…As it builds wheat stocks
National Foods Limited (Natfoods) has a ZWL$1.2bn kitty for this year’s winter wheat contract farming scheme as it moves to secure critical raw materials for its operations in the wake of debilitating foreign currency shortages as well as reducing imports.
Natfoods chief executive officer, Michael Lashbrook, told Business Times that the contract farming arrangement would be administered by Paperhole Investments Commodities and expected to cover about 60 farmers.
“National Foods is planning to plant a minimum of 5,300 hectares under the 2021 winter wheat contract farming scheme and we have invested ZWL$1.2bn in the process,” Lashbrook said.
Last year, Natfoods planted 3,000 hectares due to low levels in various water sources.
Natfoods is courting farmers who have irrigation facilities to participate in the winter wheat scheme, Lashbrook said.
The private sector is targeting 20,000 hectares with the government targeting 70,000ha to make a total of 90,000ha.
Lashbrook said banks have shown interests in financing this year’s wheat production.
“We are making very positive progress with the banks and it’s our fervent hope that they will provide farmers with funding in the next few weeks,” he said.
Lashbrook said the Reserve Bank of Zimbabwe continues to provide assistance for the importation of key commodities, mainly wheat.
He said Zimbabwe’s climatic conditions are not suitable for bread making wheat, necessitating the need for imports.
The country’s wheat is mainly used for self-raising flour and biscuits, not bread, and there is always a need to import and mix the imported wheat with the local on a 50/50 basis to cut costs, Lashbrook said.
Natfoods is working closely with the central bank and banking sector to manage the company’s foreign currency requirements to import wheat, he said.
Natfoods can import its own wheat requirements but works with other companies in order to procure more wheat imports to ease bread shortages, Lashbrook said, adding the agro-processor would continue to invest in extending a pipeline of key raw materials.
Natfoods also procures grain from local farmers and imports whenever there are shortages in the local market.
Lashbrook said the consumer staples concern has satellite machinery to dictate the number of hectares and harvest in the fields and is currently monitoring probable wheat yields.
Zimbabwe requires between 350,000 and 450,000 tonnes of wheat per year but production has been declining due to inadequate funding.
Last year, Zimbabwe produced over 210,000 tonnes of wheat, leaving the country to import more than 140,000 tonnes of wheat.
In 2018, the country spent close to US$300m on wheat imports.
The company’s focus will be to improve 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 product lines planned to consolidate its position.