HIPPO Valley Estates (Hippo), one of the country’s two major sugarcane producers, says the decision by the Reserve Bank of Zimbabwe to liquidate US$2,68 million from its foreign currency account
(FCA) will worsen the current shortage of sugar.
The RBZ last week directed that US$2,68 million be liquidated from the company’s FCA on grounds that its banker had violated exchange control regulations with respect to the liquidation of FCA balances within the 30 days stipulated by the Reserve Bank.
“This development will adversely impact on the company’s ability to import critical inputs and thus seriously undermine production,” Godfrey Gomwe, the chairman of Hippo, said.
Hippo has denied violating exchange regulations and has since appealed to the RBZ to reverse the liquidation. Hippo is arguing that the funds were approved by the exchange control authorities and were within the stipulated retention period.
Gomwe said the monitored domestic sugar prices, which are grossly unviable and uncompetitive when compared to the regional markets, were the major cause of the current sugar shortage as it created room for speculative activities.
“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.
On the problems with their seized land, Gomwe said parts of Hippo Estates remained listed for compulsory acquisition under Section 5 despite objections lodged with the relevant authorities.
In his annual report for 2004, Gomwe said the company achieved an overall cane yield of 86,45 tonnes per hectare – a drop of 18,7% from the prior year’s average yield of 106,28 tonnes.