Govt sticks to guns on sugar pricing mandate
Martin Kadzere
THE Government has dismissed claims by sugarcane millers that it does not have the power to set revenue sharing ratio between farmers and millers, saying it is empowered to do so by the law.
In a notice of opposition to an urgent High Court application by Hippo Valley Estates and Triangle Limited seeking to set aside the revenue sharing ratio, technically known as Division of Proceeds (DoP) announced early this month, Industry and Commerce Minister Mangaliso Ndlovu argued that he was mandated to administer the Sugar Production Control Act, which provides power to control and regulate sugar manufacturing, sugarcane delivery and the setting of sugarcane prices, among other matters.
Tongaat Hulett owns 100 percent shareholding in Triangle and 51 percent in Hippo Valley Estates.
The new DoP favours farmers with an 80,5:19,5 percent ratio, from 77:23 recommended by Ernst & Young (EY) in 2016. Farmers and millers contested the 2016 ratio.
Farmers sought validation, while millers wanted a review. An interim validation was conducted by Baker Tilly, culminating in recommendation of the new DoP.
EY was initially appointed to conduct the validation but declined due to a conflict of interest, having become the millers’ auditors in 2021.
The millers argue that Minister Ndlovu lacks the authority to unilaterally set such ratios and that the validation process was flawed and led to an unreasonable and unfair recommendation.
“The DoP validation exercise was well-founded, regular, reasonable and just,” argues Minister Ndlovu.
“My actions were intra vires. As the Minister of Industry and Commerce, I acted within the scope of my authority in determining the Division of Proceeds.
“Section 10 of the Sugar Production Control Act [Chapter 18:19] empowers me to set the price paid to farmers for delivered sugarcane.”
He insists that the 1964 Act mandated a price-setting mechanism where millers purchased sugarcane from farmers at a price determined by the minister.
While the industry later adopted the DoP arrangement, the minister’s role in determining the DoP ratio has persisted.
“This consistent practice, acquiesced to by both farmers and millers, has evolved into a custom.
“Customary law, while not formally codified, is recognised as legitimate law in Zimbabwe. It arises from long-established practices that are generally accepted and followed by a community or a certain group of people.
“In this case, the minister’s determination of the DoP ratio has become a well-established practice, accepted by both farmers and millers.
“This continuous practice, over a significant period, has solidified my role in this regard, thereby vesting me with authority to set the DoP ratio.
“It is hypocritical for the applicants to now challenge the minister’s authority when both farmers and millers have always engaged the Ministry of Industry and Commerce for the Minister to determine the DoP ratio.”
Minister Ndlovu further argues that while the millers advocate for the continued application of the 2016 DoP, a decision made by then-Minister Mike Bimha, they simultaneously challenge his authority to determine the DoP in the current instance. He said the inconsistency undermines the millers’ argument.
Minister Ndlovu insists that he employed a similar process used by his predecessor Mike Bimha in determining the current DoP.
He says the millers’ objection may be stemming from a perceived disadvantage rather than a genuine challenge to his authority.
Minister Ndlovu argues the ministry did not disregard the review process, being advocated by the milling companies, but prioritised validation as a necessary preliminary step.
“Claiming that the ministry favoured one party (the farmers) is unfounded, as validation was essential before proceeding with the review,” argues minister Ndlovu.
“The review will be conducted in due course as the MoU between the parties indicated that the review was to take place within a period leading up to March 31, 2025, and will be implemented on April 1, 2025.”
On millers’ claims that they were not given an opportunity to provide detailed submissions for validation, the minister argues the same submissions initially submitted to EY were used by Baker Tilly.
EY declined to conduct the validation, citing a conflict of interest. The technical working group, of which the milling companies are members, decided that no new information should be introduced for the validation process.
Both farmers and millers were required to submit the same information they had submitted to EY before they pulled out. Minister Ndlovu argues that the farmers submitted the same information in March 2024 as they had in October 2023, albeit with a later cover letter date. The content remained unchanged as agreed upon by all parties.
He deposed that the millers and farmers had a long-standing history of disputes over various issues, often seeking the ministry’s mediation when they failed to reach a consensus.
These continuous disputes stem from the competing interests of both parties, who frequently perceive decisions unfavorable to them as unfair.
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