Economic conditions tough, likely to get worse: Dairibord
CLOUDINE MATOLA
Zimbabwe’s largest milk processor, Dairibord Holdings Limited, says economic conditions are tough and likely to get worse with the market being severely impaired by a multitude of problems including serious shortage of foreign currency, the devastating effects of the drought, currency volatility, inflationary and cost pressures.
Additionally, Dairibord issued a warning that the depressed price of all minerals on the international market, with the exception of gold, might potentially jeopardize the country’s export earnings.
“The economic outlook remains intricate. Slow global economic growth, particularly subdued mineral prices, pose a potential risk to Zimbabwe’s export revenues. While the introduction of the Zimbabwe Gold (ZiG) was aimed to stabilise the economy, its long-term impact remains to be seen. The nation continues to grapple with foreign currency shortages, which affects imports and economic activity. Maintaining currency stability and curbing inflation are imperative for safeguarding purchasing power and fostering a conducive business environment,” Dairibord board chairman, Josphat Sachikonye said.
In addition, Sachikonye said the prevailing drought conditions and adverse economic conditions will likely curtain raw milk production.
“The prevailing drought conditions exerted a substantial negative impact on agricultural yields, which is anticipated to impede overall economic growth and contribute to food price inflation. This adverse condition is also projected to curtail raw milk production,” Sachikonye said.
He stated that cost containment will be the company’s primary goal during this economic downturn.
”Given the persisting constraints within the operating environment, cost reduction has emerged as a paramount imperative. Accordingly, concentrated effort will be directed towards minimising expenditures by targeting the major cost drivers,” Sachikonye said.
In its financial results for the six months to June 30, 2024, Dairibord Zimbabwe, was back in the black , registering a profit of US$3m from a loss of US$736 000 reported in the prior comparative period.
Revenue for the group grew to US$54.7m in the period under review from US$48.4m reported in the same period last year.
The group’s raw milk increased by 40% to 19.97m litres in the six months to June 30, 2024 from 12m litres reported in the prior comparative period.
According to the Dairy Services Unit within the Ministry of Lands, Agriculture, Fisheries, Water, and Rural Development, national raw milk production surged by 22% year-on-year, reaching a total of 55.1m litres during the period under review.
“The group (Dairibord) significantly enhanced its position by utilizing 19.97m litres of raw milk, representing a substantial 40% increase compared to the previous year. This robust performance solidified the group’s dominance in the market, with its market share expanding from 28% in 2023 to a commanding 36% in the period under review,” Sachikonye said.
