Zimbabwe’s sugar industry registered an 8 percent decline in sales into the domestic market for the first quarter ended June 30, 2022 owing to reduced production as well as reduced demand due to purchasing power constraints experienced by customers, key industry player Hippo Valley said.
The sugar sales declined from 91 645 tonnes to 84 228t.
Hippo Valley’s, the country’s largest sugar producer, share of total industry sugar sales volume of 94 257t for the quarter under review was 54,5 percent, down from the comparable period volume of 98 718 tons was 52.1 percent.
Reduced discretionary incomes, currency shortages, high interest rates, exchange rate distortions and the impact of high inflation on local currency are all seen as consequences of monetary policy uncertainty.
“Despite the merging of auction rate with Willing Buyer Willing Seller as the country’s official rate, the Zimbabwe dollar suffered a 157 percent depreciation during the quarter ended June 30, 2022,” the company said in a trading update.
It said the working environment had become more difficult as a result of the increased volatility of the exchange rate.
“The price realisations in both local and foreign currency on the local market suffered negatively from the adverse exchange rate dynamics on currency.
“Management continues to align local prices to changes in cost structures where possible.”
Cane deliveries from the company’s plantations (miller-cum-planter) for the quarter ended 30 June 2022, were 22 percent above the same period prior year.
This was attributed to a combination of increased harvesting targets in line with total crop projections, a more efficient cane haulage system and improved mill uptime.
However, cane deliveries from private farmers were below the prior year on account of rains received in April 2022 which resulted in the delayed onset of harvesting.
“Whilst cane deliveries were higher than prior year on account of improved yields for cane harvested, sugar production to date is 4 percent lower than the same period in prior year largely as a consequence of lower cane quality due to a prolonged wet spell that prevailed in the region,” the company said.
Cane quality is, however, expected to improve into the drier peak sucrose period.
Hippo Valley Estates Limited, in partnership with sister company Triangle, the Government and banks, continue to progress the cane expansion project, code named Project Kilimanjaro, according to the company.
It said demand for sugar, being a staple commodity, remains strong.
“Although local demand for sugar remains strong as industry recovers from the impacts of Covid-19, the sugar industry is engaging authorities to ensure an even competitive playing field against cheap imports of sugar originating from surplus producers who enjoy duty protection in their host countries,” the company said.
“This is also in an attempt to safeguard the health of the local population as some of the sugar imported is not Vitamin A fortified, as required by law.”
The substantial off-crop maintenance programme has been successfully completed and the mills have started the new season well, with the focus being on increasing production and capitalising on efficiencies, the company said in its outlook.
The company is poised to publish its abridged audited financial statements by end of this month