daniel chigunwe
Business Writer
A new Government policy document, the Zimbabwe Industrial Reconstruction and Growth Plan (ZIRGP), proposes imposing a surcharge on imported edible crude oil used for cooking oil production to incentivise domestic production of oilseeds and reduce the country’s reliance on imports.
Surcharge is an additional levy or charge imposed on top of the usual or base price.
It can be applied for various reasons, such as penalties for late payments, violations of terms, or other infractions.
In the context of the ZIRGP, the surcharge on imported crude oil is intended to discourage imports and promote domestic production of oilseeds.
The ZIRGP, a transitional manufacturing blueprint running from October 2024 to December 2025, is the transitional successor blueprint to the Zimbabwe National Industrial Development Plan (2019-2023).
To further encourage local production of oilseeds, the ZIRGP also proposes that oil expressers be required to finance at least 40 percent of their raw materials while the Cotton Company of Zimbabwe will be compelled to prioritise supplying ginned cotton seed to local cooking oil manufacturers.
The cooking oil industry has been a significant importer for Zimbabwe.
Between 2018 and 2023, the country imported about US$1 billion worth of crude oil for cooking oil production. The new policy aims to reduce this dependence and bolster the local manufacturing sector.
“Implementation of the proposed interventions will save the country about US$120 million,” according to ZIRGP.
The cooking oil industry has eight main players with a capacity to crush 448 000 tonnes of oil seeds annually.
The country requires about 400 000 tonnes of oilseeds per annum.
Soya bean is currently the main input for cooking oil production in Zimbabwe, contributing about 57 percent, with the remainder coming from cotton seed and sunflower. It is also used in the production of stockfeed, soap and margarine, among other products.
However, the country has low soya bean production, having produced around 82 000 tonnes in 2022, against an estimated demand of 400 000.
According to the Soya Value Chain Report published by the National Competitiveness Commission (NCC) in June this year, the competitiveness of soya bean production is mainly affected by high production costs, rendering commercial production unattractive.
Speaking during the launch of the report, chief executive director of the NCC, Phillip Phiri, said there was need to intervene to improve soya bean production.
“To improve soya bean production, (farmers should) use certified seeds from reputable seed houses to enhance productivity and competitiveness. Upscale contract farming, which will guarantee supply of certified seed that produces quality soya beans for the processing of edible oil and its by-products,” he said.
He noted that farmers have applauded the introduction of statutory instrument 129 of 2023, which allows them to sell to processors.
“Consequently, self-financed farmers have welcomed the introduction of statutory Instrument 129 of 2023, which allows them to sell to processors, the Grain Marketing Board (GMB)) as well as the Zimbabwe Mercantile Exchange.
“We expect this to offer more competitive prices and encourage more farmers to invest in crop production, “ he said.
Seed shortage
Despite the Government’s efforts to promote domestic oilseed production, a significant challenge remains; a shortage of seed for planting during the upcoming season.
According to the 2024/25 summer cropping plan, the country faces deficits in both groundnut and soybean seeds.
Only 500 tonnes of groundnut seed are available, falling far short of the required 5 000 tonnes for 50 000 hectares.
Similarly, soybean seed stocks stand at 4 686 tonnes, while 7 700 tonnes are needed to plant 77 000 hectares.
The shortages could hamper the Government’s goal of reducing reliance on imported edible crude oil.
“This is a significant challenge because we are attempting to tackle one problem on top of another. The most effective strategy would be to address the challenges facing the entire value chain, beginning with seed production, developing sustainable funding models and viable marketing channels. By doing so, we can achieve these ambitious goals,” said Carlos Tadya, a Harare-based economist.
“An official with a leading cooking oil producer said introducing a surtax would merely add to the burden on consumers.
“Businesses will still import crude oil because it is our core business, but they will inevitably find ways to pass on the additional costs to consumers,” said the official, who requested anonymity.
Diversifying oil seed production
Some analysts have suggested that the Government and the private sector should prioritise diversifying oil seed production.
This shift would not only reduce the nation’s reliance on imported cooking oils but also provide a significant boost to the rural economy.
Sunflower and groundnuts, in particular, offer promising opportunities for both commercial farmers and small-scale producers.
By promoting production of these oilseeds, the analysts say the Government can empower rural communities. These crops are relatively drought-resistant and can be grown on a variety of soil types, making them suitable for many regions of Zimbabwe.
Additionally, the processing of sunflower and groundnuts can create value-added industries and generate employment opportunities in rural areas.
“To encourage diversification, the Government should consider providing financial incentives, such as subsidies and loans, to farmers who adopt these crops. Furthermore, investing in research and development can help improve yields and develop new varieties that are better suited to local conditions,” said Tadya.
ZIRGP focuses on growth opportunities in the industrial and commercial sectors, aimed at reducing the import bill and facilitating local production.
It also recognises underlying policy issues that need to be addressed during the process leading to the National Development Strategy 2 (NDS 2) and aligned to Sustainable Development Goals, Africa Union Agenda 2063, COMESA Industrialisation Strategy (2017-2026) and SADC Industrialisation Strategy and Roadmap (2015-2063) aspirations.
Bongani Ndlovu