Zimbabwean sugarcane millers have failed in their legal challenge against the government’s authority to set revenue-sharing ratios with cane producers.
Hippo Valley Estates and Triangle Limited, subsidiaries of South Africa’s Tongaat Hulett, had filed a High Court case against Industry and Commerce Minister Mangaliso Ndlovu, seeking to nullify his directive revising the Division of Proceeds (DoP) ratio to allocate 80.5% of revenues to farmers and 19.5% to millers.
The directive was based on a review by Baker Tilly Chartered Accountants.
The companies argued that the minister overstepped his authority under the Sugar Production Control Act.
They contended that while the Act allows the minister to set cane prices in Cane Purchase Agreements (CPAs), it does not authorize him to determine revenue-sharing ratios under Cane Milling Agreements (CMAs).
Additionally, the millers cited procedural flaws, including insufficient stakeholder consultation, and claimed the directive imposed unsustainable economic burdens.
They maintained that the revised ratio would severely cut into their revenues, jeopardizing operations that rely on significant investments in equipment, labor, and logistics.
They further argued that the directive ignored historical DoP ratios that had ensured a more balanced sharing of revenues between farmers and millers.
The respondents, which included Minister Ndlovu, Baker Tilly, and 11 sugarcane farmer associations, defended the directive as a lawful and necessary measure.
They argued that the minister’s authority to intervene in DoP ratios has been a longstanding industry practice used to address disputes and maintain stability.
They also emphasized that the adjustments were based on comprehensive consultations and aimed to reflect economic changes affecting both farmers and millers.
The respondents described the directive as a temporary solution to address revenue disparities while long-term measures are developed.
They stressed that rising input costs for farmers warranted adjustments to ensure their financial sustainability, which is critical for maintaining cane production.
Justice Joel Mambara ruled in favor of the respondents, stating that the directive was “reasonable, fair, and aligned with statutory requirements.”
The court found that the measure struck a necessary balance, serving as an interim step to address economic challenges faced by all stakeholders.
The ruling upheld the minister’s directive as an appropriate exercise of administrative discretion in a complex economic environment.
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