Duty-free imports strain domestic sugar sales
DELAYS in sugar cane delivery by farmers as well as logistical challenges are likely to hamper production and offset the 2023/2024 sugar production target, giant producer Hippo Valley Estates Limited has said.
In a statement accompanying its half-year abridged financial results for the period ended September 30, 2023, Hippo Valley Estate board chair Mr Canaan Dube said they had targeted 409 301 tonnes during this season compared to 396 682 tonnes last season.
He said prospects for growth were also set to be hindered by the intermittent mill breakdowns due to the non-availability of critical spares.
“In conjunction with the Triangle mill, the company has extended the season and implemented a revised cane delivery plan to catch up some of the lost milling capacity, maximise sugar production and minimise the amount of cane carried over to the season,” said Mr Dube.
Despite these mitigation measures, he said the industry’s forecast sugar production for the 2023/24 season of 409 301 tonnes (2022/3: 396 682 tonnes) is unlikely to be achieved due to initial delays in the delivery of private farmer’s cane, logistics challenges resulting from changes to the supply agreements, as well as intermittent mill break down.
Sugar – Image taken from Shutterstock
Mr Dube said although sugar production is expected to be below the prior season production level, the industry will produce adequate stocks to meet the balance of domestic market requirements in full, as well as its export commitments.
He added that the company has secured irrigation water cover for approximately two seasons at normal levels of irrigation within the current water supply dams in a bid to reduce the effects of El Nino, which have been predicted for the period between December 2023 and March 2024.
“The company is actively engaging authorities to take measures to eliminate the risk of illegal water abstraction by third parties without such water rights from the company’s canal system,” said Mr Dube.
Meanwhile, Mr Dube said due to the duty-free importation of sugar, domestic sales have experienced significant pressure with volumes declining by 25 241 tonnes, which is 14 percent to 152 013 tonnes in 2022.
“In order to mitigate against the revenue losses and generate the cash flow necessary to sustain the company’s operations, sugar that was initially intended for sale into the domestic market has been redirected into the regional and international export market,” said Mr Dube.
He said the export sales volume increased by 47 percent to 51 744 tonnes from 17 751 tonnes recorded during the same period in 2022 and maiden exports to the United Kingdom of 25 000 tonnes.
Mr Dube, however, said sales to the regional market reduced by 9 049 tonnes with no sugar sold into Kenya or Namibia during the past six months. -chronicle
