Tongaat, sugar growers dispute goes to arbitration court

the herald

business journalist

THE dispute between Lowveld sugar cane growers and millers over a milling agreement has been referred to arbitration as the disputing parties seek to end the protracted dispute.

Farmers, mostly small-scale producers, are seeking to resolve the issue through arbitration after Tongaat Hulett allegedly reneged on a milling agreement to share by-product revenue with producers.

Industry sources say Tongaat, Zimbabwe’s only sugar company, and farmers have a deal that allows growers to either collect molasses, a by-product of cane milling, or get paid for it.

Alternatively, millers can turn the residue into ethanol and use the revenue generated from ethanol sales to pay farmers.

By not allowing farmers to “participate in the value addition”, the producers allege that Tongaat was breaching a standing agreement.

“There is an agreement, which Tongaat is not respecting and we are hoping that a panel of three referees will be able to give us the result by the end of May,” said a source who declined to comment. be named because he is not authorized to speak to the press.

About 3.5% of the sugar cane milling process is carried out as molasses, which is converted into ethanol by Fuel Ethanol Zimbabwe, a company jointly owned by Triangle Limited and the state-owned National Oil Infrastructure Company .

Besides molasses, the other major by-product of the sugarcane crushing process is bagasse, which is used in electricity generation. Currently, Hippo Valley Estates generates 44 megawatts (MW) from Hippo Valley Estates and 45 MW from Triangle Estates.

Farmers are also calling for a reconfiguration of the sugar marketing agency, Zimbabwe Sugar Sales (ZSS) to broaden the participation of smallholders as well as a reduction in crushing fees, currently at 23% of gross revenue.

No comment could be obtained from Tongaat at the time of going to press.

The sugar industry is one of Zimbabwe’s largest formal employers with a total workforce of between 25,000 and 27,000 workers, mostly in the country’s Lowveld.

Prior to land reform, which began at the turn of the millennium, Tongaat, the owner of the Triangle and Hippo mills, owned 75% of all land under sugar cane.

Changes in land ownership saw a major transition as plantations under Tongaat shrank to 56 percent of its initial holdings while smallholders took control of the remaining 44 percent.

This resulted in a protracted adversarial relationship between Tongaat and the farmers.

In 2019, farmers petitioned parliament for the repeal of the Sugar Production Control Act, arguing that it had been overtaken by developments resulting from land reform.

In the petition signed by eight associations representing local farmers in the Lowveld, sugar cane growers called for reforms across the entire value chain, from a monopoly regime by Tongaat to one that takes into account the changes in the industry resulting from the land reform program which increased the participation of local farmers. Farmers.

The farmers were unanimous that the 1964 Sugar Production Control Act was outdated.

Farmers reported that the law lacks the following elements; the establishment and incorporation of the Zimbabwe Sugar Association, membership and composition of the association, powers of the ZSA Board and sugar industry agreements.

The associations noted with concern that Tongaat is the single dominant player in the entire sugar milling process in the sugar industry value chain in Zimbabwe.

Rachel J. Bradford