Forex challenges threaten Innscor operations

07 Dec, 2018 - 00:12 0 Views

eBusiness Weekly

Enacy Mapakame
National Foods Holdings, a subsidiary of Innscor Africa Limited, is engaging Government over the foreign currency shortages threatening its business leading to a possible closure of the giant agro-industrial group’s mills.Challenges in accessing foreign currency have posed serious operational problems for the entire group, whose monthly requirement is between $15 million and $18 million.

Innscor chairman Addington Chinake, said although there was no clear position yet, management remained upbeat Government would come up with a favourable position that would enable production to continue.

Earlier this week Natfoods had warned its clients of an impending closure of its mills in Harare and Bulawayo due to wheat stock outs on very limited foreign currency to settle its foreign obligations.

While product supply has been largely consistent to the market in most categories, supplies of some products that use imported raw materials such as cooking oil, flour and salt have, at times been impacted by foreign currency challenges.

“We had meetings on Tuesday and we believe the issue was also discussed in Cabinet and remedial measures are being taken. As such, we would like to confirm that irrespective of the difficult circumstances we continue to engage and try to find solutions,” he said in an interview on the sidelines of Innscor annual general meeting in the capital earlier this week.

“As a group we engage authorities regularly and in the current environment it can be as often as on a weekly basis,” he said adding there was need for clarity on policy measures Government was taking to ensure industry remained on its feet.

The absence of policy clarity, Chinake said, had invited speculative activities on the market resulting in price volatility and shortages.

However, the group, through its subsidiaries is working on import substitution for raw materials as part of efforts to cut on the import bill as well as ensure production lines keep running.

This should also guarantee product availability on the market. The group has interests in strategic commodities such as mealie-meal, cooking oil, flour, meat and stock feed. This is done through support to local farmers with this summer’s contract farming schemes amounting to 9 000 hectares of maize, soya beans, sugar beans and popcorn.

Chinake said this should cut any supply gaps to the market in the near future adding the group was putting efforts to ensure product supply during the festive season when demand is generally  high.

“What we are doing is ensure we have sufficient raw materials to meet local demand. It is, however, tough with shortages in foreign currency, some of our suppliers may not be able to provide the inputs for the purposes of production.

“But all things being equal, we do not anticipate any shortages during the festive season,” he said.

Meanwhile, Natfoods recorded an overall 26 percent volumes growth driven by growth across products.

Maize volumes increased by 55 percent over the comparative period as the maize harvest was lower than last season and consumers also elected to sell their home-grown maize to the Grain Marketing Board (GMB).

The stock-feed division recorded a 44 percent jump in volumes growth, largely on the back of the recovery in the poultry market following the outbreak of Avian Influenza last year.

Snacks and treats rose by 48 percent while the flour unit operated at maximum capacity.  Industry wide, the milling industry has been affected by foreign currency shortages for wheat imports resulting in supply gaps for flour.

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