Natfoods invests $10mln into contract farming



Listed agro-industrial firm, National Foods has invested $10 million, through Paperhole Investments (PHI) Commodities, towards contract farming for the 2018-2019 summer cropping season in a bid to ensure food security and productivity in the farms.

The Natfoods scheme comes at a time when farmers are increasingly turning to contract farming and joint ventures for inputs and equipment at lower interest rates compared to banks.

PHI local operations manager Graeme Murdoch manager told Business Times that the contract scheme would be administered by his company and Pure Oils Industries.

The investment will fund production of around 8 000 hectares of maize, wheat and soya beans. It is forecast that the company will take in more than 45 000 tonnes of maize, wheat and soya beans from local contracted farmers.

The scheme is expected to cover around 60 farmers.

“National Foods has set aside $10 million to support the growing of maize and soya beans. A total of around 8 000 hectares will be contracted in 2018/2019 summer cropping season.

“The funding won’t be very different from the previous years’ investments, only that we are increasing hectarage and the number of farmers to meet the ever increasing demand for local industry, which was catapulted by the import management programme (Statutory Instrument 64 of 2016 – now under SI 122 of 2017).”

He added that 11 000 hectares had been contracted for the winter wheat.

Murdoch said the Reserve Bank of Zimbabwe continued to provide assistance for the importation of key commodities (mainly wheat).

“We are working very closely with the central bank and the banking sector to manage our foreign currency requirements. And so far, National Foods and other milling companies are importing wheat under the Grain Millers Association of Zimbabwe (GMAZ) stewardship.

“National Foods on its own can import its own wheat requirements but it is our hope that we can work with other companies in order to procure more wheat imports to ease bread shortages,” he said.

Murdoch said 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.

Murdoch said the group had satellite machinery to dictate the amount of hectares and harvest in the fields and is currently monitoring probable wheat yields.

“We have closely looked into the country’s wheat hectarage for 2018 and we are projecting around 120 000 metric tonnes of wheat as an industry, however, according to our closer assessment, the yields will be above 200 000 tonnes.

“Another issue is that Zimbabwe’s climate is not the best for bread wheat and there is always need to import to bake quality bread. Our wheat is mainly used for self-raising flour and biscuits, not bread. We have to import always to meet the required bread quality.

“What we are doing is to blend the local and imported wheat to cut costs,” he said.

Zimbabwe requires between 350 000 and 450 000 tonnes of wheat per year but production has been declining due to inadequate funding.

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.