LIVINGSTONE MARUFU/GAMUCHIRAI TSOKOTA
Zimbabwe will experience serious cooking oil shortages in the coming weeks as foreign currency shortages have affected the importation of crude oil, leaving oil expressers producing a fifth of the 9 million litres monthly requirement, it emerged this week.
The industry requires US$20m letters of credit but the Reserve Bank of Zimbabwe has availed only US$4m. With a shortfall of US$16m and an estimated harvest of 70,000 tonnes of soyabeans, cooking oil supplies will further go down.
Busisa Moyo, president of the Oil Expressers Association of Zimbabwe, told Business Times that poor harvests would worsen the already bad situation in the cooking oil sector. The shortages are likely to affect cooking oil and soap supplies.
“Currently, we are operating at 20% capacity; therefore we are only producing 1.8 million litres of cooking oil monthly from a total requirement of 9 million litres. This [the 9m litres] is a further climbdown from our initial requirement of 12 million litres in October last year,” Moyo said, adding that the country required 300,000 tonnes of soyabeans yearly. Thus a projected output of around 70,000 tonnes would leave the economy facing cooking oil shortages.
“The projected output is going to serve us for only two months. This means we will continue to look for more forex to import crude oil,” Moyo added.
The US$4m that was offered by the RBZ will not help much in the production of enough cooking oil and other products such as soap and butter, Moyo said, adding that delays in the maturity of letters of credit was worsening the situation as companies continue to search for forex on the parallel market after failing to access it on the interbank market.
Over the past two weeks, cooking oil prices have increased to ZWL$11.25 from ZWL$8.75 due to shortages in the market. Analysts fear the price will increase further due to shortages. Turmoil continues to hit the oil industry as the government has failed to mobilise the promised $200m to grow soya beans under the Command Agriculture programme.
Due to the shortages in raw materials – such as soya bean, cotton and sunflower – the cooking oil manufacturers have been be forced to import raw materials and semi crude oil. This further worsens the situation considering there is already a foreign currency crunch. President of the Confederation of Zimbabwe Industries, believes Statutory Instrument (SI) 122 will make up for the shortages.
“We are likely to have just barely enough, shortages will be averted by direct imports since SI 122 has been suspended,” Jabangwe said.
“We will also continue to lobby for more allocations to the oil expressers.”
“Unfortunately what we are getting now is a blend of local supplies and imports. That is why we need a way to harness this foreign currency which is being used to import finished products and instead use it for local production”.
The situation remains critical as eggs, chicken, and pork availability will be negatively affected because their production depends on soya meal as the base protein source. Day old chicks and other meat sources will also suffer.
Two of the country’s oil expressers, Surface Wilmar and Olivine, have since shut down following the foreign currency crunch amid revelations that they were failing to cover debt incurred through importation of raw materials.