Listed agro-processing giant, National Foods Limited (Natfoods), has imported 60,000 tonnes of maize, which could be enough to sustain its trade for the remainder of 2020, Business Times has established.
Zimbabwe has experienced droughts in the last few years with the World Food Programme estimating that over 8m of the population were food insecure.
There has been panic in the market over companies’ failure to access adequate foreign currency to procure raw materials. Importers have also been battling supply chain restrictions due to the Covid-19 pandemic.
Natfoods, one of the largest food manufacturers in Zimbabwe, uses between 15,000 tonnes and 20,000 tonnes of maize monthly and 20,000 tonnes of wheat monthly.
Natfoods chief executive Michael Lashbrook told Business Times that the company was prioritising the importation of key raw materials amid a tight liquidity situation and weakening of the local dollar.
“National Foods currently has sufficient maize in its pipeline to satisfy the company’s requirements until the end of December.
We have initiated a substantial import programme to cover the expected high demand period for maize meal which usually is between December and March/April,” Lashbrook said.
The exact tonnages (and consequent funding) of maize and wheat required will depend on market demand, he said.
“NatFoods is currently carrying its usual maize and wheat pipelines and is adequately resourced to fund the anticipated increased demand in the coming months,” Lashbrook said.
The Zimbabwe Stock Exchangelisted concern has increased pipelines of most major raw materials by one month to cater for logistical challenges brought about by the epidemic.
Lashbrook expects the continuity of supply for all key basic commodities in the coming months.
He, however, said subdued “local liquidity and continued devaluation mean that replacement of this pipeline will need to be a key focus area for management in the months ahead”.
Natfoods’ production from the company’s contract farming scheme has declined this year due to the impact of drought and difficulty in raising funds for the programme, Lashbrook said.
The worsening economic crisis, characterised by sustained high inflation, is devouring into local companies’ top lines as consumers continue to limit their spending habits.
This crisis has impacted Natfoods’ volumes across all categories.
The company said consumers were down-trading in favour of more affordable commodities, with groceries, mainly mealie meal, rice and salt.
The group’s profit after tax increased 75% to ZWL$1.58bn in the financial year ended June 30, 2020 from ZWL$906.04m in the prior year.
Revenue for Natfoods increased 52% to ZWL$ $12.79bn, reflective of higher selling prices following the progressive removal of most grain subsidies.
Volumes for the period, however, declined by 25.3% to 456,000 tonnes compared to 2019.
Natfoods continued to focus on protection of its balance sheet in view of the prevailing inflationary environment.