Tawanda Mangoma in CHIREDZI
Sugarcane miller Tongaat Hulett Zimbabwe has notified outgrower farmers that it will start recovering nearly $10 million they owe when they bring their cane for sale this milling season.
The development comes as farmers and Tongaat in 2014 engaged Industry and Commerce Minister Dr Mike Bimha to resolve a dispute centred on the Division of Proceeds (DOP).
DOP is the monetary ratio which the miller charges farmers for processing every tonne of sugarcane into raw sugar. In a letter dated May 18, Tongaat Hullett said it would recover the dues in line with a directive given by Minister Bimha. “Following the minister’s directives dated 6 June 2014 and 23 November 2016 revising the DOP’s ratios, copies of which are attached, kindly be advised that the company will proceed to recover the overpayment from your future cane proceeds once a recovery framework has been agreed on,” reads part of the letter signed by the company’s two finance directors, Mr John Chibwe and Mr Shelton Nhari.
The company set a meeting with farmer representatives to agree on a payment plan. In 2014, Minister Bimha set an interim DOP in which the miller received 17 percent share, while farmers enjoyed 82 percent. His ministry consulted independent consultant Ernst & Young to undertake the validation exercise, a process which took three years.
Findings by Ernst & Young concluded that the miller was supposed to get 23 percent, while 77 percent goes to the farmer on every processed tonne of sugar- cane. This conclusion meant farmers had been enjoying a 6 percent overdraft since 2014, hence Tongaat’s decision to start recovering its money, backdated to 2014.
Some farmers dragged Minister Bimha to court over the DOP, while others threatened to demonstrate against Ernst & Young’s findings. Chairman of the Zimbabwe Sugarcane Development Association Mr Edmore Veterai said it was advisable for farmers to engage the miller and find common ground. “For the record, for the present and for the future we will never propagate gutter language or engage in street demonstrations to solve simple commercial disputes,” he said.
“Our position has always been clear that we should always engage the Zimbabwe Sugar Association’s leadership, commercial lawyers, contract lawyers, accountants and specialist consultants to seriously engage and negotiate with the miller. “Where need be we will engage Government, but the best route is to find a professional and neutral arbitrator.”