MOZAMBIQUE – Tongaat Hulett’s unit in Mozambique has revealed that cheaper sugar imports are negatively affecting the country’s local industry by depressing sales volumes amid concerns about exposing consumers to health hazards.

Presenting the financial performance for the year 2023, Tongaat’s chairman, Canaan Dube said the Statutory Instrument 98 implemented by the government last year whose six months tenure ended in November 2022 presented a huge hindrance to local industry’s viability.

The Mozambique government introduced Statutory Instrument 80 of 2023 last month in a bid to neutralize exorbitant prices in the markets. The local sugar industry is set to experience further setbacks during the instrument’s tenure.

However, Dube underscored that world sugar markets are normally residual for excess sugar supply and are affected by support policies and/or subsidies implemented by governments of sugar-producing countries.

“Local market share was compromised as a total of seventeen (17) brands were imported into the country during the SI’s tenure. The sugar industry estimated the total impact of these imports to have been 5% of the annual local sugar sales volume,” he said.

“Consequently, world sugar markets often trade below global costs of production, meaning that imported sugar has an unfair price advantage over sugar produced locally in Zimbabwe, where production costs are relatively higher.”

In addition, the chairperson stated some of the sugar imported did not comply with the labeling and Vitamin A fortification regulations, which would have formed part of the costs of locally produced sugar.

In the latest financial results for the year ended March 31, 2023, the company’s share of total industry sugar sales volume of 381 820 tons was 52.3%.

Total industry sugar sales volume into the domestic market for the year, at 338 059 tons (2022: 356 253 tons) was 5% below the prior year because of competition from low-cost imports.

Industry export sales, however, increased by 15% to 43 760 tons (2022: 38 000 tons) following an improvement of export volumes to the USA at 17 751 tons in 2023 compared to 13 798 tons in 2022.

Analysts expect revenues in Tongaat Hulett’s Zimbabwe-listed unit, Hippo Valley Estates, to top $141 million in the financial year ahead after the company secured additional land leases from the government.

Zimbabwean companies have started to see an uptick in US dollar sales of commodities as the economy dollarizes despite government efforts to prop up the local unit of exchange.

Despite this, analysts at IH Securities said in US dollar terms, Hippo Valley, which is currently mandated by Zimbabwean monetary policies to report its earnings in local currency, will raise revenues to US$141m in its year to end March 2024.

The growth will be supported by firmer prices on the international market and a 0.62% marginal increase in sugar production emanating from the increasing area under hectare and carry over-cane, said the analysts in a research note on the company.

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