HIPPO Valley Estates Ltd (Hippo) says the recent 74% hike in sugar prices is only a temporary reprieve and it will seek another increase soon. The government allowed Hipp
o to increase sugar prices on May 9.
According to the agreement, fine sugar now costs $155 a kg, while brown sugar is $143 a kg. Company officials said input costs had increased dramatically.
“The new prices have been overtaken by events and the company will certainly need another increase in the next few weeks,” a company official said.
A kilogramme of sugar costs $800 on the black market.
Sugar is now a monitored product and companies are required to send their price proposals to government for approval.
Hippo this week appointed Godfrey Gomwe, as chairman, taking over from Len Bruce who steps down to become an ordinary director.
Gomwe is chief executive officer of mining giant Anglo American Corporation of Zimbabwe Ltd.
He is also chairman of Zimbabwe Alloys (Pvt) Ltd, Bindura Nickel Corporation Ltd, Willdale Ltd, National Foods Holdings Ltd, and Mashonaland Holdings Ltd.
At this week’s annual general meeting Hippo said the total cane production was likely to ease by between 30 000 and 40 000 tonnes, owing to the low yield in the A2 resettlement scheme.
Last year the company produced 284 100 tonnes of cane.
Outgoing chairman, Bruce was however quick to point out that despite the shortfall Hippo would meet both the domestic and export demand for sugar.
Bruce said: “Cane deliveries from the Mkwasine have been hampered by the state of rail and we are currently cutting the old cane around the nearby estates to make up for the shortfall.” Hippo plans to begin rehabilitating the railway line that links Mkwasine and the mill.
Questioned about the company’s prospects for the first quarter Bruce said because production was seasonal this could only be gauged over a full year.
“The mill is operating satisfactorily and the general operations are in line with the management expectations. Our throughput is lower than what we would want,” Bruce said.
Of concern to the company was government’s delay in releasing the exports permit. Hippo has not received its certificate and is likely to delay its export to the European market.
Meanwhile, the local sugar shortage is likely to persist due to the high prices being offered in neighbouring countries.
At the current exchange rate a tonne of sugar costs about US$213 compared to US$380 in the region.