Hippo’s sugar production to remain unchanged

HIPPO Valley Estates, the country’s largest sugar producers, will not be publishing its financial results for the half year ended June 30 2009, as it remains exempted from doing so by the Zimbabwe Stock Exchange.

Hippo told shareholders in its trading update that if published, the statement would be misleading following the move to United States Dollars based economy and the nature of its business.

The company said, it would report its results for the year ended December 31 2009.

Hippo said the milling season is forecast to end by mid-December and production is expected to be similar to the 117 348 tonnes produced in 2008.

Management at Hippo said the company has failed to up production due to lack of liquidity as well as the presence of imported sugar that has flooded the market.

However, Hippo is riding behind increased demand for the locally produced sugar that has remained reasonably firm.

Players in the sugar industry, Star africa corporation included, have suffered a major blow due to an influx of sugar imports in to the country, which are threatening the operations of local producers.

Imported sugar products are cheaper compared to locally produced ones.

Meanwhile, to the end of June 2009, the company managed to deliver 151 786 tonnes of cane, whilst the out grower groups have collectively delivered 39 523 tonnes cane, giving a total can delivery of 191 309 tonnes.

Sugar production to the end of June totalled 21 118 tonnes.

Going forth, in order to optimise cane throughput and milling efficiencies management is coming up with strategies aimed at shortening the crushing season to take advantage of the peak of sucrose period to enhance sugar production.

"Cane quality has been slightly better than forecast whilst high fibre has also assisted in significantly reducing coal consumption," Hippo said.

During the period under review, export shipments to the European Union continued in anticipation of a reduction in the EU sugar pricing dispensation as a consequence of the further de-regulation of the EU sugar regime with effect from 1 October 2009.

To take advantage of this trade partnership, Hippo said any sugar production not taken up on the domestic market would be sold to the EU and USA in terms of preferential market access that the sugar industry in Zimbabwe enjoys.

The company can only benefit if management is focused on improving cane yields and the re-establishment of out-grower cane lands to restore sugar production in the medium-term to previously achieved levels.

Local sugar producers among other beneficiaries of the European Union preferential status next month start shipping their produce to the EU without tariffs. According to the International Sugar Organisation as part of the reform, the EU will cut the reference price, used as a base for negotiations between sellers and buyers, for sugar imports.

Other African countries expected to benefit include Sudan and Mozambique. Zimbabwe, along with several African Caribbean Pacific countries, supply the EU, the world’s biggest sugar purchaser, with 1,6 million to 1,7 million tonnes of the commodity each year under preferential deals.

Besides exports to the EU, Zimbabwe also ships sugar to the United States, where it has a 12,012 tonne quota, as well as South Africa, Egypt, India, Malaysia and Canada.

This development comes after the EU announced in June this year that they are ready to disburse 2,3 million euros of the 45 million euros the regional block set aside to revamp the country’s sugar industry.

Output of raw sugar at Hippo Valley had fallen 15 percent to 297,662 tonnes during the 2008/09 period, down from 348,670 tonnes in the same period in 2007/08.

Availability of sugar on the domestic market declined mainly as a consequence of the severe price controls and speculative activities.

source: herald.co.zw