Beatific Gumbwanda
CHIREDZI- Over 45 A2 sugarcane farmers have taken the sole sugarcane producer, Tongaat Hulett Zimbabwe (THZ) to the High Court over a breach of agreement, which they argue has led to a lot of financial stress which might prejudice future production.
THZ which runs Hippo Valley Estates and Triangle Limited has two different agreements with A2 Sugarcane farmers including the Cane Purchase Agreement, where farmers are paid for the sugarcane delivered and Cane Milling Agreement, where farmers pay the milling charge and employ the Zimbabwe Sugar Sales Pvt Ltd (ZSS) under the Tripartite Sales and Marketing Agreement for selling and marketing of the sugar.
46 A2 sugarcane farmers recently engaged lawyer Emmanuel Chibudu of the Manyika Law Chambers to file an urgent chamber application for interdict before the High Court barring ZSS Pvt Ltd from selling sugar this season before finalizing the material breach of the Agreement from the sale of last season’s sugar which farmers argue have left them in dire financial distress.
ZSS is the first respondent in the case while Zimbabwe Sugar Association, Hippo Valley Estates Limited and Triangle Limited are second, third and fourth respondents in their sequence.
According to the application for interdict filed at the High Court, ZSS is being accused of selling the sugar on the export market which was supposed to be sold in the domestic market thereby demanding the variation from the farmers.
“That the 1st respondent has unilaterally varied the volumes of the sugar that is supposed to be sold to the export market, without communicating the decision to do that with the applicants. The Applicants were put and are still continuing to be in dire financial distress as a result of the first respondent’s action of disregarding her obligations in terms of the agreement.
“The applicant followed the dispute resolution procedure as outlined in the agreement but the 1st respondent ignored the invitation to mediation. There was not even courtesy of giving a response to the invitation to mediation. The 2nd respondent who is as well dictated by the agreement to be the mediator ignored the invitation to mediation without even responding. This left the applicants to continue to languish financially while their product is sold on volumes which they never agreed to and were never consulted on,” reads part of the application.
As at January 2024, an expected value for US$ domestic market was $775.68 calculated at 63.58 percent of the sugar produced while the expected value for US$ export market being $220.02 calculated at 22.84percent of the sugar produced while 13.58percent was being sold for ZWL on the domestic market.
Farmers under the Cane Milling Agreement are given advance payments way before their sugar has been sold and the miller is now demanding the variation of the sugar which was sold on the export market at $220.02 which was supposed to be sold on the domestic market at the cost of $775.68.
According to Blessing Z Mahwererera (the first applicant)’s founding affidavit, there are two agreements that they enter into with the respondents which are the Cane Milling Agreement where the 3rd and 4th respondents receive cane from the applicants for milling and charge milling costs.
The 1st respondent would then take over, giving birth to the 2nd Agreement, the Tripartite Sales and Marketing Agreement where she acts as the agent for selling the applicants sugar.
“The applicants remain the principals and owners of the product in terms of this agreement. The 1st respondent acts as an agent for selling the applicants’ sugar.
“The 1st respondent has obligations under this agreement one of which is transparency. Clause 4 of the agreement provides for duties of the agent. A duty placed on the agent under this agreement is the duty of ensure transparency in the determination of the price of the pooled product attributable to the principals by providing the principals with such information as is required in terms of this agreement,” reads part of the affidavit.
The founding affidavit also postulates that the sugar is sold to proportions allocated to different markets with different prices.
“The applicant’s product is sold on proportions allocated to each market and the markets have different processes hence different proportions to each market.
“The mischief and prejudice to these uncommunicated changes are illustrated as follows, for instance let’s say a farmer has 100 tons of sugar, 17 tons of the 100 are to be sold in ZWL in the domestic market and 70 tons are to be in US$ in the local market and the remaining 13 will be sold in the export market for US$.
“If 1 ton is sold for US$857.00 on the domestic market and US$26 on the export market and the agent takes away even just 1 ton from the local US$ market and sells it on the US$ export market for US$26, the farmer loses US$831.00. This is what the first respondent did to the applicants herein and many others who had subscribed to the Cane Milling Agreement and the subsequent Tripartite Sales and Marketing Agreement,” reads the affidavit.
Contacted for comment, THZ Head of Industry and Corporate Affairs Dahlia Garwe said she could not comment on the matter that was in court and added that the sugar-crushing season was progressing well.
“Unfortunately, I am unable to comment regarding the above issue as it is subjudice. But I am happy to inform you that the sugar-crushing season is progressing well having kicked off on 16 April at Triangle and 23 April at Hippo. We anticipate a much more successful season than the previous one,” the affidavit read.
