Listed sugar producer, Hippo Valley Estates is still enduring the pains of a duty waiver placed on basic commodities after suffering a significant decline of sugar sales.
In the first half of 2022 Finance Minister, Mthuli Ncube under Statutory Instrument 198 allowed 16 basic commodities which include sugar, cooking oil, soap, margarine, petroleum jelly among other commodities in response to heightened indiscipline which saw weakening parallel market exchange rate induced inflation taking its toll on citizens.
The measure effectively protected citizens from escalating prices of basic commodities locally.
Presenting a trading update for the third quarter which ended December 31 2022, Hippo Valley chairperson, Canaan Dube said the policy measures affected the industry as a whole.
“The Company’s share of the total industry sugar sales volume of 397 055 tonnes (2021: 317 155 tonnes) for the 9 months to 31 December 2022 was 52.26% (2021: 53.59%).
“Industry sugar sales into the domestic market for the same period totaled 278 106 tonnes (2021: 285 548 tonnes), and were 3% below the comparable period in the prior year. The decline arose from increased competition from sugar imports after the Government suspended import duty through SI98 on 16 basic commodities including sugar,” he said.
However, the government withdrew the duty suspension as at November 30 2022 as pronounced in the National Budget for 2023 document.
During the period, 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 cane remaining in the fields for extended periods leading to reduced sugar content.
Revenue realisations on the local market, in both local and foreign currency, remained firm as most customers continued to support local brands against the imports that were available in the local market from May to December 2022.
Export sales volumes increased by 27% to 40,246 tons (2021: 31,607 tons). During the period under review, there was an improved allocation of the United States Tari- Rates Quota which contributed to higher average export prices.