INDUSTRY and Commerce minister Sekai Nzenza under fire from sugarcane farmers to act on a decades-old monopoly enjoyed by Zimbabwe Stock Exchange-listed Tongaat Hulett, has said she is finalising far-reaching reforms that will reshape the sector.
Nzenza, speaking exclusively to businessdigest this week, said that the reforms would revolve around overhauling the Sugar Production Control Act, a source of friction between Tongaat and cane farmers who entered the sector at the turn of the century following agrarian reforms that began in the year 2000.
The colonial era legislation enacted in 1964 has survived several phases of agricultural industry reforms since 1980.
However, it is seen as a weapon for propping up big corporations at the expense of thousands of smallholder farmers.
Nzenza was not at liberty to disclose full details of the changes to be introduced under a new legislation, but said there had been growing disquiet over the state of affairs.
“This Act is now outdated,” Nzenza told businessdigest. “It is old and we need to review it to reflect what is now happening. But this remains ongoing. The changes farmers are pushing for are in respect of the revenue sharing models.”
Her move came after sugarcane farmers scaled up the push for reforms that include an “urgent review” of the contentious revenue sharing model between growers and millers.
Farmers have complained that they are losing 77% of the value of their produce.
They said the viability of their farms was under threat.
Tongaat Hulett Zimbabwe, a unit of South-African-headquartered Tongaat, this week said it supported the policy changes.
“We believe the Act is still work in progress and that consultations are still ongoing,” Tongaat spokesperson Adelaide Chikunguru said in emailed responses to businessdigest. “Tongaat Hulett does support government policy and is supportive of this process.”
However, sugarcane farmers said the changes were long overdue.
The Commercial Sugarcane Farmers Association of Zimbabwe (CSCFAZ) said current policies were structured in such a way that 50% of farmers’ revenues were guzzled by transport, packaging and milling expenses.
If taxes were factored in, the costs rise to 77%.
“Costs take 50% of the revenue but these costs are not genuine, there is corruption,” Admore Hwarare, chairman of the CSCFAZ said, warning that the industry was under threat.
He said what farmers were earning after factoring in milling costs and transport expenses for their produce was not enough to pay the overheads that come with production.
Hwarare said a Zimbabwe Sugar Sales (ZSS) board meeting held last week rejected the industry’s latest budgets which had transport costs running into hundreds of millions of dollars.
He said the board felt that Tongaat was not treating them fairly.
“Outside this (ZSS) board, there is another independent board which is run by a big player and there is oppression there,” Hwarare told businessdigest.
He didn’t name the big player.
He said the ZSS has also been angered by a proposal for the industry to sponsor hockey.
“If you look at the whole of Masvingo, nobody plays hockey,” he said.
“We sponsor all that through the revenue of a farmer yet farmers don’t even have decent ablution facilities,” Hwarare added.
The sugar estates are mostly based in Masvingo province in the southern eastern Lowveld.
But experts said should the new reforms come into play, they could trigger ethanol and sugar prices hikes in Zimbabwe as producers pass on costs to consumers.
Ethanol producer, Green Fuel may also be affected by the reforms, according to the experts.
About eight farmers’ bodies in the Lowveld have publicly stated that Tongaat was a monopoly in the sector and claimed that this was working to their disadvantage.
The farmers have repeatedly knocked on Parliament’s doors seeking a complete repeal of the legislation.