Illovo Sugar (Malawi) plc has come under fire from its suppliers of sugar cane for the 16.2 percent drop in the price and alleged lack of transparency in the manner it conducts business.
In a 19–page letter we have seen dated June 2 2020, Nkhotakota North legislator Henry Chimunthu Banda, who is also a sugar cane supplier under the Lakeshore Cane Growers Association with backing from other growers, has described the drop in the price as unprecedented in his 15 years of supplying cane to the listed sugar manufacturer.
He said the price at which Illovo Malawi buys their sugar cane has dropped from K302 290 per tonne in 2018/19 to K253 290 per tonne in the 2019/20 season without any explanation.
But in an e-mail response on Friday, Illovo Malawi spokesperson Ireen Phalula refused to specifically comment on the issues, saying they will be addressed at scheduled meeting and not through the media.
“We prefer not to comment through the press, but believe that the multi-stakeholder meeting has been proposed to be the right forum,” she said.
Chimunthu Banda confirmed writing the letter, saying it followed his meeting with management of Illovo Sugar Dwangwa Factory in Nkhotakota on May 22 this year where he claims officials “did not satisfactorily respond to his concerns”.
He said the letter was aimed at presenting grievances to a wider community, which includes Illovo Malawi head office and relevant government agencies.
“Furthermore, I failed to appreciate the adverse economic fundamentals, applicable either locally or internationally that would explain such a drop during the 2019/20 farming season,” writes Chimunthu Banda.
Despite addressing the concerns specifically to Dwangwa Sugar Company, the concerns are shared by all sugar cane growers, including those under Nchalo Sugar Company in Chikwawa, which is also under the Malawi Stock Exchange-listed Illovo Malawi.
In an interview last week, Sugar Growers Association of Malawi executive secretary Geoffrey Nkhata said what has been presented in the letter is a reflection of the plight of 7 000 sugar cane farmers under the association, which stretches from Dwangwa to Nchalo.
“We are indeed engaging Illovo Malawi to iron out all those issues that have been highlighted in the letter,” he said.
Apart from low prices, Chimunthu Banda and other farmers have also accused Illovo Malawi of failure to live by the Cane Supply Agreement to make information available on its transaction of business, especially price determination.
He further questions some provisions of the agreement, which assumed that Illovo Malawi was a buyer of sugar cane from farmers.
Chimunthu Banda argued that the correct situation is that Illovo Malawi does not buy sugar cane from farmers, but it is farmers that supply cane to Illovo and the latter mills the cane and sells sugar and molasses on behalf of farmers.
A meeting, which will include officials from Illovo Malawi, growers and officials from ministries of Trade, Agriculture, Finance, Justice and Reserve Bank of Malawi, Malawi Revenue Authority and Competition and Fair Trading Commission is expected to take place tomorrow in Lilongwe to iron out the issues raised by the sugar cane growres.