Farmers embroiled in dispute with Tongaat Hulett

RYAN CHIGOCHE

 

Sugarcane farmers in the Lowveld are embroiled in dispute with Tongaat Hulett Zimbabwe  over contentious  milling charges.

Under the division of proceeds (DOP) ratio, Tongaat Hulett, which operates mills in Triangle and Hippo Valley, is charging 23% of  the total value of sugarcane milled, a move farmers described as punitive.

Farmers said  with this  charge, they are struggling to sustain operations.

An executive with the Commercial Sugarcane Farmers Association of Zimbabwe(CSFAZ), Daniel Tsingo,  said farmers want the milling charges to be reduced to  at most 15% in order for them to realise decent profits.

“DOP is the model currently being used to share proceeds between farmers and millers in Zimbabwe.

“Farmers are not happy with the current ratio as they are not realising a fair return on their investment. The milling charges should be somewhere between 5% to 15% not the current  23%, which is punitive,” Tsingo told Business Times.

Although millers have a power agreement with ZESA and pay a premium to access uninterrupted electricity, which they mainly use for irrigation they are still subjected to load shedding, which impacts on crop productivity.

It is also understood that the power generated by millers from bagasse is not adequate to cover  all irrigation processes which in turn affects crop yields.

During the start of the harvesting season, sugar cane deliveries are usually low thereby impacting negatively on power generation.

To compensate for the low production of electricity, millers use coal which is very expensive as an alternative.

Despite this, farmers are complaining that the 23% milling charge is too much considering their investment and the various costs they incur throughout the process.

One of the major cost drivers for farmers is high input cost, specifically fertiliser and herbicides.

According to CSFAZ there are three types of fertilisers that are applied in the farming of sugarcane in Zimbabwe which amount to a total of US$581 per hectare.

More so 98% of raw material used in the manufacture of fertilisers and herbicides are imported from China, South Africa and South America with the cost build-up of these inputs attributed to logistics as well as foreign currency shortages. Escalating costs of utilities  such as fuel have also been contributing to the high cost of inputs.

Adding to the farmers cost ZINWA is also charging them US$6.82 per litre when converted at the prevailing foreign currency exchange rate, with total labour cost amounting to ZWL$39 000 per hectare every month.

“As of now negotiations are being carried out through the ministry of Industry and Commerce so that we can find a suitable ratio to all parties. The 5% to 15% that the farmers are requesting is not enough to cover the milling costs. Actually, in Zimbabwe the farmers are getting the highest percentage to other countries in the region. In South Africa, for example farmers are getting 66% of the proceeds,” said Ushe Chinhuru corporate Affairs Executive for Tongaat Hulett.

 

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