Online Reporter
Sikhulekelani Moyo
The 1964 Sugar Production Control Act should be amended by October 31, while an independent consultant should be engaged by the same date to review the Division of Proceeds formula, Parliament has recommended.
Among 12 measures recommended by the Parliamentary committee on Industry and Commerce following an extensive inquiry into the sugar value chain is that the National Railways of Zimbabwe should be recapitalised through the Mutapa Investment Fund by December 31, with at least half of the rail infrastructure serving the sugar industry having been rehabilitated.
The inquiry exposed deep-rooted structural challenges threatening the competitiveness and sustainability of the strategic industry.
The committee further recommended issuing bankable tenure to at least 70 percent of out-growers within two years, establishing a concessional financing facility at below 15 percent interest by December and prioritising water and power supply for the sugar industry while transitioning to consumption-based water billing.
It also calls for Vitamin A fortification to be incorporated into import licensing to level the playing field.
The committee also wants the installation of an additional mill at Mkwasine with a capacity of 5 000 to 10 000 tonnes per day, a review of the market structure by the Competition and Tariff Commission and a review of sugar tax and fortification policies by December 31.
The committee report follows extensive stakeholder consultations, oral evidence sessions and verification visits to Tongaat Hulett’s Triangle and Hippo Valley estates, as well as out-grower plantations in the Lowveld.
The committee said sugar remains a strategic agro-industrial pillar, contributing to employment, electricity generation through bagasse, ethanol production and downstream manufacturing.
Key findings by the committee include monopoly milling.
“The Committee found that Zimbabwe has only two sugar mills, that is Hippo Valley and Triangle, both owned by Tongaat Hulett, unlike Egypt and South Africa which have more than 14 mills (each),” reads the report.
“This dominance was found to limit competition and weaken farmers’ bargaining power.
“High cost structure: Farmers and millers cited prohibitive costs. Ninety-eight percent of fertiliser and herbicide raw materials are imported.
“A 15-hectare plot incurs employee costs of US$2 814, wear and tear US$2 697 and cane haulage US$2 517.”
The committee found out that water from the Zimbabwe National Water Authority (ZINWA) costs US$6,82 per megalitre, with 15 megalitres needed per hectare annually.
“Electricity is charged at US$4,75/kWh, with farmers paying an average ZW$1 799,73 per hectare per month,” said the committee in the report.
The committee said the difficulties facing the National Railways of Zimbabwe forced reliance on expensive road haulage.
“Rail turnaround is over four days compared to one day by road.
“At the time of visit, the cane rail system was non-functional,” said the committee.
“Roads to mills were also in poor condition.
“Farmers in Mkwasine incur the highest haulage costs due to distance from mills.”
The committee said non-bankable tenure prevents farmers from using land as collateral.
Those who access loans are charged up to 60 percent interest per annum.
“An estimated 90 percent of small-scale out-growers rely on contract farming,” said the committee.
“Division of Proceeds (DoP) Dispute: The revenue-sharing formula remains a major flashpoint.
“The current ratio stands at 80,5 percent for farmers and 19,5 percent for millers, a deviation from the regional average of 63 percent farmers / 37 percent millers.
“Farmers allege lack of transparency, claiming millers control weighing without farmer representation.”
On pricing and taxes, the committee said local sugar is priced at US$890 to 900/tonne against an import parity price of US$600/tonne.
According to Delta Beverages, the sugar tax introduced in February 2024 at $0,001 per gramme of added sugar increased beverage prices by 15 to 45 percent, leaving over 90 000 tonnes uncommitted for 2025.
Mandatory Vitamin A fortification, effective July 2017, adds US$9 to US$10 per tonne, making local sugar uncompetitive in export markets.
On utilities, erratic water and electricity supply disrupts irrigation.
“The prevailing water billing model charges based on allocation not actual consumption, while illegal upstream abstraction and underutilisation of Tugwi-Mukosi Dam worsen shortages,” said the committee.
The committee observed that the Sugar Production Control Act [Chapter 18:19] of 1964 was outdated and co-assigned to two ministries, creating inefficiencies.
The other measures it recommended included the issuance of bankable tenure to at least 70 percent of out-growers within two years, establishment of a concessional financing facility below 15 percent interest by December and prioritisation of water and power supply for the sugar industry.
“The sugar value chain remains a critical pillar of the economy with strong potential for growth and value addition,” said the committee.
“However, its competitiveness is constrained by macroeconomic instability, high input costs, infrastructure deficits and institutional inefficiencies.”
The committee urged coordinated reforms to ensure a sustainable, competitive and inclusive sector.
