Zimbabwe sugar millers appeal High Court ruling on revenue-sharing model

ZIMBABWE – Zimbabwean sugarcane millers have lodged an appeal against a High Court ruling that upheld a government directive mandating an 80.5 to 19.5 percent revenue split in favor of farmers under a sugarcane milling agreement. 

Hippo Valley Estates and Triangle, both subsidiaries of South Africa’s Tongaat Hulett, had previously challenged the directive issued by Industry and Commerce Minister Mangaliso Ndlovu.  

The millers argued that the decision was invalid and exceeded the minister’s authority under the Sugar Production Control Act. 

According to Hippo Valley’s trading update for the third quarter ending December 31, the company has now filed an appeal with the Supreme Court, contesting the changes to the Division of Proceeds (DoP) model.  

The revenue-sharing adjustment was implemented following recommendations from Baker Tilly Chartered Accountants, which conducted a review of the sugar industry’s revenue framework. 

The revised DoP ratio marks an increase from the previous 77 percent allocation to farmers and 23 percent to millers. The new directive, the millers argued, imposes an unsustainable financial burden on their operations. 

In their lawsuit, Hippo Valley and Triangle named Minister Ndlovu as the first respondent, Baker Tilly as the second, along with 11 sugarcane farmer associations. 

They contended that while the minister has the authority to set cane prices under Cane Purchase Agreements (CPAs), this authority does not extend to revenue-sharing terms under Cane Milling Agreements (CMAs). 

The millers also raised concerns over procedural flaws, claiming that the directive was issued without adequate stakeholder consultations.  

They warned that the revised revenue split would significantly reduce their earnings, affecting their ability to sustain operations, invest in infrastructure, and cover essential costs such as machinery maintenance, fuel, labor, and distribution. 

Additionally, they argued that the directive unfairly favored farmers while disregarding the capital investments and operational expenses required for milling.  

The 19.5 percent allocation to millers, they said, undermines previously established DoP ratios, which had been determined through expert assessments aimed at balancing the interests of both parties. 

In response, the respondents defended the directive, asserting that it was a lawful exercise of the minister’s authority and aligned with longstanding industry practices. They noted that government intervention in DoP ratios had historically played a role in stabilizing Zimbabwe’s sugar industry by mediating disputes between farmers and millers. 

Furthermore, they maintained that Baker Tilly conducted extensive consultations with stakeholders, and the revised ratio was based on a comprehensive evaluation of economic data and industry conditions.  

They also argued that the millers should have filed their challenge as a review rather than a declaratory application, given that their objections focused on procedural and jurisdictional concerns. 

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