Companies

Natfoods expands contract scheme

…Plans to plant 10,000 ha

LIVINGSTONE MARUFU

Listed agro-processing firm, National Foods Holdings (Natfoods) is set to expand its contract farming programme for the 2020/21 summer cropping season in a bid to ensure food security and productivity in the country, a company executive has revealed.

Natfoods plans to plant 10 000 hectares of both soya beans and maize under contract farming for the forthcoming season from 9 000 hectares last year.

Chief executive officer Michael Lashbrook told Business Times this week that the contract scheme would be administered by PHI Commodities.

He said Natfoods will inject about ZWL$12m into the scheme, which is expected to cover over 60 commercial farmers.

The scheme comes at a time when farmers across the country are increasingly turning to contract farming and joint ventures following the government’s decision to abolish Command Agriculture.

Early this year, the government introduced “smart agriculture” to replace Command Agriculture.

The smart scheme, however, is controlled by banks instead.

Consequently, many farmers are struggling to access funding from this scheme.

“National Foods is planning on planting around 10,000hectares with maize being planted on 8,000 hectares and soya beans under 2,000hectares.

An amount of around US$12m is expected to be invested in the contracts scheme,” Lashbrook said.

It is estimated that the company will take in close to 70,000 tonnes of maize and soya beans from local contracted farmers.

Lashbrook said the funding system won’t be very different from the previous years’ investments only that the company has added popcorn and sugar beans contract farming to its existing scheme.

The Reserve Bank of Zimbabwe, Lashbrook said, continued to aid with the importation of key commodities.

Natfoods would continue to invest in extending a pipeline of key raw materials.

The company also procures grain from local farmers and imports in cases where there is inadequate local product. Natfoods posted a 15% increase in volumes for the first quarter to September 30, 2020 compared to the prior year and 4% ahead of the previous period.

Volumes for Natfoods’ maize division, however, were disappointing and the group has since commenced maize imports in preparation for expected demand in the December 2020 to April 2021 period.

Excluding maize, volumes grew 42% on prior year and 30% on the previous period.

Volumes in the flour division increased substantially by 43% compared to last year and 31% relative to the previous period.

The category benefited from access to funds on the foreign currency auction which assisted product affordability.

Volume performance during the period was also driven by the progressive easing of the Covid-19 lockdown measures while stability enabled greater opportunity to focus on day to day trade rather than balance sheet preservation, working capital management remained a key area of focus for management in view of the constrained Zimbabwe dollar liquidity.

Natfoods further noted that in terms of raw materials, substantial maize imports will be required to augment the recently concluded harvest which was impacted by a second successive drought.

The company’s focus will be on improving efficiencies across all areas of the value chain to ensure quality, affordable products.

The group plans to fund further growth initiatives through retained profit and moderate levels of borrowing with new products lines planned to consolidate its position in the agro- industry sector.

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