HARARE – Zimbabwe’s largest sugar producer has reported a significant recovery in sales and revenue following the government’s decision to reinstate a ban on sugar imports, which had previously claimed up to 25% of local producers’ market share.
The government, according to NewZwire, had initially lifted the import ban on sugar and other commodities in 2023 to combat rising inflation. This policy opened the market to at least 17 foreign sugar brands, which disrupted the local industry by undercutting prices and reducing market share for domestic producers.
Local Sugar Market Recovers
In its latest half-year report, Hippo Valley, which accounts for over half of Zimbabwe’s sugar production, attributed the industry’s recovery to the reinstated ban.
“Resultantly, the industry’s customers have largely switched back to locally produced sugar, with the domestic market industry sales volumes recovering by 31,716 tonnes,” the company stated.
Despite the ban, Hippo Valley highlighted ongoing challenges with illegal imports. “Unfortunately, unfortified sugar brands not compliant with regulations are still being illegally imported, and relevant authorities have been alerted,” the report noted.
Challenges with Foreign Competition
Imported sugar remains cheaper due to subsidies provided by foreign governments to their producers. In contrast, Zimbabwean producers face higher production costs, making it difficult to compete without protective measures.
Production and Revenue Growth
For the six months ending September 2024, Hippo Valley reported an 8% increase in production, reaching 159,426 tonnes of sugar compared to the same period in 2023. Industry-wide production during the period totalled 312,600 tonnes.
“This improvement in sugar production was largely driven by a combination of higher yields, a more consistent rate of delivery of sugarcane, and improved mill uptime following a successful off-crop maintenance programme that ensured better plant reliability,” Hippo said.
Revenue for the company surged by 24% to US$102.6 million, primarily due to increased sales in the domestic market, where prices are higher compared to export markets.
Supply and Export Outlook
Hippo Valley assured that there is enough sugar to meet local demand, with exports continuing to markets such as the United States. The company added that the record drought from the past season is not expected to impact output significantly.
The reinstated import ban and the subsequent recovery in local sales mark a positive turn for Zimbabwe’s sugar industry, which had been under pressure from cheaper foreign imports. However, the persistence of illegal imports underscores the need for stricter enforcement to fully safeguard the local market.
