GOVERNMENT’S decision to review duty upwards on sugar imports will enable local sugar industry players to regain lost market share, a sugar concern has said.
In his mid-term fiscal policy review recently, Finance minister Patrick Chinamasa increased duty on a wide range of imports of finished products, including cooking oil, poultry, soap, maize-meal, flour, beverages, sugar, fresh and canned fruits and vegetables, among others.
The Finance minister introduced a 10% duty plus a $100 per tonne importation levy.
However, in its results for the year ended March 31 2014, Hippo Valley Estates Limited’s revenue declined by 22% to $136 125 000.
Hippo Valley Estates Limited is a Zimbabwe-based company engaged in the growing and milling of sugarcane and other farming operations.
The company’s chief executive Sydney Mutsambiwa told shareholders at the company’s annual general meeting that sugar imports into Zimbabwe reached almost 100 000 tonnes during the period under review as anyone could import resulting in a dramatic reduction in revenue.
“As a result of regulatory interventions, we have seen a significant reduction in imports and consequently this has manifested in fair levels of prices with a fairly modest off,take,” he said.
He said sales performance was below expectation due to challenges on the domestic market adding that the company’s situation was a lot better.
“Our key concern is liquidity. We believe there are good prospects of the situation getting back to normal. A lot will depend on the agricultural sector’s performance in particular tobacco and cotton,” he said adding that Hippo Valley’s anticipation is that the crop will be comparable in terms of yield.
Profit for the year also declined from $13 586 000 during the year ended March 31 2013 to $9 015 000.
Company chairman Murray Munro said the decline in profitability was a result of margin squeeze in both domestic and export markets caused by the low prices achieved during the 2013 to 2014 marketing season.
He said the recent good rains which saw almost all the dams supplying the industry attaining the 100% full capacity level, has revived the industry’s expectations of restoring sugar production to installed milling capacity of around 640 000 per annum.
“The replanting programme has since resumed and is now back on track and is gaining momentum with sugar production expected to progressively increase over the next four years,” said Munro. “The recently instituted measures to protect the local market against unfair competition from cheap world market imports are expected to yield positive results in the short term resulting in early restoration of lost market share,” he said.
It was noted that international sugar prices have come under pressure in recent months, a situation which has brought pressure on the company’s revenue lines.