Crookes says land expropriation without compensation poses uncertainty in sugar industry
Agricultural group Crookes Brothers said on Friday that the government’s motion to expropriate land without compensation was contributing to a period of "unprecedented" instability and uncertainty in the sugar industry.
MD Guy Clarke said in a video message to shareholders that the company was, however, confident that "sanity will ultimately prevail" in the matter, which has been a hot political potato.
Parliament’s constitutional review committee has until August to come make recommendations on the way forward regarding the land question.
The South African sugar industry generates an annual estimated average direct income of more than R12bn, according to the South African Sugar Association. This is based on revenue generated through sugar sales in the Southern African Customs Union region, as well as world market exports,
The KwaZulu-Natal-based company said it was also looking to introduce an empowerment shareholder to help it accelerate its transformation agenda, skills development, as well as community development. The company is also seeking ways to reduce its independence on the sugar business, which is highly cyclical, thus clouding the visibility of its earnings.
Crookes — which specialises in sugar‚ deciduous fruit‚ bananas and macadamias — is making steady progress in unlocking value from its Renishaw property holdings. It is also looking into other alternative high-value crops to insulate itself from the cyclicality of its product offerings, noting, "At present, we are coming under great pressure due to low world sugar prices, caused by the over-supply."
In the six months to September 2017, the company had reported a 70.5% plunge in first-half net profit, dragged lower by a decrease in sugar cane revenue and a write-down in its "cane biological asset value"‚ as a result of the drought.