Cooking oil firms access US$75m on fx auction system
LIVINGSTONE MARUFU
Five cooking oil firms have accessed close to US$75m on the foreign currency auction system in 2021 to procure critical raw materials for cooking oil production amid calls for players to invest in sunflower to cut on imports.
In the latest Competition Tariffs Commission (CTC) bulletin, the Commission said the US$74.8m going into importation of the edible oil should be utilised towards sunflower production which is way cheaper than other oil removal crops. This constitutes about 4% of the forex allotments.
The nation will be able to lower the huge import bill of soyabean oil and cotton-seed oil.
“If Zimbabwe increases sunflower production, the nation will save about US$138m (considering 2020 imports) that is going towards importation of soya bean oil and cotton-seed oil and direct the money towards other essential things such as machinery, equipment and fuel to increase production efficiency.
“Reliance on crude oil also means that Zimbabwe will need to import soya cake for the stock feed producers, which means Zimbabwe would not be able to compete in the AfCFTA on the production of livestock as feed cost would be high compared to other countries ,” CTC said.
Sunflower production benefits Zimbabwe as its average oil extraction rate is relatively higher at 40-50% compared to soya beans and cotton whose average oil extraction rate is 18% and 18% -25% respectively.
A better oil extraction rate benefits Zimbabwe by saving on land for agricultural activities.
Given the current cooking oil demand of 120 000 litres per annum, soya beans require more land (333 333ha) compared to sunflower (133, 333ha) to meet the current demand.
Further, to meet the cooking oil demand, the country needs about 667,000 tonnes of soyabean.
The 667,000 tonnes required to produce cooking oil is well above the 185, 000 tonnes of soya bean required for stock feed production and thus, focusing on soya beans as a source for cooking oil result in excess soya beans which Zimbabwe does not have enough crushing capacity as well as more soya cake than Zimbabwe needs for feed production.
This means the excess produce will have to be exported in a highly competitive exports market.
