Saved by the bell! . . . Sugar industry welcomes positive move on imports
SUGAR processor Starafricacorporation says the re-instatement of duty on imported sugar will have a positive impact on the local sugar industry as that will preserve local jobs, and ensure Zimbabwe continues to retain the much-needed foreign currency for the development of the economy.
Industry players have long raised concern that the influx of cheap sugar imports after the lifting of duty on products such as sugar by the Government threatened the viability of more than 1 300 commercial out-grower farmers.
That was after the promulgation of Statutory Instrument 80 of 2023 (SI 80 of 2023) which resulted in sugar imports and other commodities being duty-free.
However, since last week duty is now payable on imports of a small range of essential goods, most of which are also produced or at least packed locally following the repeal of emergency measures taken in May last year to allow duty-free imports when shortages and price manipulations were accelerating price rises.
The repeal of the duty-free status has since been gazetted by the Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube in Customs and Excise (Suspension) (Amendment) Regulations, 2024 (No. 272).
Starafricacorporation chairman Dr Rungano Mbire noted in the financial results for the period ended 30 September 2023 that duty-free imports together with a three-month-long shutdown, caused by an upward price review of raw sugar negatively impacted on the firm’s operations.
The restoration of duty is a major development for the sugar industry, he noted.
“The removal of sugar from duty-free imports will positively impact the local sugar industry, preserve local jobs, and ensure Zimbabwe continues to retain the much-needed foreign currency for the development of our economy.”
In the first half of the year, the firm experienced depressed sales.
During that period, the sole local supplier of raw sugar to Starafrica increased its prices making the firm’s products uncompetitive relative to the cheaper imports.
As a result, Dr Mbire said the company experienced depressed sales within this period.
The company imported part of its raw sugar requirements from Zambia while negotiations were underway with the local supplier. The negotiations were successfully concluded, and operations resumed in the month of October, he said.
In the period under review, Goldstar Sugars experienced a 41 percent decrease in sales volumes of granulated sugar compared to the same period in the previous year.
“The decline was mainly due to depressed demand caused by the influx of cheaper sugar imports, after the suspension of duty on basic commodities.
“Additionally, the refinery was closed for three months from July to September 2023 owing to relative upward price adjustments by the sole local supplier, which made the business’ products uncompetitive relative to imports.”
Country Choice Foods also experienced a decline in sales volumes of sugar specialties during the same period.
However, under the properties business, performance improved significantly with $650,49 million of rental income being recorded, compared with $352,42 million in the prior comparative period.
On financial performance, a 35 percent increase in turnover was recorded in the period under review, from $73,52 billion to $99,41 billion.
However, the group’s operating profit receded by 723 percent, from $4,73 billion in the prior year comparative period to negative $29,45 billion for the six months ended 30 September 2023.
The lower operating profit was a direct result of reduced sales volumes and increases in operating costs in real terms.
In historical terms, revenue increased by 382 percent, from $15,82 billion recorded in the prior year comparative period to $76,20 billion, while operating profit decreased by 432 percent, from $3,20 billion to negative $10,64 billion.
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