Companies have been urged not depend on government for their raw material requirements but should be innovative enough to produce these raw materials locally.
Two oil processing companies have seen light and are embracing the recommendations by the government to undertake contract and corporate farming to produce soya bean locally rather than waiting for foreign currency allocations from the central bank to import soya bean.
Zimbabwe is producing less than 50 000 metric tonnes of soya bean against a national annual requirement of between 400 000 to 600 000 tonnes, with the balance being covered through imports.
Two major oil processing sister companies, Olivine Industries and Surface Wilmar have since failed to re-open this year after the annual shutdown as they failed to pay for the imported soya bean.
The companies have already lost millions of dollars in potential revenue and are ruing the decision of not to grow soya beans locally to support their own production requirements.
For a long time, companies have been spoon fed by the government with foreign currency without taking their own initiatives to provide for their own raw materials.
Surface Wilmar CEO, Mr Sylvester Mangani said they will put 20 000 hectares under the crop after feeling the pinch of a loss in revenue.
“The only solution at the moment is for us to go corporate farming so that we avail our own raw materials. We have gone for almost a month without production and we have set up a framework to ensure that next year, we engage farmers in a partnership so that we produce over 100 000 tonnes which is over two thirds of our requirements,” he said.
Import substitution is the bedrock to Zimbabwe establishing its own foreign currency reserves and also to deal with one of the twin evils of current account deficit mentioned in the Transitional Stabilisation Programme (TSP).
Taking cognisant of the need for import substitution, Mr Mangani said investing in farming is key before they fully start
“Government’s recommendation is right but investment is required to ensure that the whole value chain is efficient, so that we don’t produce expensively. So we need to start by putting proper infrastructure like pivots for irrigation so that we don’t depend on rain water. That way, it means that we only concentrate on risk at the factory,” he said.
The government last year took a cabinet resolution to encourage and help private sector companies to start contract farming to ease the pressure on the country’s limited foreign currency shortages.
Zimbabwe spends billions of US dollars in importing raw materials which otherwise could have been produced locally and it is imperative that others also follow suit in complementing the government to transform the economy.