Mr Lashbrook talks of investments in milling
. . . as NatFoods invests US$3,4 million
ZIMBABWE’S biggest milling company, National Foods Limited, will invest US$3,4 million in its milling business during the current financial year, as it pulls all the stops to ramp up production in an industry poised for fierce competition.
The funds will add to the US$9 million already invested by the Zimbabwe Stock Exchange-listed firm to upgrade its flour milling unit.
NatFoods has increased capacity utilisation at its Harare and Bulawayo milling plants to 100 percent, driven by tailwinds from Government’s protectionist policies.
The company is supplying flour to the country’s three biggest bakeries — Lobels, Bakers Inn and Proton — and also plans to engage smaller bakeries.
NatFoods CEO Mr Mike Lashbrook says Government’s decision to restrict wheat flour imports in the 2017 National Budget will have positive spin-offs.
“In particular, the move announced by the Minister of Finance (Mr Patrick Chinamasa) in the 2017 National Budget, to remove wheat flour from the (open) general import licence, will further improve the recovery prospects of the flour milling industry in this country.
“Support for the milling industry will also aid in the recovery of local agriculture. The milling industry will also embark on contract farming and be off-takers of local wheat produced from Command Agriculture,” said Mr Lashbrook.
Natfoods has been involved in contract farming for over 5 000 hectares of wheat in the past two winter wheat cropping seasons.
The company’s planned investment comes at a time when Blue Ribbon Industries (BRI), which closed shop in 2012 due to operational challenges, is gradually coming back to life.
BRI has been lifted by a US$20 million capital injection by Tanzanian milling giant, the Bakhresa Group.
The mothballed Bulawayo plant has been reopened and BRI’s established maize-meal brands such as Ngwerewere and Chibataura have been re-in- troduced.
The Bulawayo plant is expected to produce 3 000 tonnes of maize-meal monthly, while the Harare plant — whose capacity stands at 8 000 tonnes of flour per month — is presently producing 5 500 tonnes.
The Bakhresa Group, led by Tanzania’s third-richest man Mr Said Salim Bakhresa, is expected to pout another US$20 million into the business.
Increased competition in the sector is considered a boon for consumers.
BRI general manager (operations and marketing) Mr Yusuf Kamau recently said Zimbabwe’s milling industry was “very attractive”.
“We are going to play our part in the country; we are not here to take the money out. We want to sustain the demand in the country as we intend to install a new mill although it takes time,” said Mr Kamau.
Innscor Africa Limited noted in its 2016 annual report a 13 percent growth in both the maize and flour divisions.
Group chair Mr Addington Chinake said a “strategic decision to drive volume growth through reducing prices to the consumer and improving national coverage continued to propel business performance”.
Innscor holds 37,82 percent of NatFoods.
The Bakhresa Group also has operations in Tanzania, Zanzibar, Uganda, Rwanda, Burundi, Malawi, Mozambique and South Africa.
Victoria Foods, the third-largest flour milling company in the country, is also on the path to recovery.
The company — a subsidiary of CFI Holdings — operates two wheat plants in Harare and Gweru, and one maize-meal plant in Gweru.
While the business is surviving on toll milling, there are indications full operations will resume soon. Grindrod Trading of South Africa had been linked to the milling firm but the deal fell through.
Zimbabwe has 29 operational milling plants for maize and wheat, while 21 others are mothballed.
According to Grain Millers Association of Zimbabwe chair Mr Tafadzwa Musarara, the country has installed maize milling capacity of 135 000 tonnes per month against current consumption of 38 000 tonnes.
Wheat milling capacity is approximately 65 000 tonnes against monthly consumption of 21 000 tonnes.
Mr Musarara believes maize and wheat flour imports are a major challenge for the industry.
“If they are stopped, there will be more than adequate market space for all millers to compete and survive. BRI was operational when these small millers started milling (and) it’s wrong to assume that the resumption of BRI operations will elbow out smaller millers.
“. . . (the) milling industry is making a collective action to bar imports of maize meal and wheat flour so that there is lucrative market space for all players,” said Mr Musarara.