Sugarcane farmers seek price review
Sugarcane producers in the country are seeking an upward review of their share of revenue from sugar sales citing high costs of production, Business Weekly can report.
In terms of the division of proceeds (DoP) agreement between cane farmers and Tongaat Hulletts
— which operates two mills at the Hippo Valley Estates and Triangle — farmers get 77 percent of revenue from sugar while the miller retains the balance. Cane farmers are arguing its revenue portion has become “too little” given high costs of producing sugarcane and are now seeking to have it raised to 85 percent.
“We hired a consultant who recommended 85 percent as a fair share of the proceeds,” Hippo Valley Sugarcane Farmers Association ( HVSFA) Patrick Muvhingi said.
“We have engaged the Minister of Industry and Commerce (Dr Sekai Nzenza) and we are now waiting for her to convene an all stakeholder meeting anytime soon.”
Several calls seeking a comment from Dr Nzenza were not answered.
Zimbabwe Sugar Sales ( ZSS) chairman Muchadeyi Masunda said the matter was under “active consideration”. ZSS is the marketing and distribution arm of Zimbabwe’s sugar.
“Farmers are feeling short-changed when it comes to sharing of the proceeds and they need the formula revisited so that they can maximise their earnings,” said Masunda.
The sugar industry is one of the largest formal employers in Zimbabwe with a total labour force of between 25 000 to 27 000 employees mainly in the country’s Lowveld.
In addition to making sure that the needs for domestic consumption of sugar are met, ZSS currently exports sugar to a number of countries within the SADC and COMESA blocs as well as North America. ZSS is also working with ZimTrade with a view to penetrating the potentially lucrative markets in the Democratic Republic of Congo ( DRC) and the Great Lakes region comprising Rwanda and Burundi.
Meanwhile, sugarcane farmers are seeking a redress through an arbitration after Tongaat Hulletts “reneged” on agreement to share revenue from by-products. Tongaat, Zimbabwe’s sole sugar milling firm and farmers have an agreement, which allows farmers to either collect the molasses or get paid for it, according to HVSFA. Alternatively, millers can further process the residue into ethanol and use revenue generated from ethanol to pay farmers.
“Sugarcane millers are failing to accommodate farmers in the value addition although there is an agreement,” Muvhingi said.
From the sugarcane milling process, about 3,5 percent is realised as molasses. The molasses is processed into ethanol by a Fuel Ethanol Zimbabwe, a company jointly owned by Triangle and the National Oil Infrastructure Company ( NOIC).
Apart from molasses, the other major by product from sugarcane milling process is bagasse, used in power generation. Currently, Hippo Valley Estates produces 44 megawatts ( MW) from Hippo Valley Estates and 45MW from Triangle.
Prior to the land reform, which started at the turn of the millennium, Tongaat, which owns mills in Triangle and Hippo owned 75 percent of all the land under sugarcane. Changes in land ownership saw a major transition as plantations under Tongaat declined to 56 percent while out-growers took control of the remaining 44 percent. This culminated into a prolonged antagonistic relationship between Tongaat and the farmers.
In 2019, farmers petitioned Parliament for the repeal of the Sugar Control Production Act, arguing that it has been overtaken by developments resulting from land reform.
In the petition signed by eight associations representing local farmers in the Lowveld, sugarcane growers sought reforms in the entire value chain from a regime of monopoly by Tongaat to that which takes into account changes in the industry resulting from land reform programme that increased participation of local farmers.
The farmers unanimously concurred the Sugar Production Control Act of 1964 was out-dated.
The farmers indicated that the Act is devoid of the following; the establishment and incorporation of the Zimbabwe Sugar Association, membership and composition of the association, powers of the
ZSA Council and sugar industry agreements. The associations noted with concern that Tongaat is the sole-dominant player in the entire sugar milling process in the sugar industry value chain in Zimbabwe.