malvernmugadzikwa
Business Writer
Sugarcane farmers have welcomed the High Court judgement upholding the Government’s recent decision on how to divide revenue with sugarcane millers.
Hippo Valley Estates and Triangle Limited, subsidiaries of South Africa’s Tongaat Hulett, filed a lawsuit in the High Court against the Minister of Industry and Commerce, Mangaliso Ndlovu, recently, seeking a declaration that his directive establishing a revised Division of Proceeds (DoP) ratio, allocating 80,5 percent to farmers and 19,5 percent to millers, was null and void.
The revised DoP ratio was implemented based on a report prepared by Baker Tilly Chartered Accountants, who were engaged to review the revenue-sharing model within the sugar industry.
In the suit, Hippo and Triangle cited Minister Ndlovu as the first respondent, Baker Tilly as the second as well as 11 sugarcane farmer associations.
“They should accept it and move on for the sake of the industry,” said a representative of farmers, who is also a member of technical working group.
“What is important is to appreciate that we are partners in this business. We need each other. There is a symbiotic relationship. We, as outgrowers, contribute about 46 percent of the cane to the mills and we are truly serious stakeholders in this business.”
“We really look forward to changing times. We would want a situation where we treat each other with respect and do our business professionally. What we are looking for is equity, transparency, and fairness, and we believe our colleagues understand that. We can go far as an industry.”
The millers had challenged the directive’s legality, arguing that it exceeded the minister’s authority under section 10 of the Sugar Production Control Act.
While the Act empowers the minister to set cane prices under Cane Purchase Agreements (CPAs), the millers contended that it does not extend to setting revenue-sharing ratios under Cane Milling Agreements (CMAs).
Additionally, the millers alleged procedural deficiencies in the issuance of the directive, claiming inadequate stakeholder consultation and an economically unsustainable burden imposed on the milling industry.
The millers argued that the revised DoP ratio will significantly reduce their revenue share, thereby impacting their ability to operate sustainably.
Conversely, the respondents argued that the directive was a lawful exercise of the minister’s authority, grounded in longstanding industry practices.
They asserted that the minister’s involvement in DoP ratios had been a stabilising force in Zimbabwe’s sugar industry, historically used to address disputes between millers and farmers.
The respondents further submitted that the application should have been brought as a review rather than as a declarator, given the applicants’ focus on procedural and jurisdictional concerns.
Bongani Ndlovu