SUGAR producing company Hippo Valley Estates Limited has secured an irrigation water cover for two seasons as it ensures the security of its water from illegal abstraction in the face of a forecasted drought due to El Nino weather patterns.
El Nino usually causes delayed and erratic rains, adversely affecting crops and livestock.
In a statement, accompanying the financial results for the six months ended 30 September 2023, the company said they were also engaging authorities to take measures to eliminate the risk of illegal water abstraction.
“An El Niño weather pattern has been predicted for the period between December 2023 and March 2024. Despite this, the company has secured irrigation water cover for approximately two seasons (at normal levels of irrigation) within the current water supply dams.
“Latest national and regional weather forecasts indicate erratic and below normal rainfall, triggered by the El Niño. The company is actively engaging authorities to take measures to eliminate the risk of illegal water abstraction by third parties without such water rights from the company’s canal systems,” said Hippo Valley Estates.
It said in conjunction with the Triangle mill, the company has extended the milling season and implemented a revised cane delivery plan to catch up some of the lost milling capacity, maximise sugar production and minimise the amount of cane carried over to the following season.
Hippo Valley Estates said despite these mitigations, the industry’s forecast sugar production for the 2023/24 season of 409 301 tonnes against 396 682 tonnes for 2022/23 season, was unlikely to be achieved due to initial delays in the delivery of private farmers’ cane, logistical resulting from changes to the cane supply agreements.
“The target is unlikely to be achieved as well due to intermittent mill break downs due to the non-availability of certain spares. Although sugar production is expected to be below the prior season’s production, the industry will produce adequate stocks to meet the balance of the domestic market requirements in full, as well as its export commitments.”
The company said preparations for an effective off crop maintenance shutdown were progressing according to plan to ensure an efficient and reliable milling campaign in the 2024/25 season.
It said with the suspension of duties on imported basic commodities only being removed at the end of January 2024, the current marketing focus was on balancing profitability and cash flows, specifically through prioritising domestic market requirements but quickly identifying surplus stocks and allocating these to regional and international markets.
“This season, with approximately 70 percent of cane supply arrangements shifting from a variable pricing model to a fixed price model, the impact of any discounts required to incentivise domestic market sales or price reduction arising from shifting volumes to lower priced export markets will be borne by the company entirely and not shared across all industry participants.”
Source Zimsituation
