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    HomeMasvingo StarSugarcane farmers, millers at loggerheads

    Sugarcane farmers, millers at loggerheads

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    By Antony Chawagarira

    TRIANGLE – SUGARCANE farmers in Zimbabwe’s Lowveld region are standing firm against a court order sought by Hippo Valley Estates and Triangle Limited to overturn a newly established revenue-sharing ratio mandated by the Government

    In a heated legal dispute, the farmers argue that the proposed changes will not significantly affect the two sugar milling firms.

    Triangle and Hippo Valley have instituted legal action, challenging the Government’s directive, which adjusts the revenue-sharing ratio to 80.5 percent in favour of farmers and 19.5 percent for millers. The previous ratio was set at 77 percent to 23 percent, following recommendations from Ernst & Young (EY) in 2016. The millers contend that the new ratio is unrealistic and could jeopardise the industry’s viability.

    Tongaat Hulett, a South African sugar producer, owns a 100 percent stake in Triangle and a 50.5 percent stake in Hippo Valley Estates. The company’s legal team has voiced concerns about the implications of this new ratio, arguing that it could threaten the sustainability of sugar production in Zimbabwe.

    In their opposing affidavit, which includes signatures from over 1,200 farmers affiliated from 10 associations, the farmers assert that the new revenue-sharing arrangement will not adversely impact the sugar industry’s overall viability.

    They cite historical data from 2014 to 2016, during which a higher (DoP) Division of Proceeds ratio of 82.65 percent for farmers did not prevent millers from operating profitably.

    The farmers maintain that Baker Tilly, the accounting firm tasked with validating the revenue-sharing recommendations, conducted an impartial review. They state: “The validation process was impartial, ensuring that both parties had equal opportunities to review and critique the EY findings.”

    The affidavit emphasises that the Government’s role was merely to facilitate the process without imposing its will on either party.

    On the other hand, the millers argue that they were not afforded a fair chance to present their case during the validation process. They claim that they were restricted to materials submitted previously to EY, which they believe undermined their position. The millers’ affidavit states: “It makes no difference if the submission was to be made to a different consultant firm… EY or Baker Tilly could not guess what the correct values claimed to have been understated in the EY report should be.”

    The ongoing legal feud between sugarcane farmers and millers poses significant implications for both parties and the broader Zimbabwean economy.

    If the court rules in favour of the millers, it could set a precedent that farmers claim undermines their bargaining power, potentially leading to reduced incomes for those in the agricultural sector. Conversely, if the court upholds the new ratio, it may enhance the financial stability of farmers, but could threaten the operational viability of the mills, which are crucial for local employment and sugar production.

    The outcome will likely resound through the entire sugar industry, impacting prices, competitiveness, and ultimately the livelihoods of many in Zimbabwe’s agricultural sector.

    The two parties have been at loggerheads over a raging Division of Proceeds (DOP). DOP is the scientific ratio used to share proceeds from sugarcane milling between the miller (Tongaat) and the out growers.

    The Government in 2019 said that it remained committed to finding a lasting solution that will engender harmony in the sugar industry.

    The main sticking issue remains the issue of DOP and both sides made presentations in support of their positions. The Government asked representatives of farmers to bring more documentation before the Government could make a determination.

    The then Minister of State in VP Mohadi’s Office, Davis Marapira, was mandated to look into the issue and advise VP Mohadi.

    Minister Marapira said then that they would make a recommendation on the way forward to VP Mohadi upon completion of consultations that were underway at that moment. “It is everyone’s hope that at the end there is a win-win situation. We want our farmers to benefit to remain afloat, but at the same time we must also take cognisance of Tongaat’s concerns,” he said at the time.

    The minister said the Government wanted harmony in the sugar industry for all players to benefit and ensure the country’s sugar output continued to rise.

    Farmers argue that Tongaat’s share of the DOP (milling charges) is too high at 23 percent, considering that the firm no longer extends exemptions and benefits, especially in cane haulage as used to happen during the era of white commercial sugar cane farmers.

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