Hippo Valley Estates says it expects an increase in sugar production in the 2016/17 season largely premised on the completion of the Tokwe Murkosi Dam while the forecast world sugar deficit would provide a boon in terms of pricing.
Chief executive Sydney Mtsambiwa said production is expected to increase to between 180 000 to 220 000 tonnes due to an anticipated increase in irrigable land if Tokwe-Murkosi Dam is completed by December.
“Our two sugar mills have been performing very well; recoveries are better than they were last year and we anticipate the outturn for 2016/7 to reflect some improvement. From a production point of view, we anticipate to produce 180 000 to 220 000 tonnes of sugar this coming year,” he said. This is against total industry production of between 379 000t to 440 000t.
The target goal for the industry continues to be the attainment of the sugar production installed capacity of 640 000 tonnes per annum. Hippo sugar production for the year ended March 2016 dropped 11% to 204 000 tonnes against 228 000 in the comparable year.
“We anticipate that the dam will be completed by the beginning of next raining season and we expect that the dam will provide water during the 2016/17 rainy season, further mitigating irrigation water risk, and presenting new development opportunities for industry expansion.”
Hippo expects to cash in on the anticipated 1.5% annual growth in global sugar consumption. Prices abroad are getting a fillip from a deficit forecast by the International Sugar Organisation. The London-based agency had in May forecast a 3.8 million tonne deficit for 2016-17. There are two basic reasons for much better sugar prices in the world. First, crops are bad in Asia, including India, China and Thailand. Second, there is no longer an artificial pressure on Brazilian producers to produce less ethanol and more sugar.
Meanwhile according to the SADC regional early warning bulletin for September, the region is likely to receive normal to above-normal rainfall for most of the period October to December (OND) 2016 and the January to March (JFM) 2017. The northernmost Democratic Republic of Congo (DRC) northern Angola, Tanzania, northern Mozambique, the islands states of Seychelles and eastern-most Madagascar are however more likely to receive normal to below- normal rainfall most of the season.
The SADC report says that due to the long drought period of the last two years in some countries, the normal to above rainfall conditions might not bring positive societal gains in terms of more rains than usual due to the fact that the transition between the two season may result in filling the gaps endured during the deficit years.