Millers turn to wheat reserves

Published: 24 June 2018

TWO of the country's biggest milling companies, National Foods Limited and Blue Ribbon Foods, have resorted to using reserve stocks of wheat due to severe shortages on the market, Standardbusiness has learnt.

Reliable sources say milling companies have since around end of last year, been relying on the 180 000 metric tonnes of wheat harvested locally in 2017.

Ideally, locally produced wheat is stored as reserve stocks and blended with imported wheat when it is used.

Zimbabwe has not been able to import enough wheat due to foreign currency constraints.

National Foods Limited told Standardbusiness it was experiencing challenges over wheat imports.

"National Foods imports a reasonable quantity of wheat, which is blended with local wheat to produce our top quality Gloria Flour," the company said.

"As with all imported commodities, there have been challenges in paying for wheat imports over the last couple of years.

"National Foods works closely with RBZ [Reserve Bank of Zimbabwe] and the authorities in managing this position."

A source said National Foods now had just three months' supply of imported wheat left and the Grain Millers' Association of Zimbabwe [GMAZ] confirmed that the RBZ had just unveiled $11 million for millers to be able to import wheat beginning tomorrow.

"Currently we have a pipeline of imported wheat for the next three months.

"Our flour mills both in Harare and Bulawayo are running at full capacity and we do not expect shortages of National Foods flour products.

"All our flour brands including Gloria, Red Seal and Snowwhite are readily available in the market."

However, insiders said the challenges being experienced by National Foods had pushed the company into using reserve wheat.

A source at Blue Ribbon said prior to last week they had experienced shortages of flour but that was due to a problem with one of the Zesa cables, which supply power to their mills.

"The factory relies heavily on electricity, but there was a problem with one of the electricity cables, which has since been fixed, that led to a lower output of the usual capacity of the factory," the insider said.

This power problem was around the same time that the GMAZ sent an SOS to the RBZ in a letter dated June 6 requesting for the $11,25 million to import wheat.

The suppliers, Holbud Limited, a United Kingdom-based distributor of grains, had written a letter dated May 24, 2018 to GMAZ threatening to divert a wheat shipment of 30 000 metric tonnes, which was at the Beira port in Mozambique and destined for Zimbabwe .

The wheat was going to be diverted elsewhere unless payment of $11,25 million was made.

The consignment is still sitting at the Beira port and is now expected to start flowing into the country as soon as payment is made.

At the time GMAZ sent the SOS to RBZ, it warned that a diversion of the wheat by Holbud would lead to flour and bread shortages in the country.

Blue Ribbon confirmed that they had been using reserves of local wheat for their milling processes.

"We have been depending on local wheat for our production, but that wheat was running out, which is why this forex allocation has come timely," Blue Ribbon said.
"Only 30% of wheat that we use is the imported gristling variety, which is blended with the local variety.

"Currently farmers are not growing the right blending wheat in the country, hence the need for imports.

"If the farmers can grow 400 000 metric tonnes of wheat there would be no need to import."

Blue Ribbon said, like other companies, foreign currency remained a critical component for their operations, which they needed to import wheat and they thanked government for including the grain in the command agriculture programme.

Confederation of Zimbabwe Retailers president Denford Mutashu said widespread shortages of flour products from the retail sector were imminent had it not been for the allocation of forex last week.

Meanwhile, it emerged last week that isolated instances of flour shortages were being reported in the retail sector.

That was mainly before the meeting held between millers, government and RBZ, which brought the foreign currency allocation assurance.

GMAZ chairman Tafadzwa Musarara said potential widespread shortages of flour and eventually bread would have occurred had there not been intervention from government and the RBZ.

"However, all the three major bakeries (Lobels, Proton and Bakers Inn) who account for 90% of the market supply are well stocked and they will continue to receive their normal supplies," he said.

'It must be noted that in this winter season, bread consumption surges. We are also aware of some vultures who want to capitalise on the situation and armtwist government to allow flour imports."

Last week's meeting involving millers, government and RBZ also resolved on an extra allocation to import part of the 290 00 metric tonnes of wheat from a Canadian supplier.
- the standard

Tags: Millers,