HILLARY NDUWENI
HARARE-Listed sugar giant, Star Africa Corporation based in Harare’s Workington industrial area has been forced to close shop due to balloning operation costs particularly the price of unprocessed sugar from the lowveld.
Star Africa is mainly into production, purification, marketing and distribution of sugar specialty products used in beverages, bakery industry, grocery and snack products among other uses has temporarily closed its Harare sugar refinery citing high cost of raw sugar.
This comes as raw sugar supplies in the Lowveld have been facing challenges caused by high cost of raw materials and inputs such as fertilisers and fuel involved in the growing of sugar cane a capital intensive crop.
In a statement issued yesterday Star Africa Corporation announced that it was temporarily halting operations amid fears the move would have negative repercussions on the local economy.
Revesai Gwenhamo, Star Africa commercial executive said the listed entity was in the process of negotiating with its traditional raw sugar supplier to come to an amicable solution over the pricing issue which threatens the whole sugar value chain.
“We are writing to advice that we have closed the Gold Star Sugars Harare Refinery with effect from Monday 13 February 2023 until further notice,”read the statement.
“The closure is a result of a raw sugar price increase taken by our supplier on 9 February 2023 which makes it difficult for the company to produce and sell refined sugar at competitive and viable price as well as onerous trading terms which have constrained raw sugar supplies to the refinery.”
Added the statement, “We have engaged the supplier and look forward to finding an amicable solution to enable us to resume operations as soon as possible. We will keep you informed of progress on the matter.”
Raw sugar is produced by Tongaat Huletts which mills cane from its fields and with outgrower farmers supplying close to 40% of Zimbabwe’s sugar needs.
The move by Star Africa has been described by some players in the raw sugar production industry as an attempt to arm twist Government to intervene and come up with a price cap on the white gold amid reports that conglomerates were buying raw sugar in local currency and sell it at premium in foreign currency.
Indigenous farmers who carry the burden of high input costs like fertilisers, fuel and herbicides which are all procured in foreign currency have been calling on the Government of President Mnangagwa to subsidize inputs as a 50kg bag of Urea is going for a whopping US$60 in the market.
Cartels that have been buying raw sugar at a song and selling it for huge profits have not helped matters amid reports that hundreds of cane farmers or the entire sugar industry in Chiredzi will totally collapse unless a fair pricing structure that retains value is introduced.
A senior official with the a sugar refinery in Chiredzi who spoke on condition of anonymity for professional reasons pointed a finger at Star Africa for wanting to get raw sugar for very little in local currency and go to make huge profits in exports.
“We are offering them prices far below the imports. We are giving them 14 days credit facility. They(Star Africa)are a bad debtor. No banks are even willing to give them a(credit( facility. Farmers and Millers get credit facilities. We have been financing Star Africa until we black listed them, hence they are now crying operational costs,” said the the senior official.
There have been calls for a thorough engagement to solve challenges in the sugar industry that has seen most beneficiaries of the land reform programme “renting”out or completely abandoning their plots because of erratic an payment system under very poor cane prices that have left many farmers struggling.
The Midweek Watch gathered that a farmer is paid about US$490 per tonne before deduction of a 27% as milling charge and the farmer also pays transportation of the sugar to the market around Zimbabwe yet the same sugar retails between US$900 and US$1200 per tonne.
Efforts to get from the Agricultural Ministry officials or the Ministry of Industry and Commerce were futile by the time of posting as their phones were ringing unanswered or not reachable at all.
