THE local sugar industry suffered a 14% sales decline due to the influx of cheaper imports necessitated by the government's policy initiatives.
In May 2023, the government initiated Statutory Instrument 80 of 2023 which gazetted a list of 14 basic commodities exempting from customs duty payment on importation for the next six months which included sugar, powdered milk, rice, maize meal, flour, laundry and bath soap, washing powder, toothpaste and petroleum jelly.
The policy initiative was aimed at protecting the consuming public from errant price hikes by retailers accustomed to the practice of price hedging in anticipation of future exchange rate depreciation.
"Imported sugar enjoys unfair comparative cost advantages over locally-produced sugar such as lower minimum wages, as it is not subject to the same mandatory local fortification regulations among other factors.
"Most of the sugar originates from countries where the host government has implemented policies and or subsidies to support sugar production," the company said.
To mitigate against the revenue losses and generate the cash flow necessary to sustain the Company's operations, sugar that was initially intended for sale in the domestic market has been redirected into regional and international export markets.
"As international sugar markets are residual markets for excess sugar, export markets. As international sugar markets are residual markets for excess sugar, export market prices are lower than the domestic market, despite the recent benefit of higher world sugar prices," said the company.
Consequently, export sales volumes for the industry increased by 47% to 51 744 tons following an increase in the US$ quota allocation to 18 276 and maiden exports to the United Kingdom of 25 000 tons with no sugar sold into Kenya or Namibia during the past six months.
Despite a 4% decrease in industry sales volumes, the company's revenue increased in ZWL terms by 76%.
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