief executive Sydney Mutsambiwa in the group’s financials for the half year to September 2013.
“Generally, the most vulnerable to these dynamics are rural communities and emerging farmers,” he added.
This comes as Zimbabwe is importing most of its sugar as local producers are failing to meet demand.
Mutsambiwa said Hippo is focusing on multiple areas to achieve the best possible outcome in terms of sugar prices, the mix of sugar flow destinations and combating unfair import competition.
“The changes in the European Union (EU) are on-going, with some fundamentals remaining in place, including duty-free access for Zimbabwe. At present, this benefit is being eroded by the EU allowing additional imports at reduced duty and the low world price,” he said.
Meanwhile, Hippo’s revenue slumped 43 percent to $52 million in the period under review from $90,7 million registered in same period last year.
“The business experienced severe pressure from significantly lower international sugar prices and from a surge in sugar imports into the domestic market which significantly reduced domestic sales volume,” Mutsambiwa said.
Operating profit and profit for the period stood at $11 million and $5,8 million against prior comparable period’s $17,4 million and $11,1 million respectively.
The company’s sugar production for the period amounted to 178 946 tonnes compared to 160 910 tonnes for the same period last year, an increase of 11,2 percent.
Total cane deliveries to the mill increase of 4, 4 percent increased by 1 409 062 tonnes against 1 349 467 tonnes recorded in prior year period.
“The private farmers responded positively to the accelerated rehabilitation initiatives embarked upon in 2011, collectively delivering 650 945 tonnes of cane over the six month period compared to same period last year’s figure of 581 460 tonnes, an increase of 12 percent inclusive of cane deliveries from Green Fuel amounting to 134 386 tonnes,” said Mutsambiwa.
The industry’s domestic and export sales volumes for the period decreased by 22,3 percent to 192 542 tonnes from 247 741 tonnes registered in same period last year.
“The company’s share amounted to 84 990 tonnes against last year’s 117 532 tonnes, a 27,7 percent reduction as a result of lower local market sales and a timing difference on export shipments,” said Mutsambiwa adding that “the trading environment has added impetus to the drive to reduce costs of sugar production, with substantial reductions being achieved in the current season.”
In its outlook the company said as part of its on-going objective to economically empower communities around its operations in Zimbabwe, it has embarked on a socio-economic upliftment drive to create value for relevant entrepreneurs, by developing sustainable new business enterprises and outsourced services within its value chain, with particular focus on employment creation for the youth.