Harare— Zimbabwe’s sugar value chain is teetering under the weight of an outdated legal framework, a single-entity milling monopoly, infrastructure collapse, and a contentious revenue-sharing formula that has pitted farmers against millers for decades, according to a damning new report by the Portfolio Committee on Industry and Commerce.

A report, presented to Parliament following findings by the Industry Committee led by Chairperson, Clemence Chiduwa, tabled in the Third Session of the Tenth Parliament followed an extensive inquiry involving oral hearings, stakeholder engagements, and verification visits to key sugar-producing areas in the Lowveld, including Tongaat Hullet’s Triangle estate and surrounding out-grower plantations.

The 26 member Committee found that Zimbabwe’s sugar industry operates as a monopoly, with only two sugar mills, both owned by Tongaat Hullet, compared to countries like Egypt and South Africa, which have more than 14 mills each.

This dominance, the report warns, limits competition, weakens farmers’ bargaining power, and leaves growers vulnerable to high transport costs, particularly in far-flung areas like Mkwasine.

Farmers’ representatives told the Committee that large-scale producer millers, Mwenezana Estate, Triangle Estates, and Hippo Valley Estates, control approximately 25,760 hectares, or 56% of the total 46,000 hectares under sugarcane cultivation, while private and out-grower farmers cultivate the remaining 20,240 hectares (44%).

At the heart of the industry’s tensions is the Division of Proceeds (DoP) formula, a revenue-sharing mechanism dating back to 1936.

The current ratio stands at 80.5% for farmers and 19.5% for millers, a notable deviation from the regional average of 63% for farmers and 37% for millers. However, out-growers argue that the 19.5% allocated to millers is excessive, especially given the high production and transport costs they bear.

The report highlights concerns over transparency and integrity in the DoP system, with farmers alleging that millers control key processes such as cane weighing, often without farmer representation.

The Committee has recommended that the Ministry of Industry and Commerce engage an independent consultant to develop a DoP ratio acceptable to both out-growers and millers by 31 October 2026.

The inquiry unearthed a litany of cost drivers crippling the sector. An estimated 98% of raw materials used in fertiliser and herbicide manufacture are imported from China, South Africa, and South America, with logistics, exchange rate volatility, and foreign currency shortages inflating costs. Farmers pay an average of US$4.75/kWh for electricity used in irrigation, resulting in monthly power bills of ZW$1,799.73 per hectare.

Transport costs are equally punishing. Infield haulage rates average US$44 per bundle, while road charges stand at US$175 per load and rail at US$8 per tonne.

The collapse of the National Railways of Zimbabwe (NRZ) has forced greater reliance on costly road haulage, undermining the competitiveness of locally produced sugar.

Water management challenges were identified as a critical concern. The Lowveld receives an average rainfall of just 588mm per annum, requiring 15 megalitres of water per hectare annually for irrigation. ZINWA charges US$6.82 per megalitre.

However, illegal upstream water abstraction, inconsistent allocations, and an inequitable billing model based on allocation rather than consumption have exacerbated shortages.

Land tenure insecurity remains a fundamental structural challenge. The absence of bankable land tenure prevents farmers from using land as collateral to access funding, with those who do secure loans facing interest rates of up to 60% per annum — a rate the Committee describes as “neither viable nor sustainable.”

The report also scrutinises the impact of the sugar tax, introduced in February 2024, which increased beverage prices by 15–45%, reduced demand, and left over 90,000 tonnes of sugar uncommitted for 2025.

Delta Beverages told the Committee that although the tax was halved in 2025, it continues to distort the market.

Similarly, the mandatory fortification of sugar with Vitamin A, introduced in July 2017, adds US$9–10 per metric tonne to production costs, placing local producers at a competitive disadvantage in export markets where fortification is not required.

The Committee has issued a series of time-bound recommendations aimed at rescuing the sector. It has called for the amendment of the Sugar Production Control Act of 1964 by 31 October 2026 to reflect current industry dynamics.

It has also recommended that the DoP formula be reviewed through an independent consultant by 31 October 2026, and that the NRZ be recapitalised to enhance transportation efficiency by 31 December 2026.

Further recommendations include issuing bankable land tenure instruments to at least 70% of out-grower farmers within two years, establishing a concessional financing facility with interest rates below 15% by December 2026, and prioritising water and electricity supply for the sugar industry.

The Committee also wants an additional mill installed in Mkwasine with a capacity of 5,000 to 10,000 tonnes of cane per day, a transition to consumption-based water billing and rehabilitation of conveyance infrastructure by 31 December 2026, and a review of the sugar tax and fortification policies to balance public health goals with industry competitiveness.

The Committee concludes that the sugar value chain remains a critical pillar of Zimbabwe’s economy, contributing to employment, electricity generation through bagasse, ethanol production, and downstream manufacturing.

However, its competitiveness is constrained by macroeconomic instability, high input costs, infrastructure deficits, and institutional inefficiencies.

“With appropriate reforms and investments, the sugar industry can significantly contribute to national development and industrialisation goals,” the report states, urging all stakeholders to act on the recommendations to ensure a sustainable, competitive, and inclusive sugar value chain.