- Hippo Valley Estates export sales volumes increased by 27% to 40,246 tonnes.
- Efforts are underway to expand the regional export market base so as to reduce the market concentration risk
- Hippo Valley Estates Limited, listed on the Zimbabwe Stock Exchange, is a subsidiary of Tongaat Hulett Limited and primarily involved in growing and milling sugar cane in Zimbabwe.
Hippo Valley Estates, a leading sugar producer in Zimbabwe, has reported a 27% increase in sugar export sales volumes for the third quarter ended 31 December 2022 to 40,246 tonnes. The company attributes the jump to improved allocation of the United States Tariff Rates Quota.
“During the period under review, there was an improved allocation of the United States Tariff Rates Quota which contributed to higher average export prices. This export quota remains secure and has been consistently fulfilled,” the company said in a trading update.
According to the company, efforts are underway to expand the regional export market base to reduce the market concentration risk.
“While the Kenyan market has been a significant regional export market for the past three years, the improvement in their local sugar producers’ output has resulted in a reduction in imports from COMESA in line with the trade protocols on sugar. Efforts are underway to expand the regional export market base so as to reduce the market concentration risk,” it said.
Hippo Valley Estates Limited, listed on the Zimbabwe Stock Exchange, is a subsidiary of Tongaat Hulett Limited and primarily involved in growing and milling sugar cane in Zimbabwe.
Hippo Valley Estates is an extensive enterprise and has other interests in sugar packaging, game hunting, fishing, and livestock and citrus farming. Chiredzi Township (Private) Limited provides services for water treatment. The Hippo Valley Estates and Triangle Sugar mills in Zimbabwe have combined milling capacity to crush more than 4,8 million tons of cane annually and produce over 640 000 tons of sugar. Refining capacity is 140 000 tons per annum, according to African Financials.
Despite the decline in local sugar sales, the company’s revenue realizations on the local market remained firm, as most of its customers continued to support local brands against the imports available in the local market from May to December 2022. Hippo Valley Estates had a 52.26% share of the 397,055 tonnes of sugar sold overall by the industry, while industry sugar sales into the local market totaled 278,106 tonnes, 3% less than the comparative period.
“The decline arose from increased competition from sugar imports after the government suspended import duty through SI98 on 16 basic commodities including sugar,” the company said.
Total cane milled by the company increased by 3% during the period under review. However, one of the company’s two production lines malfunctioned in November 2022, forcing an early shutdown of the line for the remainder of the season.
As a result, 27,001 tonnes of cane had to be diverted to the Triangle sugar mill for crushing.
Despite an overall increase in cane supplies, the milling plants’ output of sugar somewhat decreased.
“This resulted from lower cane quality attributable to prolonged wetness arising from rains received at the onset of the season that had an adverse impact on cane quality,” the company said in a trading update.
“The wet weather in December 2022 also impacted the quality of cane harvested as significant rainfall was received during the month. Rainfall hinders both the harvesting and hauling of burnt cane to the mills resulting in the cane remaining in the fields for extended periods and leading to reduced sugar content.”
The firm expects the off-crop maintenance program, which started in December 2022, to be finished before the start of the 2023-24 season in April 2023.
“The focus of this annual maintenance is to minimise breakdowns and improve mill efficiencies during the crushing period,” it said.
Sugar Cane Supply Expansion Projects
After providing an update in the half-year results, the company is collaborating closely with the government to put the memorandum of understanding for how to advance the US$40 million Kilimanjaro Project as part of socioeconomic empowerment into action.
There has not been much progress made on the land tenure issues during the quarter under review, according to the company.
The company continues to partner some private farmers and this is bearing significant results on the sugarcane yields.
“Hippo Valley Estates Limited and Triangle Limited (Tongaat Hulett Zimbabwe), as was reported before, continued to provide input and extension support to over 1 000 farmers operating on approximately 20 000 ha.”
“A rigorous training programme is currently running where farmer supervisors are taken through sugarcane crop production courses covering irrigation water application and scheduling, crop protection and crop nutrition. A new course on farm management was introduced and will be rolled out beginning in March 2023.”
“The Co-Management Programme through which the Company continues to partner some private farmers by co-managing their previously underperforming farms, is in progress and bearing significant results on the sugarcane yields. Technical and extension services to the private farmers, continues on a number of new sugar-cane development projects for the benefit of the local community,” the company said.
In its outlook, the firm said both local and foreign currency funding arrangements with respected financial institutions will support any potential impact of liquidity and currency distortions on the company’s operating capital.
“Current marketing focus remains on optimising returns, specifically through prioritising local market requirements and allocating residual stocks to regional and premium international markets to generate additional foreign currency.”
“It is envisaged therefore, that there will be continued local demand in foreign currency which will assist with procurement of imports of certain specialised goods and services. Any potential impact of liquidity and currency distortions on the Company’s working capital will be supported by both local and foreign currency funding facilities with reputable financial institutions,” said the company.
