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Business Reporter
DAIRIBORD Zimbabwe Holdings says the acute shortage of raw milk supplies in the country is a huge obstacle to exploring opportunities for business growth with imports seizing the chance to fill in the supply gap left by local companies.Group chief executive Mr Anthony Mandiwanza told Herald Business that there was tremendous opportunity for growth, but shortage of milk was a problem.
This has made efforts to penetrate the segment of the market occupied by imports both in terms of processed milk and milk products difficult to achieve. The group posted some lukewarm financial results in the interim period to June 2013.
“We don’t have (enough) milk in the country. Look at the gap between demand and supply, that is why people are importing milk,” Mr Mandiwanza said.
The Zimbabwe Stock Exchange listed dairy processor said all its production was readily absorbed in the market, which shows demand is high.
But the company is among firms forced to look outside Zimbabwe to augment milk supplies.
“It means we are not meeting demand that is why people are (also) importing milk products. Where factory demand stands at 8 million litres per month, milk production at national level stands at only 4,5 million litres,” he said.
“If you want to penetrate the market, how do you do it (without enough milk). The biggest problem is that we want to take the easy route on difficult issues. I believe milk production is critical if we want to develop the dairy industry in this country.”
On its part Dairibord has already imported 250 dairy cows, distributed to 10 farmers. An additional 90 are expected in the country before the end of the year.
Against this background, the Dairibord chief executive said Zimbabwe required a comprehensive dairy industry development strategy to enhance milk output and allow dairy processors latitude to explore opportunities for growth.
Dairibord incurred a US$3,1 million operating loss in the half-year to June 2013, weighed down by plant rationalisation and retrenchment costs. Early this year, the group shut down its Bulawayo and Mutare plants to contain costs.
Inter Horizon Securities have forecast Dairibord Holdings Limited’s revenue to remain largely flat around US$108 million this year following the slow growth in the top line during the first half of the financial year.
In its September 2013 Dairibord half-year earnings update Inter Horizon predicted that the group may only manage a marginal 1,7 percent increase in revenue after a constrained first half due to costs of restructuring the group.
However, Dairibord has already seen some improvement in operating costs in July and August post the rationalisation exercise, which has reduced the wage bill.
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