Fears rise over delayed Hippo Valley, private farmers supply deal

BUSINESS REPORTER

 

The slow progress in finalizing a supply agreement with private farmers has caused the total output of sugar produced by Hippo Valley Estates Limited to decrease in the quarter ending June 30,2023.

The low cane throughput during the first five weeks of the milling season, according to Hippo Valley, had a negative impact on milling time efficiencies.

There are now growing fears that the delay will adversely impact on the company’s performance in this second half of the year.

“Total sugar produced for the quarter amounted to 57 427 tonnes, trailing prior year by 10.6% due to delayed deliveries by farmers on account of late finalisation of sugarcane supply contractual agreements with private farmers,” Hippo Valley said.

According to the company, the annual crop maintenance program was successfully finished before the 2023–2024 season, which led to the plant starting up as planned in the first quarter.

Improvements in recovery efficiencies have been made as a result of cane quality and cane to sugar ratios that are both above target.

A revised cane delivery plan is being developed to maximize milling capacities at the Triangle Mill in order to finish the season as planned and prevent carryover of cane.

The business keeps taking proactive steps to overcome these obstacles, including initiatives to increase productivity and cut costs.

In a trading update for the quarter to June 2023, revenue for Hippo Valley, shot to ZWL$231.4bn   from ZWL 14.9bn reported in the prio comparative period as a result  of price adjustments in response to hyperinflationary pressures.

Although El Nino episodes, which are characterized by dry and warm conditions  are anticipated between December 2023 and March 2024, the major water supply dams, according to Hippo Valley, provide enough protection for the industry’s irrigation regimes for about two seasons.

Total industry sugar production for the 2023/24 season is forecast at 414 773 tonnes against 396 682 tonnes produced  during the 2022/23.

To increase capacity utilisation in the medium to long term, the industry is putting both vertical (yield and quality improvements) and horizontal (new developments) strategies into practice.

Future seasons’ yields will be significantly improved by deliberate ploughing out and replanting plans as well as the introduction of new varieties.

While the local market continues to be crucial for the industry, current marketing initiatives continue to be concentrated on increasing and optimizing returns from both local and premium export sales. Management gives priority to effective fulfillment of commitments to existing regional and premium international markets as well as development of new markets, which is required for the generation of additional foreign currency to sustain the industry’s requirements for critical imports.

The business wants to put a stronger emphasis on using sustainable practices in both its internal operations and with the community in which it operates.

 

 

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