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Judith Phiri, Business Reporter
THE Competition and Tariff Commission (CTC) has said Government must incentivise oil expressers to venture into contract farming of sunflower to supplement Government efforts in order to grow more sunflower with more edible oil content.
Zimbabwe stands to greatly benefit from a reduced soyabean oil and cotton-seed oil import bill of US$138 million as the country increases production of sunflowers, the Commission has revealed.
In a recent fourth quarter, 2021 newsletter, CTC said: “Zimbabwe is not producing sufficient edible oilseeds to meet the current cooking oil requirements. As a result, the oil expressers are left to rely largely on crude oil imports.
However, the National Development Strategy 1 (NDS 1) calls for improved production in agriculture to reduce over-reliance on imports.”
CTC said oilseed diversification into sunflower production was critical and this could be achieved by capacitating farmers and offering support.
The Commission said an assessment of the allotments by the Reserve Bank of Zimbabwe indicated that five cooking oil firms among the top 10 bidders got four percent of the foreign exchange auction system allotments.
“These huge amounts of forex going for the importation of crude oil shows the need to support sunflower production among the crops supported by the Government as cooking oil companies were accessing US$74.8 million.”
The statistics from the foreign exchange auction system cooking oil firms’ allotments under the main auction for 2021 showed that more than US$74.8 million was given to cooking oil firms such as United Refineries Ltd getting US$17.5 million, Cangrow Trading US$13.6 million, Willowton Group Zimbabwe US$12.3 million, Olivine Industries US$10.8 million, Surface Wilmar US$10.8 million and Pureoil Industries Limited received US$9.5 million.
CTC said if the country was to increase sunflower production, the nation will save about US$138m (considering 2020 imports) that was going towards importation of soya bean oil and cotton-seed oil.
“The money can then be directed towards other essential things such as machinery, equipment and fuel to increase production efficiency.
Reliance on crude oil also means that Zimbabwe will need to import soya cake for the stock feed producers, which means Zimbabwe would not be able to compete in the AfCFTA on the production of livestock as feed cost would be high compared to other countries.”
It said that sunflower production will benefit Zimbabwe as its average oil extraction rate is relatively higher at 40 to 50 percent compared to soya beans and cotton whose average oil extraction rate is 18 percent and 18 percent to 25 percent respectively.
The Commission said a better oil extraction rate would also benefit the country by saving on land for agricultural activities.
“Given the current cooking oil demand of 120 000 tonnes per annum, soya beans require more land (333 333ha) compared to sunflower (133 333ha) to meet the current demand.
Further to that to meet the cooking oil demand, the country needs about 667 000 tonnes of soybeans.
The 667 000 tonnes required to produce cooking oil is well above the 185 000 tonnes of soya bean required for stock feed production,” said the Commission.
“Thus, focusing on soya beans as a source for cooking oil results in excess soya beans which Zimbabwe does not have enough crushing capacity as well as more soya cake than Zimbabwe needs for feed production.
“This means the excess produce will have to be exported in a highly competitive exports market.”
CTC commended the initiative by the Government of distributing 600 metric tonnes of sunflower seed as part of the Pfumvudza/Intwasa farming inputs as a welcome development which can reduce crude oil imports in Zimbabwe.
It said importation of crude oil due to oilseed production deficiencies was as a result of local farmers who had also for some time lost interest in sunflower production as there was a perceived lack of market for the crop and a highly informalised value chain.
Online Reporter