Tongaat face supply challenges
TONGAAT Hulett Zimbabwe (Tongaat) says it continues to face logistical challenges in the supply of imported critical inputs, spares and services, emanating from shortages of foreign currency in formal banking channels.
The country’s largest sugar producer has previously said it is looking at extending farming operations to support its export strategy which will help reduce foreign-denominated debt.
Tongaat said sales were significantly impacted by low disposable incomes as salary and wage adjustments across many sectors continue to lag the increase in prices of goods and services.
“Total industry sugar sales into the local market for the quarter ended December 31, 2019 were 29 percent below prior-year at 265 805 tons reflective of weak disposable incomes,” Tongaat said.
Industry sugar exports increased by 23 percent during the period to 67 355 tons, significantly improving the company’s access to foreign currency.
“Marketing focus remains on ensuring fulfilment of local market requirements whilst growing export sales in regional premium markets to generate additional foreign currency to fund foreign input costs,” the company said.
Cane harvested from the company’s operations declined by five percent to 1,01 million tons during the nine months ended December 31, 2019 from 1,068 million tons in prior year.
Cane harvested by private farmers declined by 14 percent to 685 815 tons during the review period compared to 793 868 recorded during the same period in 2018.
Total cane milled decreased by nine percent to 1,696 million tons during the nine months ended December 31, 2019 compared to 1,862 million tons in prior period.
Sugar produced declined by 12 percent to 211 267 tons during the review period as compared to 238 965 tons in prior year.
Cane quality for the period was three percent lower than prior season mainly due to the high incidence of Yellow Sugarcane Aphids (YSA) experienced in the region.
Tongaat said robust crop management practices are being implemented to contain the pest.
Tongaat said the exceptionally dry and hot weather experienced during the period October to December negatively impacted cane growth particularly on fields that depend on electricity for irrigation.
“However, rains received in January and early February brought much needed relief to the crop. Notwithstanding the current comparatively low dam levels occasioned by minimal inflows, the industry has irrigation water cover in excess of one season. This will hopefully improve with expectations of reasonable rainfall activity during the February to April 2020 period,” Tongaat said.
The firm said work on the 4 000 hectare out grower cane development project in partnership with Government and local banks (Project Kilimanjaro) is on-going with a total of 2 700 hectares of virgin land having been cleared and ripped, 400 hectares planted to sugarcane, six of 12 storage dams built, two pump stations installed and canals constructed.
On completion, Project Kilimanjaro will contribute significantly to the industry target of full utilization of installed milling capacity of 600 000 tons sugar by 2023/24, positioning the country to be one of the most competitive sugar producers in the region and globally, Tongaat said.