Tongaat Hulett agrees to rectify payment mechanism for cane deliveries

ZIMBABWE – Tongaat Hulett, an agriculture and agri-processing-focused company, will soon rectify the payment mechanism for cane deliveries in the current milling season in Zimbabwe as part of its commitment to creating a viable sugar industry for the country.

Out-grower farmers, who account for 45 percent of Zimbabwe’s aggregate sugar cane production and are beneficiaries of the land reform program in the country, have been discouraged as many of them have landed into bankruptcy owing to what they said was a skewed payment model by Tongaat.

Farmers, beginning the impending 2023/24 milling season, were scheduled to start at the beginning of April, and want to be given a choice between a Milling Agreement and a Cane Purchase Agreement.

The Cane Purchase Agreement entails that out-growers sell their sugarcane to Tongaat and get paid once-off an agreed fee per tonne of delivered cane.

Meanwhile, the Milling Agreement entails that the farmer owns their milled sugar until it is disposed of in the shops, with Tongaat only providing milling services charged at 27 percent.

This is the agreement that is provided to commercial cane farmers in the Lowveld cane block, and the farmers have been repulsive.

The stand-off with Tongaat has resulted in out-growers delaying cane harvesting for the current milling season to push for an agreement first.

A high-powered ministerial delegation is expected in Chiredzi to try to hammer out an agreement between Tongaat and the farmers.

Farmers noted that delays in harvesting by out-growers will not hurt local supplies, as there was a surplus carried over from the prior season, which closed on 31 March, according to local news outlets.

Other reports point out that farmers were threatening to forcibly close the country’s only two sugar mills at Hippo Valley and Triangle to pave the way for talks to strike an agreement.

Tongaat Corporate and Industry Affairs Executive Dr. Dahlia Garwe expressed hopes and optimism of a breakthrough, explaining that the way forward for the industry was predicated on the outcome of an arbitration process facilitated by the Government through the Ministry of Industry and Commerce.

She added that Tongaat had started harvesting its cane for the new milling season and out-growers will soon follow suit.

“It is important to note that there was an arbitration process that was facilitated by the Ministry of Industry and Commerce that took place. The award was only given on 13 April, and we are now looking at complying with the terms of the award,” Dr. Garwe said.

“Farmers have approached us with proposals on both a cane milling agreement and a cane purchase agreement. We expect that we will reach an agreement with the farmers on the way forward in the next few weeks.”

Tongaat also pledged to continue assisting out-growers to ramp up sucrose output, with Dr. Garwe highlighting that an out-grower extension scheme is in place to help ramp up yields.

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