Regional sugar deficit drives Hippo’s export volumes

Sugarcane processor, Hippo Valley Estates Limited, says its export volumes into the region grew in the half year to September 2022 as the company took the opportunity to supply the markets that experienced a deficit during the period.

According to listed firm, total sugar industry export sales for the period improved to 35 265 tonnes – a 19, 31 percent growth from 29 558 tonnes in 2021 credited partly to volume allocation on the United States Tariff Rate Quota to 17 751 tonnes from 13 087 tonnes.

Kenya, a key regional player relaxed its sugar import ban regulations during the period under review as it sought to cover its shortfall, prompting it to import the commodity from regional trading blocs particularly Common Market for Eastern and Southern Africa (Comesa).

The East African country resolved to grant its traders a nine-months extension to limits on sugar imports from Comesa as it seeks to complete reforms that are likely to make its sugar industry competitive, enabling the country to restrict the influx of sugar from foreign countries.

Consequently, according to Hippo, exports to Kenya, a key regional market, increased to 8 113 tonnes from 5 875 tonnes in 2021 despite restrictions instituted to safeguard its local sugar industry which has been registering sustained growth lately.

On the other hand, export sales to Botswana dropped by 23, 35 percent to 7 041 tonnes from 9 186 tonnes due to deferred export shipments at the start of the season during which the higher-yielding domestic market sales were prioritised.

The growth in exports, however, comes at a time when Zimbabwe’s sugar industry is battling sugar imports into the country after the Government’s promulgation of Statutory Instrument 98 of 2022 which suspended customs duties on the importation of basic commodities including sugar.

This has led to an increase of imported sugar despite the country’s ability to produce enough sugar for the local market.

“The industry sugar sales into the local market remained under pressure from competing sugar imports driven by the then existing suspension of import duty on basic commodities,” said Canaan Dube, Hippo Valley Estates Limited chairman.

Consequently, total industry sugar sales for the period under review at 212 519 tonnes were 50, 1 percent lower than 223 892 tonnes recorded in the same period in 2021 due to subdued demand on the back of imports as the market responded to SI 198 which allowed duty-free importation of cheaper sugar.

Kenya had been expected to open up fully its market to imports from the states in 2024 after more than a decade of being allowed to protect its sugar farmers with high tariffs.

On the International market, demand for sugar continues to surge due to the impact of adverse weather conditions on crop yields in India, the world’s second-largest sugar producer, and sugarcane crushing delays experienced in Thailand and Australia during the festive season, mainly in December.-ebusinessweekly