Hippo has enough water to irrigate all its cane fields

The country’s leading sugar producer, Hippo Valley Estates Limited, says it has sufficient water to sustain its irrigation projects that should cushion the business from the adverse impacts of the El Nino induced drought.

Agriculture-focused businesses have experienced severe setbacks due to prolonged dry spells caused by the weather phenomenon that affected not only Zimbabwe, but the rest of the Southern Africa region.

The company itself acknowledged the El Nino weather phenomenon’s impact in slowing economic growth, which is projected across many business sectors which depend on water for irrigation.

However, Hippo chief executive officer (CEO), Tendai Masawi, allayed fears of moisture stress for the company’s cane.

“The company’s major dams are holding sufficient water to support optimal irrigation regimes for the coming season,” he said in a performance review for the year to March 31, 2024.

“With low water levels at Manjirenji and Siya Dams at 39,8 percent and 59,3 percent respectively as of 6 May 2024, the Zimbabwe National Water Authority (ZINWA) plans to rationalise water supplies from these dams in order to mitigate impacts on the crop until such a time the water stocks improve,” he added.

But the other water sources, Tugwi Mukosi and Lake Mutirikwi, are at 79,9 percent and 94,3 percent respectively.

In line with this and other strategies, the group is forecasting a 4 percent increase in sugarcane harvest for the 2024/25 season.

The company, in partnership with Triangle Limited, is poised for higher productivity in the 2024/25 season, with plans to harvest 945,471 metric tonnes of sugarcane and receive 739,329 tonnes from private farmers.

The company’s strategic focus on improving yields is expected to drive the increase in cane production for the 2024/25 season. Milling efficiencies are also anticipated to recover on the back of improved cane quality and the successful completion of the requisite annual maintenance programme, with a forecast to produce 202,860 tonnes of sugar at a cane-to-sugar ratio of 8.26.

Despite the challenges faced in the 2023/24 season, Hippo Valley Estates remains committed to its strategic focus on improving yields and productivity.

In terms of financial performance, Masawi said the year was not plain sailing for the sugar industry mainly owing to lost revenue in the local market, which generates higher returns compared to the export market.

Unscheduled mill stoppages, combined with the decline in yields, increase in the minimum wage, high input costs due to price volatility negatively impacted financial performance.

As a result, an inflation adjusted operating loss of $1,3 trillion was recorded from an operating profit of $0,8 trillion, which was recorded in the prior year.

The company recorded a net monetary gain of $2,6 trillion from a monetary loss of $0,1 trillion last year. This was influenced by the indexing of the actuarial loss on the post-retirement medical aid obligation (PRMA) and Retirement Gratuity (RG), which accounted for $1,3 trillion, while the remaining balance was mainly due to the net indexing effect on other income statement related items.

The net monetary gain was significant enough to turn the operating loss for the year into an overall inflation-adjusted profit of $0,5 trillion.

Meanwhile, Hippo, in partnership with Triangle, continues to work with the Government and various financial institutions to progress the implementation of Project Kilimanjaro, a 4,000-hectare new sugarcane development.

The first 700 hectares, called the Project Kilimanjaro Empowerment Block, have been planted with cane, with 348 hectares harvested in the current season.

The Government has allocated offer letters to 116 new beneficiary farmers for development to new sugarcane plots on the balance of the 3,300 hectares of Project Kilimanjaro.

Despite challenges faced during the 2023/24 season, such as a four-week delay in the milling season due to cane delivery agreement negotiations and reduced cane yields resulting from adverse weather conditions, Hippo remains optimistic about the future.-ebsinessweekl