Sugarcane growers are pressing Illovo (Sugar) Malawi plc, the Malawi Stock Exchange-listed sugar producer, to revisit the division of proceeds ratio and separate cane from molasses pricing to boost their revenue share.
The call by Lakeshore Cane Growers Association and the Sugarcane Growers Association of Malawi come amid concerns over transparency in how profits from sugar and molasses sales are calculated and distributed, with growers seeking a more favourable arrangement to enhance their earnings.
The two organisations highlighted this at the growers open day in Dwangwa, Nkhotakota on Friday convened by Illovo Sugar (Malawi) plc.
Factory in Chikwawa. | Nation
In an interview, Lakeshore Cane Growers Association chairperson Robert Seyara said to improve the growers’ value, there is need for Illovo Sugar to consider increasing the division of proceeds ratio from the current 60:40 to 65:35 percent after deducting overhead costs to ensure growers are well compensated.
He said this is in line with other countries where the sugar manufacturer operates.
Said Seyara: “In other countries where Illovo operates, indications are that the ratio is slightly lower in favour of the grower. For example, in Zimbabwe a grower gets about 80 percent while here we are at 60 percent.
“I know there should be situations that exist in Zimbabwe to have that ratio, but the fact that in Malawi the ratio has stayed the same since the commencement of the industry, we believe it is time to review and our proposal is looking at 65:35 as the ratio that could assist growers to get more return on their investment.”
Under the current formula, growers supply cane to Illovo Sugar (Malawi) plc and upon processing and selling sugar, the company pays growers K1.18 million per tonne of sugar. This means that growers get K1 018 per one kilogramme packet of sugar whose recommended price is K3 500.
But Seyara said the formula should also be clear on how much growers get from sugar and molasses, considering that Illovo also sells molasses to Ethanol Company and PressCane Limited as raw materials for ethanol production and other products such as hand sanitisers and methylated spirits.
He said: “As of now, growers are getting one figure of the products that come out of sugarcane, but the industry practice is that every product should be sold separately.
“For example, in some countries, when sugar is produced, it is given to a different institution that sells to the industry and also molasses are sold to a different industry.”
On his part, Sugarcane Growers Association of Malawi president Robert Dziweni said what they are asking for is in line with the current practice in the industry worldwide that molasses, which are a by-product of sugar, should be given a different price and sugar itself should also be given its own price.
He also called for the operationalisation of the Sugarcane Industry Act, which was enacted in Parliament early this year.
Commenting on the issues, Illovo Sugar (Malawi) plc managing director Ronald Ngwira said they have noted the growers’ concerns, adding that they will look into the issues.
“We have noted the concerns from growers, which include unbundling the cane price from the molasses price and that is something that we will be looking into as well as the 60:40.
“There is some science and a slot of mathematics behind it and a slot of civic education, grower education is important. We intend to be transparent and make sure that we move together and explain clearly and exactly what is happening.”
Meanwhile, Ministry of Agriculture Secretary for Irrigation Geoffrey Mamba, who described the engagement between millers and the growers as critical to strengthen the industry, said a special commission will be set up to oversee implementation of the Sugarcane Industry Act 2025.
“The good thing is that during the formulation of the bill, we did it together with the growers associations and the millers,” he said.
Smallholder sugarcane growers contribute about 25 percent of cane for Illovo Malawi, but lack of irrigation technologies and extension services, among others, limit their output to between 40 to 60 tonnes of sugarcane per hectare.
