HomeBusiness DigestSugar shortages in sight, warns producer

Sugar shortages in sight, warns producer

Eric Chiriga

ZIMBABWE is likely to experience more sugar shortages as Zimbabwe Sugar Refineries (ZSR), the country’s biggest sugar producer, says they would not be able to produce to the

ir normal capacity because of logistical problems.

ZSR, which produces about 40% of Zimbabwe’s sugar requirements, is currently hamstrung by the shortage of coal and foreign currency problems.

The company has a production capacity of 220 000 tonnes per year at its two refineries.

In an interview with businessdigest, ZSR chief executive, Pattison Sithole, said sugar production had been adversely affected.

“We are facing problems in moving raw sugar from the Hippo and Triangle estates,” Sithole said.

“This has been compounded by the shortage of coal,” he said.

Sithole refused to disclose how much sugar they expected to produce this year.

He said ZSR used to import coal from Botswana but they had since stopped due to lack of foreign currency.

Sithole also said price controls introduced by government had a negative impact on their business.

“The price of sugar has not been going up at the same rate as the cost of production and this is affecting our margins,” he said.

Sithole refused to comment on the effects on their business of the takeover of part of their sugar estates under the land reform programme.

“You will need to ask Triangle and Hippo Estates on that issue,” he said. Sugar has become a scarce commodity and long queues have become a common sight outside supermarkets where consumers expect supplies.

Meanwhile, the sugar crisis will be further exacerbated as cane producer, Hippo Valley Estates (Hippo), says that the move by the Reserve Bank of Zimbabwe (RBZ) to liquidate US$2,68 million from its Foreign Currency Account (FCA) will severely undermine production.

On August 12, the RBZ directed that US$2,68 million be liquidated from the company’s FCA on the grounds that the company’s banker had violated exchange control regulations with respect to the liquidation of FCA balances within the specified period.

“This development will adversely impact the company’s ability to import critical inputs and thus seriously undermine production,” Godfrey Gomwe, the chairman of Hippo, said.

Gomwe said this contention is rejected and the company has since lodged an appeal with the RBZ for the reversal of this directive on the grounds that the applications in question were indeed lodged with, and approved by the Exchange Control Authorities within the stipulated retention period.

He said the monitored domestic sugar prices, which are grossly unviable and uncompetitive when compared to the regional market, precipitated intense speculative activities, thereby exacerbating shortages of sugar in the local market.

“The economic improvements recorded during the greater part of 2004 and early 2005 in response to the RBZ monetary policy interventions have started to reverse,” Gomwe said.

He said Hippo remains listed for compulsory acquisition under Section 5 despite objections being lodged with the relevant authorities, and this has also affected their yields.

In his annual report for 2004, Gomwe said the company achieved an overall cane yield of 86,45 tonnes per hectare – a decrease of 18,7% from the prior year’s average yield of 106,28 tonnes per hectare.

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