‘Cut sugar imports to avert collapse of local industry’

George Maponga in Masvingo

Sugar imports into Zimbabwe should be stopped to save local producers who are battling with depressed sales.

There are fears that by March next year, the country might be stuck with nearly 100 000 tonnes of locally-produced sugar owing to depressed local sales. Zimbabwe is now a dumping ground of lower-quality sugar from neighbouring countries after Government opened the door to imports and removed import duty together with other basic commodities in an attempt to cushion local customers from high prices earlier this year when there was a lot of market manipulation including the withholding of sugar from shops.

However, the industry now says that these problems have been sorted out and that as the retail prices for locally milled sugar and imports are about the same, the need for imports to regulate local prices now longer exists.

However, the retail price of the imported sugar that is mainly coming from Zambia, Malawi and Mozambique is the same as that of the locally-produced sugar that is milled by Tongaat Hulett Zimbabwe at Triangle and Hippo Valley estates.

The flooding of the local market with the cheap imports has created distress for the local sugar industry and is threatening the viability of more than 1 300 indigenous commercial cane farmers who benefitted under the land reform programme.

This also threatens negatively affect the cash flow of Zimbabwe’s sole sugar miller Tongaat which operates sugar mills at Triangle and Hippo Valley, employing nearly 20 000 contract and permanent employees.

Cane farmers’ associations and industry officials have since raised a red flag over the continued cheap imports and have called on authorities to intervene before the local sugar industry collapses.

Signs of distress in the local sugar industry have already started showing with Tongaat last week postponing payment for August cane deliveries by farmers and other players to a later date citing a cash squeeze spawned by subdued local sugar sales because of stiff competition from cheap imports.

The price of locally produced sugar cannot be reduced further as this will cause heavy losses because of high costs of production.

In a notice to farmers last week, Tongaat said it was struggling to mobilise sufficient funds to pay for August cane deliveries because of depressed local sugar sales, leaving farmers facing a bleak future. There are fears the situation could worsen as the year progresses, sparking calls for authorities to intervene urgently.

In a cane proceeds statement to Zimbabwe Sugar Sales (ZSS) board members, dated 11 September, the company’s general manager Ms Tracey Mutaviri painted a gloomy picture on the state of local sugar sales.

“As a result of depressed local sales, stock has been building up and if the current trend persists to March 2024, stocks will potentially close at 94 000 tonnes by March 31, 2024, which will be 64 000 tonnes more than the planned closing stock of 30 000 tonnes.

‘’ High closing stock will delay closure of the 2023/24 season and continue to pose liquidity challenges for both MCP and farmers as cash will be tied in stocks for a longer period,” warned Ms Mutaviri.

Zimbabwe Sugarcane Development Association spokesperson Mr Saul Chin’anga lamented that while the rationale of sugar imports was to stabilise local prices, what was shocking was that the price of both imported and local sugar was now the same.

He lamented that from a health standpoint, local consumers were also consuming cheap imported sugar that was not fortified.

‘’From a health point of view, the cheap sugar imports will pose serious health risks to local consumers because that is sugar not fortified and we hope the Consumer Council of Zimbabwe (CCZ) and Ministry of Health and Child Care will enforce the relevant laws to ensure that local consumers are protected,’’ said Mr Chin’anga.

He expressed shock why Zimbabwe was importing sugar allowing foreign companies to harvest the much-needed foreign currency locally yet the country produced enough sugar for local consumption and was even exporting to niche markets such as the US earning the country the much-needed hard currency.

‘’The country currently produces enough sugar for domestic consumption and for exports. There is therefore no need for imports from a supply side of things. “Currently the country has large stocks of sugar which is in warehouses. When local sugar sales do not move, farmers are impacted in that they get paid for their sugar on the basis of cash received price(CRP). When payment is delayed, or sales don’t not move, farmers struggle to maintain the sugarcane fields, sowing seeds of a decline in production in subsequent seasons thereby affecting the aggregate national sugar output.’’

‘’Given that sugarcane is a 13 months crop, the impact of the current imports will be felt in the coming years when the country struggles to produce enough sugar. The imports are therefore a threat to the survival of sugarcane farmers in the Lowveld as well as the sugar industry in general and we appeal to authorities to review this issue of imports as a matter of urgency,’’he added.

Mr Chin’anga said the convergence of prices between unfortified imported sugar and the locally-produced sugar meant price stability had been achieved hence imports should be scrapped.

‘’We understand that the intention of bringing in sugar imports was to stabilise prices. However, we have also observed that the price of imported sugar is now the same as the locally-produced commodity and furthermore the local prices have stabilized so there is no more need for these imports.’’

Zimbabwe has,over the past few years, been producing an average of 400 000 tonnes of sugar annually against an annual consumption of 300 000 tonnes leaving a surplus of about 100 000 tonnes that is exported.

However, the country’s two sugar mills at Hippo Valley and Triangle have an installed milling capacity of 630 000 tonnes annually meaning the country should ramp up sugar cane output for the mills to operate at their optimum.

Projects such as the Kilimanjaro Sugar Cane Project funded by banks and Tongaat to the tune of US$40 million were meant to spike sugar output and resultantly expand the industry, thereby creating more jobs and earning more foreign currency in line with Vision 2030.

A dip in sugar cane output will hamper growth plans for the industry and will likely cause severe aftershocks whose ripple effects will be felt across the economy.

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