Hippo Valley locks in three-year water buffer

TAFADZWA CHINYANGANYA

Hippo Valley Estates says it has enough water reserves to sustain sugar-cane production for the next three years even if rainfall remains poor, providing a buffer as the company seeks to recover lost production time and expand sales across regional markets.

Speaking at the company’s annual general meeting this week, chief executive Tendai Masawi said the group’s major water sources held sufficient reserves to support its core estates despite the threat of an El Niño-induced drought.

The assurance comes as Hippo Valley seeks to recover from a delayed start to the 2026/27 crushing season, which was pushed back by about two-and-a-half weeks after heavy rains left fields inaccessible.

Masawi said the company initially crushed on one line at about 220 tonnes an hour before ramping up operations on May 18.

Despite the delayed start, management expects to recover lost ground, with sufficient cane available to support a target of 1.8 million tonnes of cane crushed during the season.

Cane quality has also remained strong, with Hippo Valley recording yields of more than 100 tonnes per hectare on its own estates, while outgrower farmers are averaging between 80 and 90 tonnes per hectare.

The company is adjusting its crushing programme to accommodate the delayed start while ensuring operations are completed before the rainy season, which can disrupt the movement of cane and finished products.

Water availability remains one of the biggest risks facing the sugar industry because of its heavy reliance on irrigation.

Hippo Valley said its main water system, which supports about 32 000 hectares, had sufficient reserves to sustain production for three years even in the absence of meaningful rainfall.

Masawi said the system included a recently commissioned dam with capacity of about 1.9m cubic metres, alongside the Mutirikwi system, which holds about 1.5m cubic metres.

Together, the two sources provide about 97% of the company’s water requirements for the 32 000 hectares under the main irrigation system.

The company is, however, closely monitoring the Manjirinjii and Siya water system, which supplies about 12 000 hectares, particularly land operated by outgrowers.

A separate southern water system supporting about 2 000 hectares is about 77% full and has an estimated three to four years of water supply.

“From those three bodies, I can safely say we are covered from a water point of view. Even if it doesn’t rain, we’ve got enough water to take us through,” Masawi said.

While cane crushed is about 9.4% lower than the comparable period because of the delayed start, sales are about 6% higher, driven by stronger demand for its SunSweet sugar.

Masawi said Hippo Valley was deliberately prioritising SunSweet over raw sugar because of stronger demand and the greater opportunity to capture higher-value markets.

The company is targeting manufacturers, retailers and the informal market, where management said offtake remained strong.

On exports, Hippo Valley has been forced to diversify after an eastern African market imposed a US$300-per-tonne import duty on sugar.

The company has since secured additional demand from the Democratic Republic of Congo, Namibia and Rwanda, with management saying stronger volumes into the DRC could compensate for lost business in the eastern market.

Hippo Valley is also supplying Botswana and has secured a 6 000-tonne consignment for South Africa.

The company has sugar earmarked for United States tariff quotas of about 4 000 tonnes, helping it avoid logistical delays experienced during the previous season.

Masawi said cost management remained central to maintaining competitiveness, with the company seeking to reduce its reliance on passing higher costs on to consumers.

Hippo Valley is increasing the use of internally sourced equipment, introducing metering systems to improve water-cost management and expanding its own energy generation and utilisation.

The measures come as the company faces rising costs for water, electricity and outsourced equipment.

The group is also continuing its cane-replanting programme, with about 10% of total cane volumes targeted for replanting.

With stocks available and cane ready for crushing, Masawi said Hippo Valley expected to meet demand in both the domestic market and selected regional export markets.

The company, which is celebrating its 70th anniversary this year, said its outlook remained positive provided currency stability, pricing arrangements and demand conditions remained supportive.

Masawi, however, flagged the growing use of artificial sweeteners as a structural challenge for the sugar industry, particularly among beverage manufacturers.

The company is engaging stakeholders over the impact of the sugar tax and changing product formulations as manufacturers respond to shifting consumer preferences.