Group Cane Supply Initiatives
In line with our Strategic Intent to be cognisant of the rural locations of our operations and our corporate governance objective of being socially responsible, we strive to support the advancement of all communities where our operations are located. Sustainable community development is achieved, inter alia, through our employment, procurement and supply chain development, as well as direct and indirect support for outgrower initiatives.
Total cane supplies from outgrower schemes across the group amounted to approximately 4.2 million tons, generating revenue of R1.697 billion in 2012/13. This revenue promotes economic growth, enterprise development and job creation through support services such as cane hauling and land preparation within the communities concerned. This significant growth in the volume of sugar cane supplied by outgrower schemes, amounting to almost 30% of total cane throughput, reflects our commitment to supporting the development of sustainable, commercially-directed farming business models and governance systems in our farming communities.
We work closely with local farmers through established cane grower development schemes and recognise, through partnerships with national governments, development partners and private sector companions, the need to develop sustainable farming business models. This business model has created more opportunities for us to adopt a holistic and integrated approach to address the social, economic and environmental challenges faced by the communities. The model further promotes linkages to all the parts of the value chain providing agricultural, technical, financial and administrative competences, together with assistance to access grants and other funding opportunities for agricultural projects, such as irrigation schemes.
Outgrower cane initiatives across the group include:
- A major outgrower project launched in 2002/03 which ten years later, has resulted in outgrower cane deliveries to Kilombero’s mills increasing to almost 600 000 tons in 2013. The generated income from this project is used to develop further cane expansions and to fund local community projects, including the rehabilitation of existing and building of new roads.
- In Malawi, the EU funding of an additional development of 680 hectares of land under cane at Kasinthula, adjacent to our Nchalo mill, through the Shire Valley Cane Growers’ Trust. The project involved 340 farmers and was completed in March 2013. These and other outgrower projects in Malawi have accounted for a steady increase in cane deliveries to our mills, rising from 85 000 tons in 2011/12 to 134 000 tons in 2012/13, representing a significant increase of 58%. At Dwangwa, the benefits of similar outgrower projects resulted in a 3% increase in cane supplied by this sector during the 2012/13 season.
- Our continued partnership with LUSIP in Swaziland. This large-scale irrigation programme initiated by the Swazi government and supported by a major capacity expansion of our Ubombo mill at Big Bend, is providing a comprehensive small-scale grower intervention with future potential to develop additional agricultural land for small-scale farmers. Through their increasing cane deliveries, sugar production at Ubombo is expected to exceed 300 000 tons in the medium-term.
For more information see LUSIP Case Study
- Outgrower cane development and expansion initiatives in Zambia that have continued to deliver positive results. At total of 1.304 million tons of cane was delivered to our Nakambala factory in 2012/13, representing a 13% increase in total cane supply year-on-year. This good performance included cane supplied from the Magobbo Project, involving 94 outgrowers who produced 72 000 tons of cane at an average annual yield of 166 tons of cane on 430 hectares of land. Together with the major factory and agricultural expansion of this operation, and financial support from their own Mazabuka Cane Growers’ Trust and the EU, the Magobbo growers have formed a collective farming unit which is now benefitting from water supply, irrigation and drainage, land development and crop establishment projects that were commenced three years earlier.
- Several investment grants within our South African subsidiary company, Illovo SA. These grants, amounting to more than R150 million, have been allocated to small-scale growers by South African provincial and national government for development schemes which are administered and managed by ourselves on behalf of the growers. This forms part of ongoing initiatives co-ordinated by Illovo SA and local cane growing bodies to increase cane supply from the small-scale grower sector. These include rehabilitation of existing land under cane, as well as the development of new land to sugar cane agriculture. The SETHUSE cane development project near our Umzimkulu mill, involving the planting of 3 000 hectares of community land to cane, is just one example of a number of initiatives, including the continued productiveness of settled and unsettled land claim farms, aimed at increasing small and medium-sized cane deliveries to around two million tons in six years’ time.