Consideration of Zambia Sugar PLC in Light of the Cop26
Agriculture, Zambia Sugar Plc

Zambia Sugar PLC is the largest sugar producer in Zambia with a capacity to produce more than 450,000 metric tons of sugar. The company has interest in growing sugar cane and producing raw sugar as well as specialty sugar products for domestic and export markets. The sugar market is largely private sector driven, highly concentrated and dominated by three sugar milling companies, namely Zambia Sugar, Kafue Sugar and Kalungwishi Sugar.

With regards to financial performance review and challenges, Harriet kapekele – Katongo Sugar Company Secretary wrote that the revenue for the 6month period to 28 February 2021 was ZMW2.121billion, 52% above the comparative period last year driven by growth in domestic sales volume 28% and high realization of export sale 39%. Cost escalation continues to be contained through continuous saving initiatives.

Following the recent Conference of Parties (COP26) meeting held in Glasgow, Scotland and what the Sugar Company may want to consider, a number of major challenges or constraints exists in the Zambian sugar market including the high cost of doing business in Zambia as reflected in high taxes, high fuel, electricity along with transportation and distribution costs and the high wages that push the domestic prices of the commodity upwards.

Harriet Kapekele Katongo further said that covid-19 pandemic has had both negative and positive effect on the operation of the business. On the negative side, a key effect has been the escalation of costs due to the adverse effect on global supply of chains and commodity prices which has marked increase in transport costs due to increase in both domestic and international transport rates. On the positive side, travel restrictions in the wake of covid-19 and a weak Kwacha resulted in reduction of the flow of illegal imports of sugar into the market.

With regards to market and agriculture performance review, the domestic market performance has continued on a positive trajectory as a result of continued optimization of marketing strategies.  Regional market sales volumes have continued to reduce due to the impact of surplus world sugar supply resulting in significant volume of world market sugar finding its way into the region, thereby affecting demand and putting pressure on margins.

Cane supply has continued to trend average estimation for the past three years due to improved irrigation and pest control methodologies. This was slightly offset by a drop in cane quality caused by adverse climate conditions. Sugar production for the 2020/21 farming season ended at 393k tons compared to 391k tons in the prior season.

With the recent COP meeting and the establishment of a Green Ministry, Zambian companies will face green issues now more than ever. The Zambia Sugar Company expects to face improvement of business before the year ends due to economic improvement in a new dawn resulting in Kwacha appreciation and decrease in inflation. There is also decrease with effect of the corona virus pandemic.

In brief statements made at COP26, President Hichilema said Zambia and the UK will continue to support each other in key areas of good governance, economy, trade and investments including education and health. Zambia Sugar is expecting more to happen following the COP26 meeting held. It is evident that climate resolution is one of the things that should be worked on as the rainfall deficit has been a long-standing phenomenon in some parts of Zambia which resulted power harvest of cane.

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