Illovo Sugar (Malawi) plc has attributed the 16.2 percent drop in sugar cane prices supplied by growers to a number of factors beyond the listed sugar manufacturer and growers’ control.
But at a meeting on Wednesday in Lilongwe, which Illovo Malawi officials snubbed, sugar cane growers said they have given the Malawi Stock Exchange-listed sugar manufacturer a chance for dialogue, warning that they will take the firm to court if talks fail.
In a statement yesterday in response to Sugarcane Growers Association of Malawi (Sugam) concerns, Illovo Sugar (Malawi) plc managing director Lekani Katandula cited depreciating exchange rate of neighbouring countries’ currencies, smuggling of sugar from Zambia and Mozambique, issuance of import licences in 2019 and the resultant drop in Illovo domestic sugar sales which have suppressed sugar’s demand.
The sugar cane growers’ meeting in Lilongwe followed a letter one sugar cane lead grower, Henry Chimunthu Banda, who is legislator for Nkhotakota North and former Speaker of Parliament wrote Illovo on June 2, backed by fellow sugarcane farmers, protesting the drop in prices without valid reasons.
The Lilongwe meeting attracted representatives from sugarcane growers associations, Competition and Fair Trading Commission, parliamentary committees on Industry and Trade, Legal Affairs and lawmakers from Nkhotakota, among others.
In his presentation, Chimunthu Banda said this is the first time in 15 years that Illovo Malawi has slashed prices awarded to growers as records show that in 2013, Illovo Malawi bought the sugar cane at K160 000 per tonne, in 2014 at K178 000 per tonne, in 2015 at K210 000 per tonne, in 2016 at K242 000 per tonne, in 2017 at K279 000. In 2018, the listed sugar manufacturer bought the sugar cane at K302 000 per tonne while in the current season, the price has dropped to K253 000 per tonne.
The growers complained that Illovo Malawi has been taking advantage of voiceless sugar cane farmers to offer poor prices and even failed to live by the Cane Supply Agreement to make information available on its transaction of business, especially price determination.
Said Chimunthu Banda: “Sugar prices have not gone down in the country, the cost of producing sugar cane keeps on rising yet Illovo is slashing down the prices it buys sugar cane from farmers. We find the actions of Illovo exploitative”.
The growers have since demanded that Illovo should revert to last season’s prices offered to farmers, saying there is no justified reason for the company’s action.
But Katandula said they share the sugarcane growers concerns, adding that Illovo’s farming operations earn the same payment per sucrose tonne earned by the smallholder sugar cane growers and also face the same challenges.
He said the calculation of sucrose prices used in the division of proceeds is determined using a formula that takes into account various factors such as revenues from domestic and export sugar and molasses sales after deducting packing, distribution, marketing and warehousing costs.
Sugam chairperson Frighton Njolomole accused Illovo Malawi of ignoring growers’ concerns and lacking transparency and accountability on price determination.