GIANT sugar producer, Hippo Valley Estates Limited, says the domestic sugar industry is facing steep competition from imports coming from competitors operating in stable and subsidised environments who are taking advantage of the lifting of all restrictions on the importation of basic commodities.
In May, the Treasury lifted all restrictions on the importation of basic commodities to boost supplies as part of broader measures geared at tackling resurgent price madness, and stabilising the economy.
The list included sugar, maize meal, rice, milk, flour, salt, cooking oil, petroleum jelly, toothpaste, bath soap, and washing soap.
Announcing the measures, Finance and Economic Development Minister, Professor Mthuli Ncube, said they were necessitated by the resurgence of speculative macro-economic instability in which domestic inflation is driven primarily by the skewed preference for the use of the United States dollar as a savings currency.
In a statement of financial results for the year ended March 31, 2023, Hippo Valley, said it was monitoring the complexities that include the ongoing rolling power outages to implement appropriate value preservation measures.
“With the recently introduced Statutory Instrument 80 of 2023 allowing duty-free importation of several commodities including sugar, the sugar industry faces huge pressure to compete against imports coming from competitors operating in stable and subsidised environments,” said the firm.
“Additionally, the ongoing rolling power outages are set to compound recovery challenges across the economy. The company continues to monitor and navigate these complexities and implement appropriate value preservation measures.”
On marketing performance, the firm noted that local market share was compromised as a total of 17 brands were imported into the country during the Statutory Instrument 98’s six-month tenure, which ended in November 2022.
It said the sugar industry estimated the total impact of these imports to have been five percent of the annual local sugar sales volume.
“World sugar markets are residual markets for excess sugar supply and are affected by support policies and/or subsidies implemented by governments of sugar producing countries.
“Consequently, world sugar markets often trade below global costs of production, meaning that imported sugar has an unfair price advantage over sugar produced locally in Zimbabwe where production costs are relatively higher,” said the company.
“In addition, some of the sugar imported did not comply with the labelling and Vitamin A fortification regulations, which would have formed part of the costs of locally produced sugar.”
The firm said cane deliveries from its own plantations (miller-cum-planter) were 13 percent above the prior year.
“The growth was driven by a six percent improvement in yields to 97,98 tons cane per hectare (tch) (2022: 92.23tch) in response to improved control of yellow sugarcane aphid infestations through aerial spraying, as well as an increased area of cane harvested compared to the prior year.
“Private farmer cane deliveries contributed 42 percent of the total cane supply, and were two percent below prior year, having achieved yields of 71.85tch (2022: 73.75tch).”
The company noted that in November 2022, one of its two production lines suffered a major breakdown that resulted in it being inoperative for the balance of the season.
Consequently, the milling season was extended to December 29, 2022 to accommodate the reduced production capacity, while 27,001 tons of cane had to be diverted to the Triangle sugar mill for crushing.
It said repair work was satisfactorily carried out on that line, which has since been re-opened for the 2023/24 milling season.
Meanwhile, the Government has issued a 99-year lease on five blocks of 3 804 hectares to Hippo Valley with the land title for the remaining three lease blocks with a combined 20 175ha set to be granted in due course.
“A total of five leases (amounting to 3 804ha) with respect to Hippo Valley North have so far been issued, with the balance of three lease blocks (amounting 20 175ha) still to be issued.
“Encouraging assurances have been received from the ministry that the remaining leases will be issued in due course and that recommended changes to the wording of the lease documents are being finalised by the Attorney General’s Office,” said the company. – The Chronicle
