ZIMBABWE – The surge in cheap sugar imports into Zimbabwe has raised alarm in the local sugar sector, with increasing worries that the country may have an excess of nearly 100,000 tonnes of domestically manufactured sugar by next March unless swift actions are implemented to restrict imports.
This surge in cheap imports followed the government’s decision to lift the duty on sugar products, leading to dire consequences for the local sugar sector.
The imported sugar primarily originates from Zambia, Malawi, and Mozambique and competes directly with locally-produced sugar milled by Tongaat Hulett Zimbabwe at Triangle and Hippo Valley estates
More than 1,300 commercial out-grower farmers and over 20,000 workers employed by Tongaat Huletts, responsible for sugar mills and plantations at Hippo Valley and Triangle estates, are now facing an uncertain future.
The rapid proliferation of these inexpensive imports has resulted in a severe cash crunch for the local sugar industry.
As a direct consequence, Tongaat Huletts has been compelled to delay payments to cane farmers, which were originally scheduled for 15, September 2023.
In an official statement addressed to farmers, Tongaat cited the challenge of mobilizing adequate funds due to the downturn in local sugar sales.
Worries loom large that the situation could deteriorate as the year progresses, potentially leading to the collapse of the local sugar industry.
This collapse would not only leave farmers and millers in a precarious financial position but would also have a significant impact on the economy.
In a recent communication to Zimbabwe Sugar Sales (ZSS) board members dated September 11th, Tracey Mutaviri, General Manager of Tongaat, painted a grim picture of the local sugar sales landscape.
“As a result of depressed local sales, the stock has been building up, and if the current trend persists until March 2024, stocks will potentially close at 94,000 tonnes by March 31, 2024—64,000 tonnes more than the planned closing stock of 30,000 tonnes,” she revealed.
“High closing stock will delay the closure of the 2023/24 season and continue to pose liquidity challenges for both MCP and farmers as cash will be tied in stocks for a longer period.”
Saul Chin’anga, spokesperson for the Zimbabwe Sugarcane Development Association, pointed out that while the initial rationale behind sugar imports was to stabilize local prices, it was now shocking to discover that the prices of both imported and locally-produced sugar were virtually identical.
Zimbabwe has become a dumping ground for lower-quality sugar from neighbouring countries since the government opened the doors to imports and removed import duties on basic commodities earlier this year.
However, industry experts now contend that these problems have been resolved, and with retail prices for locally milled sugar and imports nearly identical, the justification for continued imports is waning.