According to the United States Department of Agriculture (USDA), Zimbabwe’s sugar cane production is projected to fall by 3% in MY 2014/15 to 3.8 million tonnes, due to a 12% drop in the area harvested. It notes that improved yields prevented a more dramatic fall, and that as a result overall sugar production in Zimbabwe is expected to fall by just 8,000 tonnes, to 480,000 tonnes.
Around 80% of sugar cane produced comes from the Triangle and Hippo Valley estates, in which Tongaat Hulett enjoys a 100% and 50.3% shareholding, respectively. The remaining sugar cane production comes from large-scale farmers and newly resettled farmers. The Successful Rural Sugar Cane Farming Community project aims to expand farmer-supplied cane from 800,000 to 1,400,000 tonnes, on the basis of a loan-financed revolving fund supported by the company, and a local bank and technical services (tillage cane replanting extension support), designed to improve cane yields and sucrose content.
Since 2010/11, Zimbabwean sugar production has increased by 44%, from 333,000 to 480,000 tonnes, with yields per hectare increasing by 40%, from 6.2 to 93 t/ha. Sucrose extraction has also grown in the last 2 years.
Total sugar consumption in Zimbabwe declined slightly in 2013/14 to 340,000 tonnes. However, sales of locally produced sugar were reduced to 180,000 tonnes in the face of increased imports from lower-priced world market suppliers, which reached 124,639 tonnes. These imports also pushed down local sugar prices (wholesale prices −18%; retail prices −11%). Imports largely originated from South Africa (64,570 tonnes of refined and 41,468 tonnes of raw sugar) with small volumes of raw sugar imported from Malawi (2,460 tonnes) and Zambia (1,796 tonnes); 7,447 tonnes of raw sugar and 6,898 tonnes of refined sugar were imported from beyond Southern Africa.
In response to this situation, from “17 January 2014 the government effectively stopped all sugar imports, except for importation of white manufacturers grade sugar for the beverage industry”.
In 2014/15, Zimbabwean exports to the EU are expected to remain at about 200,000 tonnes, the same level as in 2013/14.
Zimbabwe: Sugar production, consumption, imports, exports and ending stocks (tonnes)
|MY 2012/13||MY 2013/14||MY 2014/15|
Source: USDA (see below)
The increased competition from imports and lower sugar prices experienced in Zimbabwe in 2013 has led to the government resorting to trade restrictive measures which have effectively halted imports of 124,000 tonnes, the vast majority being sourced from the Southern African Development Community (SADC) region. This highlights the sensitivity of intra-region sugar trade to price shocks.
In this context, it would appear necessary for governments in sugar producing countries in Southern and Eastern Africa to discuss how to deal with the likely decline in sugar sector revenues which will arise from the abolition of EU sugar production quotas in 2017 (see Agritrade article ‘ More limited market prospects projected for sugar imports beyond 2017’, 3 March 2014). Such discussions could foster the development of joint strategies to manage the process of regional market adjustment which is likely to be necessary. This could then avoid the emergence of sugar sector trade disputes, resulting from the implementation of unilateral trade restrictions that violate regional trade policy commitments.
The expansion of smallholder farming taking place in Zimbabwe would also appear to raise the major issues of the distribution of revenues between millers and farmers arising from the development of new revenue streams based on sugar cane processing (see Agritrade article ‘ Distribution of new revenue streams raised by Mauritian cane farmers’, 21 July 2014). Previous pronouncements from Tongaat Hulett suggest that the company may be adopting a somewhat different strategy in Zimbabwe than other sugar companies elsewhere in the region (see Agritrade article ‘ Tongaat Hulett CEO highlights income gains from electricity co-generation’, 16 July 2012)