Zim companies look beyond own borders
ZIMBABWEAN companies are looking beyond the country’s borders to boost sales volumes as they predict tough times ahead after massive lay-offs.
These job cuts will push down demand for foodstuffs, dairy and beverages among other goods produced locally.
More than 20 000 workers in Zimbabwe have been laid off in the past month, with the state broadcaster, the Zimbabwe Broadcasting Corporation, sending home more than 300 workers this week.
Companies cited stretched cashflows while others are staggering salaries for employees as Zimbabwe grapples with an economic crisis that has continued to worsen, sinking the country into deflation.
But for Dairibord Holdings, a dairy concern focused on Zimbabwe and Malawi, respite may lie in exports to South Africa, Zambia and Mozambique.
The company predicted that there would be lower demand for milk products in the second half of the year because of the massive lay-offs.
“Company closures and retrenchments will negatively impact disposable incomes and aggregate demand, while food shortages will affect raw milk production and prices. The group will use available capacity to drive turnover with specific focus on the export markets of Zambia, South Africa and Mozambique,” Dairibord chairman Leonard Tsumba said.
He said the company’s other market, Malawi, had been characterised by “depressed economic activity” during the halfyear period to June.
Dairibord Malawi had recorded a 19 percent decline in raw milk intake.
Liquid milk volumes rose by a marginal 1 percent owing to disruptions to its production line in Chipinge, in eastern Zimbabwe, which underwent refurbishments.
A marked decline in prices had contributed to a mismatch between volume growth – underpinned by a 63 percent rise in dairy juices – and a lowly 10 percent rise in revenue to $47 million (R601m).
The low revenue increase was also blamed on “an increase in the proportion of lower value, per litre beverages”.
The company is set to import about 500 heifers to boost milk production in Zimbabwe.
“Floods, low disposable incomes, erratic supply and high cost of utilities impacted on business performance,” Tsumba said in reference to the Malawi unit.
Dairibord also produces ice cream, yoghurt and dairy juices.
The Zimbabwe Dairy Services Department said raw milk production in Zimbabwe for the first six months to June had only marginally increased by 2 percent compared with the previous contrasting period.
President Robert Mugabe’s family has interests in the dairy and dairy products market through Alpha Omega Dairy.
The Mugabes launched a new range of ice cream and chocolate products on Friday, with Industry Minister Mike Bimha saying the company had decided to venture into valueadded dairy products manufacturing after Nestlé Zimbabwe cut its milk procurement from a dairy farm owned by the Mugabe family.
“One morning, the company that used to buy milk from (the Gushungo dairy farm) woke up and said they had been informed not to buy milk from there. But this enabled the company to make a decision to venture into value addition,” Bimha said in a speech read on his behalf at the launch of the brands in Mazowe on Friday.
However, Dairibord Holdings, which competes with Mugabe’s dairy company, said on Thursday that there was growing price competition in the market, with firms “constantly” lowering their prices.
A 500ml bottle of water that cost 50 US cents last year now costs about 30c as the effects of deflation take effect.