BY LORRAINE NDEBELE
Zimbabwe Stock Exchange-listed sugar producing giant Hippo Valley Estates says total industry exports plummeted during the third quarter ended December 31, 2021 after shipments to Kenya were halted.
Kenya, one of Zimbabwe’s key brown sugar export destinations, has scaled up restrictions on cheap imports to protect its industry.
Hippo, along other Zimbabwean producers previously enjoyed significantly less restricted access into that market under Common Market for East and Southern Africa (Comesa) regulations.
However, Nairobi has been granted safeguards by the pan-African bloc to protect domestic producers from regional peers.
The steady growth of Nairobi’s sugar industry in the past two decades, which has seen the establishment of 15 white sugar mills, while several jaggery operators have moved in, has been attributed to the these policies.
In a trading update for the review period, Hippo said the Zimbabwe Sugar Sales, which markets products from domestic millers, was scouting for new export markets following developments in Kenya.
“Following the industry’s reduced Comesa quota allocation into Kenya for the year, export sales volume reduced by 68% to 31 607 tonnes,” Hippo chairperson Canaan Dube said.
The industry exported 97 620 tonnes to Kenya during the comparable period in 2020.
“The volumes originally targeted at the Kenyan market were redirected to the local market to satisfy the strong local demand. Efforts are underway to develop other regional markets to reduce Kenya market concentration risk. The country’s annual export quota to the United States of America remains secure and fully satisfied,” Dube noted.
Hippo said its share of total industry sugar sales volumes increased to 53% during the review period, compared to 49,95% during the comparable period in 2020.
According to Rosemary Owino, head of the sugar directorate in Kenya’s Trade ministry, in August 2020 the area under cane increased by 24% to 197 438 hectares from 159 288 hectares in 2010 as demand spiralled in 2019.
Dube said in December last year that Hippo was working around the clock to address over-reliance on the Kenyan market.
But in Harare, domestic demand has been bullish and volumes previously targeted for international markets have been deployed to meet the healthy absorption by Zimbabwean consumers.
“Market development efforts are underway to establish other regional markets to supplement the existing stable Botswana market and reduce Kenya market concentration risk,” Dube said in December.
“The industry concluded the sale of 13 000 tonnes of sugar under the country’s annual export quota to the United States, at an average net price 9% above target,” Dube said.
Commenting on the outlook on Tuesday, Dube said: “Having successfully concluded the past milling season in mid-December 2021, focus is now on ensuring a robust plant maintenance programme. As successfully achieved in prior year, the company is again planning for an early milling season start in April 2022, with the long-term goal of gradually repositioning the crop to prevent the disruptive impact of harvesting during wet spells in December.
“Marketing efforts in the last quarter of the financial year are on ensuring available stocks are disposed of at best value to the industry, both locally and regionally”.