Milk processors appeal for powders import quota rise
ZIMBABWE’S milk processors are appealing for an increase in their milk powders import quota, a move that will see the sector’s import bill trebling to over US$60 million this year.
The call comes amid a serious shortage of milk in the country, which the sector believes could be a result of processors paying farmers only 10% in United States dollars and 90% in the Zimbabwean dollar.
The anomaly has forced farmers to redirect the product to the parallel market, where they can sell in foreign currency.
Zimbabwe imports milk powders mainly from South Africa at an average annual cost of US$28 million.
Zimbabwe Dairy Farmers Association (ZADF) chairperson Kudzai Chirima told Zimbabwe Independent that there was a need to interrogate the dairy sector value chain.
Of the problems the sector is facing, Chirima said, chief among them was high cost of production worsened by the currency equation, given the fact that farmers require hard currency to buy fuel, machinery, drugs and stockfeed.
Farmers are now facing continuity hurdles because of the currency issues in relation to payment of milk by processors.
Some of the processors include Dairibord Zimbabwe, Kefalos, Alpha Omega, Nestle Zimbabwe and Prodairy.
“The problems in the dairy sector emanate from the costs of feeding and maintaining the cow. In most cases the farmers are producing milk, but are not getting full recovery on it. We are having challenges as far as the payment of milk is concerned. We are getting 10% in US dollars and 90% in RTGS, but we need foreign currency to buy diesel and machinery,” he said.
He added that the dairy farmers were facing shortages of labour, as many workers have turned to artisanal mining, where they are getting hard currency.
“The processors say they are not selling milk in hard currency, so they can only pay us 10% of the cheque value in foreign currency. If we can get the processors to pay us 50%, we should be fine. This can also help mitigate the cost of doing business,” he said.
On the other hand, while processors are paying ZW$0,48 per litre, the informal market is paying US$1 per litre.
This has seen milk available at the farm level and not at the processing level.
Chirima added that the formal dairy sector was losing to the informal traders, as farmers sought to make a living.
He said this also posed a health threat as the informal traders were not taking precautionary measures to ensure their product is safe for consumption.
The price of stockfeed has increased drastically over the past year, thereby affecting production.
According to the Stockfeed Manufacturers Association of Zimbabwe, which includes major players such as Natfoods and Profeeds, the average cost of raw materials in 2020 went up by 886%, compared to 2019.