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Sikhulekelani Moyo, Business Reporter
GIANT sugar producer Tongaat Hulett says it has lost 56 percent of its export volume sales following the industry’s reduced Common Market for Eastern and Southern Africa (Comesa) quota allocation to Kenya this year.
TongaatHulett is an agriculture and agro-processing business, focusing on sugarcane farming, milling, packing and distribution and is also into cattle ranching.
The group operates Hippo Valley Estates Limited and Triangle Limited.
In a financial report for the half-year ended September 2021, Tongaat said export sales volume for the period dropped to 29 558 tonnes against 66 629 tonnes achieved during the same time last year.
“Following the industry’s reduced Comesa quota allocation to Kenya for the year, the export sales volume for the half year reduced by 56 percent to 29 558 tonnes against 66629 tonnes last year,” said the company.
This has prompted the business to start working towards establishing other alternative regional markets so as to reduce risks imposed by different market fluctuations.
“Market development efforts are underway to establish other regional markets to supplement the existing stable Botswana market and reduce Kenya market concentration risk,” said Tongaat.
“The industry concluded the sale of 13 000 tonnes of sugar under the county’s annual export quota to the United States at an average net price of nine percent above target.”
Despite the fall in its export market, the company said there was an increase in the demand of sugar in the local market, which resulted in the company supplying the existing local market with the export quota.
“Volumes originally targeted this market were redirected to satisfy strong local demand,” said Tongaat.
“The total industry sugar sales into domestic market for the period under review were 23 percent above same period in prior year due to a combination of strong local demand and improved supply,” said the company.
On the outlook, the company said total production for the sugar industry was forecast to grow towards maximum milling capacity over the next five years driven by both vertical and horizontal sugarcane growth.
“With adequate irrigation water for at least two seasons at normal water duty secured in the industry’s key water systems and positive rainfall forecast, the total production for the sugar industry is forecast to grow towards maximum milling capacity over the next five years driven by vertical and horizontal sugarcane growth,” said the company.
Citing the need for business continuity amid the threat of Covid-19, Tongaat, which has been classified as an essential service, said it has established pandemic preventive and reactive protocols in anticipation of the fourth wave.
It also noted that supply chain constraints have been mitigated by advance planning and procurement of critical spares and inputs resulting in adequate sugar being available to cover both local market requirements and export commitments. – @SikhulekelaniM1.
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