Chronicle Editor
Sikhulekelani Moyo, [email protected]
LISTED agro-industrial concern, Hippo Valley Estates Limited says while the local market remains pivotal for the industry it will prioritize existing regional and premium international markets and search for new avenues as it seeks to expand its reach and increase foreign currency generation to sustain the industry’s requirements for critical imports.
In a trading update for the first quarter ended 30 June 2023, the company said revenue realization on the local market, in both local and foreign currency, remained firm as most customers continued to support local brands for the better part of the quarter under review.
It said volume decline was evident in the last weeks of June as the impact of duty-free sugar imports set in adding that various measures are being implemented to defend market share in the domestic market.
Industry exports amounted to 3 423 tonnes (2022: 10 039 tonnes) with the deferential being due to the fact that in the prior year, there were carry-over export allocations that were rolled over while in the current year the bulk of the export orders will be processed in the second and third quarters of the year.
However, it said current marketing initiatives remain focused on growing and optimising returns from both local and premium export sales.
“Whilst the local market remains pivotal for the industry, management prioritises efficient fulfilment of commitments to existing regional and premium international markets as well as the development of new markets, necessary for the generation of additional foreign currency to sustain the industry’s requirements for critical imports,” said Hippo Valley Estate.
It noted that industry sugar sales into the domestic market for the period under review totalled 87 816 tons from 84 228 tons recorded in the same period last year representing a four percent growth.
“The increase was largely on account of firm demand from industrial customers during the quarter ending 30 June 2023,” they said.
Total sugar produced for the quarter amounted to 57 427 tonnes, trailing prior year by 10,6 percent due to delayed deliveries by farmers on account of late finalization of sugarcane supply contractual agreements with private farmers.
The annual crop maintenance program was successfully completed before the 2023/24 season which resulted in plant start up as scheduled in the first quarter.
The update notes that the low cane throughput in the first weeks of the milling season negatively impacted milling time efficiencies.
However, cane quality and cane to-sugar ratio are both above target to date resulting in improved recovery deficiencies.
It highlighted that in order to finish the season as planned, and avoid carry over of cane, a revised cane delivery plan is being worked out to optimize milling capacities with the Triangle Mill.
Zimbabwe’s sugar industry is one of the country’s largest agricultural bases with higher prospects for growth in exports.
According to recent data from the United Nations COMTRADE database on international trade, Zimbabwean sugar exports and confectionery stood at around US$17,14 million in 2021.
As part of its mandate to improve exports, the national trade development and promotion organisation, ZimTrade conducted a market analysis in Malaysia where the organisation said local sugar producers have an opportunity to expand their footprint by tapping into that market.
The country’s main sugar markets are South Africa, Botswana, Namibia, Zambia, Mozambique, Kenya, and Malawi.
However, ZimTrade said that there are higher prospects for more export gains if local sugar producers expand their business footprint to international markets, including Malaysia.
Meanwhile, the sugar company said historic revenue realised in the first quarter grew by 785 percent to $131,9 from $14,9 billion recorded during the same period last year on the back of price adjustments in response to hyperinflationary pressures.
-@SikhulekelaniM1
Online Reporter