Zim cooking oil exports fail to sizzle

Zim cooking oil exports fail to sizzle
Published: 24 August 2017
ZIMBABWE'S edible oils sector has recovered and is producing a surplus, but is unable to make inroads into the regional export market due to lack of price competitiveness, an industry body has said.

Upon dollarisation in 2009, virtually all the cooking oil consumed in the country was imported, mostly from South Africa.

However, the government has, over the past three years, restricted the import of basic foodstuffs  including edible oils through increased taxation.

The sector has recovered and has three major producers competing for the domestic market.

These are Surface Wilmar, which has added Olivine to its Chitungwiza-based operation, United Refineries and Parrogate.

The Oil Expressers Association of Zimbabwe (OEAZ) says Zimbabwe's production costs were 25 to 30 percent more than in Zambia, Mozambique and Malawi, a situation that hampered export prospects.

"The local costs of production are still high and our oil is 25 to 30 percent above the required landed prices in Zambia, Mozambique and Malawi. We remain optimistic about the work of the Rapid Results Initiative and the imminent positive impact of the work to be done by the National Competitiveness Commission," OEAZ president, Busisa Moyo, told The Financial Gazette last week.

Government set up the commission in order to improve the competiveness of local products. Local producers still have cost structures that make them uncompetitive on foreign markets.

About 95 percent of cooking oil consumed in Zimbabwe is locally produced, according to Moyo, and local suppliers have been targeting the region for expansion.

Moyo said Zimbabwe had capacity to produce soya beans, a key input in the production of cooking oil, cheaper than its counterparts in the region if government offered subsidies to farmers.

This, he said, would reduce costs on the industry and translate into cheaper cooking oil.

The country currently imports the bulk of its crude soya oil. In other countries inputs are sold to farmers with no huge premiums or mark ups, said Moyo.

"Other countries are subsidising certain key inputs like treated seedlings and fertiliser to ensure low costs in Soya production," he said.

Moyo said subsidies would translate to "huge saving on currency to support a broken soya value chain".

He said it would take Zimbabwe three to four years to build a sustainable supply of soya beans, a situation that required government intervention.

Moyo said that subsidising the cooking oil industry could have a multiplier effect on downstream and upstream industries.

He said creating a special economic zone for the soya value chain would help reduce costs of production, making Zimbabwean cooking oil more competitive in the regional markets.

"This value chain can also be housed in a Special Economic Zone to create a regional powerhouse for soya related products like cooking oil, margarine, soap, white meats, tofu, soya chunks, soya milk, soya based animal protein feeds," said Moyo.

He pointed out that smuggling remained a big threat to the sector.

"Smuggling remains a big issue against cooking oil, protein meal and soap products from this value chain. However plus or minus 95 percent of the cooking oil is locally produced as we speak due to collaboration between government and private sector on several initiatives carried out in the last 4 years," Moyo said.

- fingaz
Tags: Cookingoil,

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