Govt gets E55.4m tax from KDDP, LUSIP I farmer companies

Mbabane; Reaping what you sow!

And indeed, the Government of the Kingdom of Eswatini is expiriencing just that. The investment made by government at Komati Downstream Development Project (KDDP) and at Lower Usuthu Smallholder Irrigation Project (LUSIP I) is now reaping the fruits of its toils in taxes being paid by the famer companies.

For the financial year that began on April 1, 2018 ending March 31, 2019, famer companies remitted E55.4 million in taxes to government. However, this shows an 8.0 percent decrease which was attributed to the overall 7.0 percent decrease in the sucrose revenue.

According to the company’s latest report, of this amount, E29.3 million (53 percent) was paid by farmer companies under LUSIP I while E26 million (47 percent) was paid by farmer companies under KDDP.

These taxes comprise of Value Added Tax (15 percent), Corporate Tax (27.5 percent), Pay As You Earn and tax on Shareholders’

Allowances (10 percent).

“Over 90 per cent of the taxes are from Value Added Tax levied on sucrose revenue paid to farmer companies during the reporting period,” reads the report.

 Dividends and employment

A total of E41.5 million in shareholders’ allowances was paid out by farmer companies in both projects. This reflects a combined 45 percent decrease from the previous year. “A low sucrose price added the most pressure to the 45 percent decrease on top of high inputs and

operational costs, noteworthy being electricity.

LUSIP farmer companies paid out E23.2 million (56 percent) of the aforementioned total dividend. The LUSIP pay-out shows a 44 percent decrease compared to last year’s shareholders’ allowances and shows a sharp drop year on year. The KDDP pay-out shows a 47 percent decrease over last year’s shareholders’ allowances. This is a significant drop in dividend pay-out to date.

In terms of employment creation, 2 494 personnel were employed in both projects during the reporting period resulting in a 2.0 percent increase year on year;1362 in KDDP and 1132 in LUSIP I were employed.

“Employment has shown stability as the projects have matured over the years,” reads the report.

Sugarcane production in ESWADE project

The total area harvested during the reporting period in the KDDP and LUSIP was 8 465 hectares, which represents a 5.0 percent increase compared to the previous year.

According to the report, a total of 906 364 tons of sugarcane were harvested, which translates to a 18 per cent increase year on year.

“This is a significant increase considering it is on top of a 17 percent increase reported in the previous period. The total sucrose that was harvested during the period in both projects was 125 260 tons, reflecting a significant 16 percent increase year on year, on top of a 6.0 percent increase reported in 2017/18 compared to 2016/17,” states the report.

An analysis made by ESWADE shows thatthe productivity in the projects showed increases across both sugarcane and sucrose yield with 12 percent increase in sugarcane and 10 percent increase for sucrose.

ESWADE projects comprise of 15 percent of the sugarcane area harvested in the sugarcane industry in the reporting period, which is a 1.0 percent increase compared to the previous period. It was also discovered that sugarcane and sucrose yield were both 1.0 percent below the industry average with projects attaining 107.07 and 14.80 compared to industry average of 107.94 and 14.94 cane and sucrose tons per hectare respectively.

The sugarcane production and productivity statistics have seen a consistent growth for the past two years, showing a good trend in recovering from the El Nino induced drought of 2016. “This

trend is best marked in the KDDP which has recovered from 83 to105 tons per hectare and 12 to 15 tons sucrose per hectare from 2016/17 to 2018/19. A replanting programme, stronger environment, agronomic and corporate management have been critical in the recovery of the farmer companies in the projects,” ESWADE said in the report.

Sugarcane business earnings

The report further stated that the revenue from sucrose sales totalled E393 million (including VAT). This is a 6.0 percent decrease compared to the revenue received in the previous reporting period. In the climate of increase in production of sucrose, the decrease in revenue can be attributed to a decrease in sucrose price. Farmer companies in ESWADE projects remain competitive in the sugar industry and the reporting period saw strong management and governance throughout the projects at farmer company level.

The extension services, both agronomic and business remained strong in both projects and ESWADE in collaboration with miller-based extension services worked to further strengthen farmer companies.

Alternative cash crops

In order to further strengthen alternative crops businesses, ESWADE is facilitating the strengthening of value chains, construction of packhouses and modifying current packhouses to qualify for certifications for export markets.

Livestock enterprises

Regarding livestock enterprises, 2 333 animals were sold from ESWADE implemented projects during the reporting period. Livestock revenues decreased by 42 percent at the back of significant decrease in revenue from LUSIP piggeries resulting in the LUSIP livestock revenue decrease of 286 percent year on year. The total revenue from livestock in ESWADE projects was E1.5 million.

ESWADE has reported that steps are being taken to assist farmers increase their production, further strengthening both production and financial management. Milk production continued exclusively in the KDDP and continues to succeed with an increase of 11 percent to 6 214 litres year on year.