Crocodilian skins and meat producer Padenga Holdings Limited has shelved plans to venture into agriculture after the board led by Alexander Calder asked the executive to do more investigations.
This comes after chief executive officer Gary Sharp had told Business Weekly, on the sidelines of the company’s annual general meeting (AGM), that plans to diversify from the current core business were at an advanced stage and would be in full swing within a few months.
At the analysts briefing held back in March, chief executive officer Gary Sharp said the Group, which also has alligator operations in the United States, was now looking at new ventures in line with the new political dispensation which has brought confidence back into the economy.
“In line with the new political dispensation we are looking at new ventures. We have the cash resources available, we have identified some exciting ventures that are not directly in our core business,” Sharp said then.
However, Sharp was not in a position to disclose the new area of business saying; “We are looking at going into additional ventures and we will bring those to your attention in due course hopefully by the annual general meeting (AGM) in May.”
At the AGM early this week, Sharp told the Business Weekly that the plans to venture into agriculture were now at an advanced stage.
“We are on the point of appointing a new member of the executive management team and he will be tasked with spearheading the new venture which is into the agriculture sector.”
“We are about to start due diligence and within the next few months we expect to present the business plan to the board and by the year end we expect to have started,” Sharp said.
Sharp said the new plans to venture into agriculture would focus on avocado and macadamia production in the Eastern Highlands.
Further inevstigations ordered
But a couple of days after Sharp spoke to Business Weekly about the diversification programme, Padenga Chief financial officer Oliver Kamundimu, however, said the plans had now been put on hold after the board had asked for more investigations into the new business venture.
Speaking to Business Weekly, Kamindimu said: “Our plans are kind of held back at the moment, but we are still pushing for it, and will do more investigations and prove we have to grow out of crocodiles.”
Analysts, however, said if Padenga is to go ahead with the plans to grow nuts and fruits it would be an interesting development given the recent demand for the two crops across the world.
The export market for avocado and macadamia nuts is very lucrative with ZSE listed entity Ariston, and Tanganda, a subsidiary of listed Meikles already into that business space.
As of last year, Zimbabwe was exporting more than 4,5 tonnes of nut in shell (NIS) with Ariston exporting approximately 1 500 tonnes NIS. Year 2016 was one of the best for the company in terms of prices, as exported macadamias fetched an average price of $3,60 per kg of NIS.
Across the globe, demand for macadamias has been particularly strong with the bulk of the produce destined for the export market, and as with many other things, China is the biggest importer of the nuts. According to China National Industry Association (CSNC), the country the total sales of China nuts and roasted seeds reached $19,5 billion in 2016, up 10 percent compared with the year before.
In terms of avocados Zimbabwe exported avocados worth $4,2 million in 2016 with the bulk of the exports, according to Zimtrade, going to the Netherlands, United Kingdom, France and Germany. Increased consumption in other countries such as China, Spain, UK and Germany, among others has put additional pressure on present supply thereby driving global prices higher.
Strong global market
In 2016, the global avocado market registered sales revenue of about $12 billion. In 2017, it is reflected a valuation a little under $13 billion and by the end of 2027, global market for avocados is estimated to touch a value of more than $23 billion.
Diversification would also make sense for Padenga given that there are currently growth restrictions on the sales volume for crocodile skins where the company’s sole buyer can take approximately 46 000 skins per annum.
Padenga’s deal with the crocodile skins buyer is exclusive and the company is currently restricted from supplying to other players.
The alligator business is also now operating at full capacity with the company targeting to produce 17 000 medium sized alligator skins and 13 000 small sized skins.