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Full dams boost sugar producer’s prospects

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THE country’s biggest sugar producer, Hippo Valley Estates, is banking on adequate dam water supplies for irrigation to boost production during the 2021/2022 season which will enhance competitiveness in export markets.

ALEX MHANDU

This comes as the group has already benefitted from the above-normal rainfall experienced in the 2020/2021 season which saw the sugar manufacturer record annual revenue of ZW$16.8 billion, a 34% surge on the previous year.

Total production is therefore forecast to increase on the back of improved yields, cane quality and milling efficiencies while efforts are underway to establish other regional markets to supplement the Botswana market as well as reduce Kenyan market concentration risk.

 Experts in the sugar industry say the global trend now shows that demand will increase going forward.

“The industry’s major water supply dams are once again reaching maximum capacity, ensuring adequate irrigation water cover for at least three seasons at normal water duty.

“This provides the necessary assurance to stimulate both vertical and horizontal sugar[1]cane growth by existing and new players to the industry which will, in turn, maximise existing milling capacity and improve the nation’s cost competitiveness in the region and globally,” said chief executive officer Aiden Mhere in an update for the third quarter to 31 December 2021.

Having successfully concluded the past milling season in mid-December 2021, Hippo’s focus is also now on ensuring a robust plant maintenance programme during the off-crop season.

 Mhere said: “As successfully achieved in prior year, the company is again planning for an early milling season start in April 2022, with the long-term goal of gradually repositioning the crop to prevent the disruptive impact of har[1]vesting during wet spells in December.

“Marketing efforts in the last quarter of the financial year are on ensuring available stocks are disposed at best value to the industry, both locally and regionally.”

According to the group, the 2021/22 sugar milling season closed in mid-December with no cane carried over to the next season.

Cane deliveries from the company’s plantations (miller-cum-planter) came in at 897 334 tonnes, representing 14% below the same period in prior year due to a combination of a 3% reduction in area that was available for harvest and a 11% drop in cane yields, due to insistent cloud cover during the past rainfall season, which constrained cane growth during the peak growing period.

However, cane deliveries from private farmers were 30% above the same period in prior year to 768 804 tonnes due to a 21% growth in yields and a 9% increase in area harvested, benefiting from prior year carryover cane.

“While private farmer yields were approximately 20% below those on the company’s plantations, the positive trajectory from prior years is commendable,” said Mhere.

While total cane milled remained stable, sugar production for the season under review increased by 2% from prior season to 209 239 tonnes due to improved factory performance, following a successful prior off-crop maintenance programme.

In terms of industry sugar sales, Hippo’s share of total industry sugar sales volume of 317 155 tonnes for the 9 months to 31 December 2021 was 53.59% compared to 49.95% in the prior year.

The total industry sugar sales into the domestic market for the same period, at 285 548 tonnes, was 10% above same period in prior year on the back of strong local demand and improved supply.

 Meanwhile, Hippo says the lack of clarity on land tenure has stalled progress on the expansion of its Project Kilimanjaro as it has resulted in delays in settling funding options with local financial institutions.

So far, 700 hectares of the Kilimanjaro Project have been set aside and allocated to new farmers by the government as part of ongoing empowerment initiatives by Triangle Limited and Hippo Valley Estates Limited. Farmers have already benefited from the proceeds of the 562 hectares planted to sugarcane in prior years at the back of impressive yields achieved in the past season.

Completion of Kilimanjaro and other projects will significantly increase sugar production to meet increasing local demand at the back of a growing population and recovery of the beverages industry, with surplus for export.

The project is also expected to contribute significantly to industry’s ability to fully utilise its installed capacity of 600 000 tonnes of sugar by 2024/2025 while positioning Zimbabwe as one of the most competitive sugar producers in the region.

Project Kilimanjaro, which is being under[1]taken by Tongaat Hulett Zimbabwe in partnership with the government and local banks, has seen a total of 2 700 hectares of virgin land being bush cleared and ripped and 562 hectares planted with sugarcane in prior years.

 The recently launched partnership framework where[1]by Tongaat Hulett Zimbabwe is co-managing certain underperforming out grower farms is also expected to yield positive results.

“The company recognizes the importance of private farmers in the growth of the industry and is committed to amicably resolving contentious contractual matters between the millers and the private farmers,” said Mhere.

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