By ETimes
HARARE – Hippo Valley Estates sugar production for the 5 months to August 2023 declined by 9% 66,319 tonnes from 72,058 tonnes in the comparative period last year, with the sugarcane miller emphasising that the duty-free importation of cheaper sugar is impacting viability.
This comes as the industry’s sugar sales into the local market remain under pressure from competing sugar imports under SI 80/2023.
Chief executive Aiden Mhere said they are “not afraid of competition” but informal traders undermine the “orderliness of doing business.”
“They may sell at prices that are not really expected in a formal retail chain,” he told this publication on the sidelines of the company’s annual general meeting held in the capital.
However, total industry sales surged by 9% to 177,836 tonnes from 162 761 in the previous period. Hippos’ share of industry sales stood at 53%.
“Excess stocks will be exported improving foreign currency generation, albeit at a lower margin.”
Like any other business, Hippo is concerned about the stability of the currency.
“Initiatives to contain increasing cost pressures and cash flow constraints impacting competitiveness are being actively managed,” he said.
Mhere said there has been no material change on issues relating to land tenure since year-end.
While the country is poised to experience the El Nino phenomenon in the current season, Mhere said the Tugwi-Mutirikwi and Manyuchi water systems have slightly more than 3 years of irrigation cover “adequate for 85% of the sugar industry requirements”.
The company’s cash requirements for the current crushing season are higher than the previous year.
He said most farmers have signed purchase agreements that require funding before the sugar is sold.
“Consequently, the company’s borrowings are expected to be higher than the previous year during the course of the crushing period,” he said.
Shares in Hippo rose 7.91% to $1650.04 on Friday