Zambia Sugar Plc says it expects dry conditions experienced in November and December 2014 to negatively affect Sugar production in the 2015/16 season.
The company said its production estimates marginally less than the past season compounded by power interruptions, the outbreak of the yellow sugarcane aphids and unseasonal rains during April 2015.
The company says it continues to implement strategies to mitigate these challenges adding that reasonable growth is expected in the domestic market.
It warned that margins in both the regional and EU export markets are expected to remain under pressure from surplus sugar stocks on the world market.
This is contained in the company’s full results for the year ended 2014.
It said Zambia Sugar produced a record 424 000 tons of sugar during the 2014/15 season, comfortably exceeding the previous record of 404 000 tons achieved during the 2012/13 season.
‘This record performance was largely due to improved factory reliability and better than expected overall time efficiencies, Average cane yields increased appreciably across the entire cane growing area from 114 tons cane per hectare in the previous year to 123 tons cane per hectare,’ it stated.
‘A record 3.4 million tons of cane was delivered to the mill representing an increase of 8% compared to the 3.1 million tons in the previous year. The estate delivered 1.96 million tons compared to 1.86 million tons in the previous year whilst out-grower deliveries increased to 1.45 million tons from 1.29 million tons in the 2013/14 season.’
It added, ‘Kaleya Smallholders Company Limited (Kascol), the largest small scale scheme supplied their highest tonnage on record of 284 000 tons exceeding their previous record of 258 000 tons. Smallholder growers contributed 10% of the total cane supply.’
Zambia Sugar recorded record sales in the domestic market, increasing by 6% while it recorded decreased sales to EU markets by 30% whilst exports into regional markets increased by 60%.
The company said the negative pricing impact on export earnings has largely been mitigated by the depreciation of the exchange rate movements.
During the same period, Zambia Sugar injected in excess of 760 million into the local economy through payments to amongst others, employees, cane growers and government in the form of direct taxation.
‘In addition ZMW355 million of total goods and services excluding cane supply were procured from within Zambia,’ it said.
It’s operating profit increased by 9%, from 303 million to 330 million with an operating margin of 17% being achieved.
Should we expect above inflation sugar prices because of this? Has the surplus sugar been exported into the region already and we will end up with shortages in Zambia?