NatFoods backs maize meal subsidy

National Foods Holdings Limited has milled 61 000 tonnes of grain for the Government’s grain subsidy programme since its inception last December.

This is part of the initiatives to enhance the availability of affordable maize meal on the market.

Group chairman Todd Moyo, indicated the group made significant contributions towards the programme although supplies steadily reduced towards the end of the financial year 2020 as local maize became available.

“The group played a significant role in supplying maize meal to the Government subsidy programme, with over 61 000 tonnes having been milled for the programme since it was launched in December 2019.

“Volumes supplied on this programme were steadily reduced towards the end of the period as the local maize harvest became available,” said Mr Moyo in the group’s 2020 Annual Report.

Recently, the country and the rest of the region experienced bad weather patterns resulting in reduced harvests, while other factors such as inflationary pressures added more strain to the environment.

According to Mr Moyo, the recently concluded local harvest of maize and soya was negatively impacted by reduced plantings and poor weather and significant imports of these commodities will be required up to at least June 2021.

To ease the challenge, Government has launched a number of initiatives to stimulate local production of key grains, which the group fully supports and endorses.

“Increased grain productivity will boost the competitiveness of local manufacturers, which remains under intense pressure, exacerbated by the on-going liberalisation of imports of basic food products,” said Mr Moyo.

During the year to June 30, 2020, NatFoods reported that maize meal volumes remained firm, albeit declining by 5 percent on last year’s high base.

There was a loss in volume momentum in the last quarter as the subsidy programme was progressively reduced and maize from the local harvest became available.

Overall, the group recorded a 25,3 percent decline in total volumes to 456 000 tonnes. Mr Moyo said whilst there were year-on-year volume declines across all categories, the quarterly volume trend during the year was largely stable, with the exception of seasonal variations in the maize division.

Revenue, however, increased by 52 percent to $12,79 billion, reflective of higher selling prices following the progressive removal of most grain subsidies.

Gross margin dollars increased by 48 percent, below the increase in revenue as the group focused on competitively pricing its products.

Operational expenditure increased by 45 percent compared to last year, with the optimisation of the Group’s cost structures remaining a key priority. As a result,  profit after tax increased by 75 percent to $1,58 billion.

Going forward, Mr Moyo indicated investments into the company’s manufacturing facilities will continue on an on-going basis in an effort to further improve efficiencies and lower costs.